On May 11, NPC released the information on a significant issue stating that the board of directors is optimistic about the rapid growth of 5G applications, and it has decided to strengthen high-value and ultra-thin copper foil and other high-value product lines. As such, the board has settled to increase the investment from NT$53.7 to NT$8 billion for No. 4 CCL Plant at Xingang Compound of Chiayi, expected to be completed next year. And the proportion of differentiated product revenue will increase from 33% to 50% in the future.

        According to information from the Ministry of Industry and Information Technology, China will have built 198,000 units of 5G base stations by the end of March and is expecting to complete the construction of 500,000 units of 5G base stations by the end of this year.

          More than just in China, 5G base stations in South Korea, Japan, and the United States are under construction with accelerated speed. With conservative estimation, the total number of 5G base stations to be established in these countries will exceed one million by the end of this year.

 

        Should a scenario occur whereby there is an outbreak of COVID-19 in China toward January, three of the dominant Taiwanese-funded players of CCL manufacturers may subsequently report postponing the resumption of work in February. However, EMC, Tuc, and Iteq have successively disclosed their financial reports for the first quarter, whose achievements have amazed the external world. In terms of revenue and profit, EMC has set new historical records, and the earnings per share by Iteq reached a record high in recent years. Regarding profitability by Tuc in the first quarter, it has maintained an annual increase, while its revenue in April has also set a new monthly record high.

 

          The key to such outstanding results in the first quarter by EMC, Tuc, and Iteq lies in 5G.

        In particular, high-speed CCL markets that are mainly dominated by Panasonic, Iteq, Tuc, and Isola at this moment. These four key manufacturers have accounted for as much as 65% of the global market share. Also, the proportion of revenue with Tuc and Iteq from base station applications is relatively higher; it was discovered.

         The growth momentum of Tuc and Iteq this year should have come from Huawei for orders of 5G base station as they had accounted for about 4% of revenue with Tuc last year, and expected to reach 10-15% this year. On the other hand, orders from Huawei had accounted for about 3% of revenue with Iteq last year, and it is likely to reach 12-15% this year.

 

          According to Industrial Technology Research Institute (ITRI) estimations, the output value of global CCL will climb from US$11.1 billion in 2018 to US$18.1 billion by 2025 as of the market driving force from 5G high-frequency and high-speed substrates.

        However, there is no real risk for the CCL industry this year. Tsai Ming-han has put on the alert, and he indicated that base stations, servers, automobiles (including electric vehicles), and mobile phones are the four major applications of CCL. Still, it is hard to predict when the COVID-19 epidemic can be placed under control. Hence, if the overall economy has come up against the headwinds, aside from 5G base stations, orders from servers, electric vehicles, and mobile phones can be dragged down, so that it may still impact upon the overall operating performance of the CCL manufacturers.

        It is also worth noting that though NPC has placed additional funding for investments, the ban by the US Department of Commerce on Huawei is expected to hurt NPC tremendously. As explicated by analysts from the investment and consultant firms, since Hisilicon is the most extensive account of Nanya PCB and its orders have accounted for up to 20% of Nanya PCB's revenue, a subsidiary NPC, the ban won't leave it unscathed (News Source: Wealth Magazine)