KUO, MING-CHI views the 400G switch and PCB business opportunities with successful prospects while Compeq and GCE’s opportunities increase

Date: 2019-08-27

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KUO, MING-CHI, a well-known Apple analyst from Tianfeng Securities, presented the last report stating the optimistic prospect about SA core network serving as the new primary basis for 5G investments. As such, this will additionally encourage a strong demand for 400G switch PCBs, while GCE, Hannstarboard, and Compeq are expected to benefit from this demand trend.

KUO, MING-CHI further indicated in the latest report released on August 14th that the output value of 400G switch PCB is expected to grow significantly by 400~450% in 2020. Moreover, the unit price and the gross profit growth of 400G switch PCBs will consequently benefit the relevant PCB suppliers.

The primary basis for 5G hardware investments includes the base station, core network, customer premises equipment (CPE), and smartphone. For the time being, China is regarded as the world's largest 5G core network market and since Chinese telecom operators are likely to change from non-independent networking (NSA) to independent networking (SA) in 2020, the transformation of core networking is expected to encourage a significant demand for 400G switches. Consequently, this change is also expected to benefit 400G PCB suppliers.

Overall, the output value of 400G switch PCBs will increase by 400~500% next year and the scale is expected to reach US$2 billion to US$ 2.2 billion, while the relevant PCB manufacturers should experience the benefits of this demand from the second half of this year. KUO, MING-CHI additionally stated that the beneficiaries include cross-strait PCB suppliers. Of the Taiwanese PCB manufacturers, these beneficiaries include GCE, Hannstarboard, and Compeq. Other manufacturers are expected to include WUS International, Shennan Circuit, and TTM.

According to the analysis by KUO, MING-CHI, since 400G switch PCBs utilizes a more complex 36-layer board compared to the 100G switch’ s 26 to 28 layer board, the PCB unit price should increase by 60-80% due to the increased number of layers. In addition, 400G switch’ s gross profit margin is estimated to be approximately 25-35%, which is also, on average, 10%-20% higher than that of 100G switch. (News source: Economic Daily News).

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KUO, MING-CHI views the 400G switch and PCB business opportunities with successful prospects while Compeq and GCE’s opportunities increase

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