The 5G mobile communication base station is going to march into the era of accelerated deployment. By 2020, the estimated number of deployments should reach nearly 1.5 million units and is expected to trigger the output value of various components, such as PCBs, while Sino-US trade should further increase supply chain variables.

 

Impact analysis

        In addition to the official operation of 5G mobile communication in the United States, South Korea, and the United Kingdom in 2019, more countries are expected to unveil 5G mobile communication operations, including Japan, which will hold the Tokyo Olympics in 2020, so that global 5G bases will be speedily deployed. Whether the frequency of Sub 6G or a millimeter wave, since the signals are easily blocked due to their short wavelength features, for the same area of transmission coverage of 4G, the number of 5G base stations has to be 4~5 times greater than that of the 4G era. Therefore, even if the PCB used in each base station is the same, the output value of PBC rendered from the 5G base station will be at least four times that of 4G.

 

      

           Regarding the structure of the current 5G base station, it can mainly be divided into three parts: AAU, DU, and CU. Among them, AAU includes an antenna, a power amplifier, a transceiver module, etc., so AAU can be considered the core of the entire 5G base station as it requires a lot of high-frequency PCB for support. At present, the value of a PCB contained within an AAU is worth about $1,500. As for DU and CU, greater attention is paid to the high-speed transmission of large amounts of data; therefore, they need the support of high-speed boards. Although the value of such embedded PCB is not as high as that of AAU, the sum of both is nearly $700. In other words, the value of PCB for a 5G base station is about $2,200, approximately twice that of the 4G era. With the estimation that the number of base stations should increase by four times and that the value of PCB for each base station should double, the output value of PCB for 5G base stations should reach as high as about 10 times that of 4G base stations.

 

    

           In foregoing the 4G era, ZTE and Huawei accounted for about 40% of global base stations, while Nokia and Olympics from Europe accounted for about 50% of the total. Samsung and other players accounted for the remaining 10%. Although the United States would like to work with other countries to boycott 5G equipment by Huawei, the current situation indicates that the market share has not been upset much by the boycott. Unless Sino-US technological warfare further deteriorates, it is believed that the chance of European manufacturers to replace ZTE and Huawei base stations, and their expectations to win over PCB orders for European-funded base stations will fall through. Therefore, the production of panels has been drastically reduced, and Taiwanese manufacturers are readying themselves for warfare.

 

Institute investor conferences are going to be held in succession, while LGD suffered a great loss of NT$12.49 billion in the third quarter. Last week, a rather conservative view for the fourth quarter was released during the investor conference. As for Coretronic and AUO, their investor conference will be held on the 29th and 30th, and this is first time that Ke Fu-ren, the GM of AUO, presided over the investor conference after returning to AUO. In the third quarter, the price of TV panels fell more than 20%, and panel makers had already cut down production in September; furthermore, the market expects the single-quarter loss of panel factories to expand. In the fourth quarter, Korean panel factories will continue to close down their production lines, while panel manufacturing plants on the mainland will also slightly reduce production. As a result, follow-up action by Taiwanese panel manufacturers has received much attention.

 

In general, institute investor conferences of panel manufacturers will be held one after another. LGD has already suffered a great loss of more than NT$10 billion for two consecutive quarters, with accumulated losses in the first three quarters reaching NT$30 billion this year, thus making LGD the hardest-hit victim of this wave of the LCD cycle. As a result, LGD has provided a rather conservative view for the fourth quarter. Although the decline in panel prices has slowed, the timing has already come to the end of the peak season, so that the momentum of goods shipment should be weakened every month. Furthermore, LGD has not only significantly cut capital expenditures, but also shut down part of its 7.5-generation and 8.5-generation capacity in South Korea, in the hopes of stopping any further loss.

 

Although large-size panel shipments grew in the third quarter, the average price of TV panels dropped more than 20%, making the third-quarter revenue from the two major panel-producers comparable to that of the previous season. (News source: Commercial Times).