PCB, as an indispensable key interconnect in electronic products, is known as the “mother of electronic products”. At present, global PCB manufacturing companies are mainly distributed in mainland China, Taiwan, Japan, South Korea, Southeast Asia, the United States and Europe. Among them, mainland China has developed into the most important production base of the global PCB industry, accounting for more than half of the global production capacity.
However, with the constant changes in the international situation in recent years, in order to cope with the uncertainties brought about by geopolitics, some customers hope to transfer their orders from mainland China. Therefore, a large number of PCB companies, including Wus Printed Circuit, Aoshikang, CEE, Sihui Fuji Electronics, Shenzhen Jove Enterprise Limited, Sunshine Global Circuits, and Victory Giant Technology, plan to build factories in Thailand, Vietnam and other places. The trend of PCB industry transfer to Southeast Asia has emerged.
Major manufacturers require their production and supply chains moved out of mainland China
In fact, under the influence of international trade frictions, while Chinese companies are actively building localized supply chains, American companies are also showing a trend of “moving out of mainland China “. Major American manufacturers, including Apple, Dell, and Hewlett-Packard, have successively requested that their production and supply chains be moved out of mainland China.
Among them, Dell appears to be the most radical. Dell has recently intensively met with the midstream and downstream supply chains. Taking laptops as an example, Dell requires that starting in 2025, 60% of Dell’s products for the US market must be produced in factories outside mainland China. In 2027, the proportion of American market products assembled outside mainland China must reach 100%. The company has similar requirements for desktop computers.
In addition to Dell, HP has also begun a survey of its suppliers to assess the feasibility of moving production and assembly out of China.
Apple is also promoting its assembly part of the supply chain to move out of mainland China faster and set up production lines in other regions such as Southeast Asia. Shen Qingfang, chairman of Zhen Ding – Apple PCB supplier, said that the assembly is easy to move, but the PCB is not easy to move.
In addition to the huge investment, environmental protection, water and electricity must be considered, and this matter must be evaluated from the perspective of economic behavior. Apple has not yet asked Zhending to set up a production base outside of mainland China. For Zhending, it is not necessary to do so immediately, but it will evaluate it in the long run. Moreover, Zhending has set up a back-end module factory in India four years ago.
Li Dingzhuan, general manager of Zhen Ding, also said that the current customers can still accept the production base in the mainland China, but in the future they will need production bases outside of mainland China, which is inevitable.
Victory Giant Technology is also planning to invest and build factories in Southeast Asia. At the recent shareholder meeting, Victory Giant Technology revealed that the company has conducted detailed inspections in Vietnam and other places, and the factory built there is also mainly for overseas customers. The company’s export ratio has reached more than 60%, and there are more and more foreign customers. Setting up factories there can also reduce some geographical influences, thereby bringing about market growth.
According to the Taiwan Printed Circuit Association(TPCA), the production bases of Taiwanese PCB manufacturers last year were distributed as follows: mainland China (60.6%), Taiwan (37.1%), and other regions (2.3%). In recent years, the rapid growth of IC substrates has increased the proportion of Taiwanese production in Taiwan. Overseas production is concentrated in Southeast Asia, including Thailand, Malaysia and Vietnam. Recently, due to geopolitical conflicts and international customers’ layout plans for supply chains, Taiwan’s PCB industry has once again risen southward.
Southeast Asia has become the focus of PCB manufacturers’ transfer
In fact, not only PCB manufacturers in Taiwan, China, but also due to the weak ability of a single production base to resist risks, building a diversified industrial layout has become a global PCB industry trend. Southeast Asia, which has a labor cost advantage, has become the focus of PCB manufacturers’ transfer.
Zhang Peike, chairman of Sunshine Global Circuits, once stated at a public meeting that Sunshine Global Circuits, takes internationalization as its strategic direction, and investing in Southeast Asian countries is a measure of the company’s global strategic layout. In terms of personnel, logistics, industrial chain, and geographical advantages, Vietnam, Thailand, and Malaysia can be considered key countries for investment layout in Southeast Asia. Considering various factors such as transportation costs, Thailand and Malaysia have more prominent advantages.
Compared with other Southeast Asian countries, Malaysia has always had a unique position in the global semiconductor packaging and testing market, including Intel, Infineon, ASE, etc., all have packaging and testing factories in Malaysia. Therefore, Malaysia has attracted AT&S, Ibiden, Simmtech and other packaging substrate manufacturers to build factories one after another. The same is true in Vietnam. Intel and Amkor are expanding their investment in packaging and testing plants in Vietnam, and have also attracted packaging substrate manufacturers such as Kyocera and Samsung Electro-Mechanics to set up factories.
Thailand becomes the preferred destination for PCB manufacturers
Thailand has established the Thailand Printed Circuit Association(THPCA) in 2019. According to its official website, Thailand’s PCB industry exceeds 1% of global PCB production. Currently THPCA has 19 members including KCE, Gravitech, Mektec, Panasonic, Atotech, Zhisheng, and Jingguo.
Since the second half of 2022, with the continuous improvement of local industrial facilities, the trend of A-share listed PCB companies to invest and build factories in Thailand has become even stronger.
As early as June 7, 2022, Wus Printed Circuit announced that the company plans to establish a Thai subsidiary and build a new production base in Thailand.
Wus Printed Circuit stated that Thailand, as an emerging market economy, has comparative advantages in terms of land, factory buildings, manpower, and taxation. In recent years, it has also undertaken more printed circuit board production capacity transfers, and related industrial chains have also been continuously improved. It can better meet the needs of the company to build a production base.
On December 19, 2022, Aoshikang also announced that in order to better meet the order needs of international customers and improve international competitiveness and service capabilities, the company plans to invest no more than RMB 1.2 billion to build a production base in Thailand.
On December 23, 2022, Huizhou China Eagle Electronic Technology announced that the company plans to invest in a new printed circuit board (PCB) production base in Thailand. The main products are high-density multilayer boards (MLB) and high-density interconnects (HDI). Key application areas include automotive electronics, computer and network communications, etc. The project plans to invest no more than 550 million RMB.
On February 20, 2023, Sihui Fuji Electronics announced that due to business development and the need to increase the layout of overseas production bases, the company decided to invest in a new production base in Thailand, with a planned investment of no more than RMB 500 million.
According to incomplete statistics, there are more than 20 PCB companies planning to invest and set up factories in Thailand or have already landed in Thailand, including Japanese manufacturers such as CMK, Fujikura, Mektec, and Mitsubishi Gas, Taiwanese manufacturers such as Unimicron, Compeq, Dynamic, as well as Chinese companies such as Wus Printed Circuit, Aoshikang, Sihui Fuji and Victory Giant Technology.