Electrification drives demand growth

The full name of FPC is flexible circuit board, which is a kind of circuit board made of flexible copper clad laminate as the base material. It is used as a signal transmission medium for the connection of electronic products. In the past, the growth of FPC mainly came from the consumer electronics industry. Due to its high wiring assembly density, good bendability, lightweight, flexible process, etc., it is in line with the intelligence, portability, and thinning of the downstream electronics industry. FPC from 2009 to 2019 The output value continues to increase. In the future, as the industry's growth momentum switches, electrification will be the biggest driving force for FPC demand. The demand for automotive FPCs is large. In the past, the main driving force of FPCs was consumer electronics, which benefited from the rapid development of the domestic consumer electronics industry. Data shows that the compound growth rate of domestic FPC from 2009 to 2019 was 6%, which was higher than the 4.1% growth rate of the PCB industry in 2019. The annual global FPC output value is 12.2 billion U.S. dollars, which is equivalent to 20% of PCB. With the development of automobile electrification and intelligence, the advantages of FPC in bending, weight reduction, and high degree of automation are further reflected. The usage of FPC in the automotive field continues to increase, and the application scope covers automotive lights, display modules, BMS/VCU/MCU three Relevant scenarios such as large power control systems, sensors, and advanced auxiliary systems.

The biggest increase of FPC in the automotive field in the future is actually the power battery FPC, whose logic comes from the replacement of traditional wiring harnesses. We know that each power battery needs to be connected with a collection line. The function of the collection line is to monitor the voltage and temperature of the cell, collect data in real time and transmit it to the BMS system, and it can be automatically disconnected when the cell is abnormal. Previously, the new energy vehicle power battery collection line used the traditional copper wire harness solution. The conventional wire harness is made of copper wire surrounded by plastic. When connecting the battery pack, each wire harness reaches one electrode. When the power battery pack current signal is large, many wires are needed. The wiring harness is matched, which squeezes a lot of space. Moreover, in the pack assembly process, the traditional wiring harness relies on workers to manually fix the ports on the battery pack, and the degree of automation is low. Compared with copper wire harnesses, FPC soft boards have many advantages such as high integration, automatic assembly, assembly accuracy, ultra-thin thickness, ultra-softness, and light weight. The overall cost of the FPC solution is still lower than that of the wire harness solution. Although the raw materials are cheaper than the traditional wire harness, in the module link, a production line of a wire harness solution may require 15 workers, and a production line of a flexible board solution may only Five or six people are needed, and the consistency of FPC is better. The application of FPC in power batteries has entered industrialization. At the initial stage of the industry introduction around 2017, due to the high cost of the small batch of the industry and the high reliability requirements in the automotive electronics field, most power battery companies are still in a wait-and-see attitude. With the excellent performance of FPC and the rapid cost reduction brought by large-scale production, the process of replacing traditional wiring harness with FPC has been significantly accelerated. Gaogong Lithium's 2018 survey showed that Ningde Times and BYD, the first echelon of domestic power batteries, have already applied FPC in batches in the pack link. Public information shows that companies such as Tesla, Guoxuan Hi-Tech, AVIC Lithium Battery, Tafel, Xinwangda, Funeng and other companies have also begun to use FPC. At present, FPC solutions have become the most important choice for most new energy vehicles and new models, and will gradually replace copper wire harnesses in the future. CCS enhances product value For FPC manufacturers, it is another big logic to further make FPC into CCS to enhance unit product value. CCS means integrated busbar, which is to weld FPC, plastic structural parts, copper and aluminum busbars into an integrated product through laser welding (see Figures 2 and 3 for more intuitive). Its consumption is related to the battery modules in each electric vehicle, but it needs to be determined. All FPCs need to be made into a series and parallel system of CCS for batteries. Each battery module is equipped with a set of CCS, and each set of CCS is equipped with 1-2 FPC. There are currently some manufacturers that specialize in CCS, but FPC will be restricted. After all, the core of CCS is still FPC. In terms of return on investment, the return on investment of FPC is less than 1:2, and the return on CCS can be more than 1:3. FPC manufacturers with this ability are willing to do CCS.

Both the volume and price range are available, and the future industry space of FPC is also very clear. In terms of volume, according to the China Automobile Association, my country’s total vehicle sales in 2020 will be 25.31 million, of which 1.367 million are new energy vehicles. It is estimated that my country’s total vehicle sales in 2025 are expected to reach 30 million. Based on the accelerated development of my country's new energy vehicles since the second half of 2020, Gaogong Industrial Research predicts that my country's new energy vehicle sales will reach 3 million in 2021, and the penetration rate is expected to exceed 20% in 2025. Based on the above two authoritative data, some brokerage firms predict that domestic new energy vehicles using FPC power battery solutions will reach 8-9 million and 18-20 million in 2025 and 2030. In terms of price, most mainstream models currently use 7-12 modules. A single battery module corresponds to 1 CCS, and 1 CCS is generally equipped with 1-2 FPCs. Now FPC single-layer boards, a car is 600-1000 The price is 3 times that of CCS, 1500-3000 yuan for FPC double panel, and more than 2.5 times of CCS. With the scale effect brought about by the continuous increase in electric vehicle sales and the gradual maturity of the industrialization of electric vehicle FPC, there will be room for price reduction. Assuming that the value of FPC bicycles is 400-600 yuan, and the value of CCS is 2.5 times that, about 1,000-1,500 yuan, the domestic power battery FPC market space is expected to reach 3.2-5.4 billion yuan in 2025, and CCS is expected to reach 8.0-135 billion yuan. In 2030, the two data can reach 7.2 to 12 billion yuan and 18 to 30 billion yuan respectively. This is only domestic space, because downstream battery factories such as Ningde, BYD, and Guoxuan High-Tech have a global layout, and the space will be even higher if the global market is added. In addition, energy storage also has a certain demand for FPC. Zhejiang Securities estimates that energy storage can increase its market size by 19% and 33% in 2025 and 2030, respectively. Gradually grasping the right to speak in the country. From the perspective of the industry structure, the FPC field was first dominated by Europe and the United States. With the increase in production costs in Europe and the United States, production capacity has gradually shifted to Japan, South Korea, Taiwan and other Asian regions. The FPC of the three The market share is 37%, 17% and 28% respectively. However, due to poor management of Japanese manufacturers after 2008, the proportion of output value in 2019 has fallen to 9%.

In the past ten years, domestic manufacturing cost advantages and demand scale have been fully reflected. Overseas FPC manufacturers have established factories in China, while domestic manufacturers have gradually formed a sales scale. The overall domestic FPC output value ranks among the world's leading positions, accounting for more than 50%. From the perspective of individual stocks, due to the threshold of the vehicle power FPC field and the differences in the investment strategies of various manufacturers in the early years, the current competitive landscape of the new energy vehicle power battery FPC industry is completely different from the consumer electronics field. Based on the broad growth space of the new energy vehicle power battery FPC industry, including Pengding Holdings, Dongshan Precision, Anjieli, Gaolan (Dongguan Sixiang), Jingwang Electronics, Hongxin Electronics, Yidong Electronics, Helitai, and Baolifeng , Zhongjing Electronics, Hengmei shares and other manufacturers are actively deploying in the field of power battery FPC.