Thinner and lighter smartphones lead the innovative applications of FPC, and the upgrading of the electronics industry drives its high growth in demand. FPC fits the development of miniaturization, lightness, and thinness of electronic products with its excellent physical characteristics. Apple leads the innovation of consumer electronics, the trend of thinner and lighter drives the high growth of FPC, and the increasing demand in automotive electronics and wearable fields drives FPC to become a fast-growing PCB sub-industry.
The FPC industry chain is divided into three parts, including the upstream that composed of electronic components, FCCL, electromagnetic shielding film, and cover film, the midstream is FPC manufacturers, and the downstream is mainly manufacturers of electronic product module parts such as display modules and touch modules, and manufacturers of terminal electronic products.
Upstream: Electronic Components Account for More Than Half of the Total Cost
At present, the mainstream business model of the industry is that FPC companies, which are responsible for the connection and assembly of electronic components and FPC, purchase electronic components from their designated suppliers according to the bill of materials provided by downstream customers. Therefore, the cost of electronic components has become the main raw material cost of FPC companies, accounting for more than 50%. And outsourcing processing costs account for about 10-15% of the total cost. Depreciation of FPC production equipment and other expenses such as manpower account for approximately 30% of the total cost of FPC production.
Midstream: China's FPC Output Value Accounts for Half of the World, But Japan Is the Owner of the Largest Output Value
The FPC industry originated in the 1960s. Since the 21st century, with the development of the PC and smartphone industries, the global FPC output value has risen rapidly. At present, FPC has been widely used in terminal consumption fields such as smartphones, automobiles, and wearable devices. In 2019, the global FPC output value reached US$13.8 billion, a year-on-year increase of 8.7%.
China is the main producer of global electronic products. Affected by the industrial chain and cost factors, global FPC companies have invested in China to set up factories. The current FPC output value in China accounts for more than 50% of the global output value.
Although the output value of FPC in China continues to increase, companies in Japan and Taiwan dominate the Chinese market, leading the Chinese mainland in terms of industrial chain coordination, technical level, and production capacity such as raw materials. Due to the early start of Japanese and Taiwanese FPC companies, they have formed a relatively complete upstream supply chain system, which also reached stable cooperative relations with downstream customers. Therefore, from the perspective of where the output value belongs, Japan is the biggest gainer, while China's output value accounts for only 16%.
The overall competitiveness of FPC companies in mainland China is relatively weak. Only a few leading companies such as Xiamen Hongxin, Shenzhen Kinwong, and SDG are competitive. Therefore, compared with foreign companies, the overall market share of mainland Chinese companies is relatively low. To enhance the supporting capabilities of the industrial chain, mainland FPC companies will strengthen industrial chain cooperation. For example, Xiamen Hongxin has established stable relationships through cooperation with large module manufacturers and terminal electronic product manufacturers such as BOE, Shenzhen Tianma, OFILM, and Lenovo.
However, it is undeniable that the shift of the industry's focus to mainland China provides opportunities for mainland enterprises to learn and develop. Relying on its labor cost advantage, resource advantage, and huge consumer market, China has become an industry undertaking country for the world's major FPC and electronic product manufacturers. With the aid of the industry agglomeration effect brought about by industrial transfer, local FPC companies strengthen cooperation and exchanges with international manufacturers, learn technology and advanced management experience, and promote the improvement of the competitiveness of local companies. With the further improvement of China's FPC industry chain, the steady improvement of technical level, and the continuous increase of production capacity, the competitiveness of China's FPC enterprises will increase, and the market share will increase accordingly.
Downstream: Wearable Devices and Vehicle-Mounted Devices Have Become the Main Growth Points
The development of downstream terminal applications is the main factor driving the development of the FPC industry.
From the FPC terminal application field, consumer electronics such as smartphones and tablet computers account for more than 70% of the consumption of FPC, and the demand for FPC in other fields such as automotive electronics is still low.
As the main application field downstream of FPC, the smartphone market is becoming saturated, and FPC demand growth will slow down. The development of new electronic products such as wearable devices and automotive electronics will provide new growth momentum for the FPC industry.
The rapid development of wearable devices creates demand for FPC. As a small electronic product, wearable devices not only impose strict requirements on product weight, but also put forward more demands on product functions, and therefore put forward requirements on the ability of the product to carry more electronic components. Due to the advantages of lightness, thinness, small size, and high circuit density, FPC has become the best choice for PCBs required for wearable devices and is used in fields such as headsets, smartwatches, wireless headphones, wearable health care, and medical equipment.
The development of automotive electronics is expected to bring broad market prospects for FPC which has the characteristics of lightweight, simple structure, simple circuit connection, a good circuit carrier for connecting automotive electronic components. With the rapid development of new energy vehicles, the degree of vehicle intelligence has increased, the number of internal intelligent electronic devices has increased, and the demand for electronic components has increased accordingly. With the large-scale application of new energy vehicles, automotive electronics will become an important application field of FPC, providing a broad growth space for FPC.
Compared with traditional vehicles, new energy vehicles are equipped with more electronic devices, and the vehicle functions are more abundant. In the context of the rapid development of new energy vehicles, the degree of intelligence of vehicles is increasing. Lighting systems, display systems, power systems, battery management systems, and sensors have increased demand for electronic components, and the number of circuit carriers required to connect electronic components has increased correspondingly, resulting in more complex electronic circuit connections inside automobiles. As a traditional circuit carrier, automobile wiring harnesses are relatively heavy and complicated in connection methods, which cannot comply with the development trend of the continuous increase in the number of electronic components of new energy vehicles. However, vehicle FPCs rely on the advantages of lightweight, simple structure, and convenient line connection.
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