High Debt in the PCB Industry: Not Borrowing Money Means Waiting for Death

The essence of the industry is to burn money for technology; without money, you are out.

Equipment is as expensive as a money printing machine, with an investment of over 1 billion for a high-end HDI production line, and even more for lines with more than 18 layers. Huadong Technology’s factory in Thailand invested 1.7 billion, and Shenghong Technology’s R&D expenses surged by 61% in 2024; without money, you simply cannot play.

Technological iteration drives people crazy, with the output value of high-end PCBs expected to increase by 40.3% in 2024, and HDI boards by 18.8%. If you don’t borrow money to upgrade your production line, wait to be eliminated.

Industry debt levels.

Hongxin Electronics has a debt ratio of 78.9%

1. • • Huazheng New Materials at 76.5%, Kexiang Co., Ltd. at 74.1%

     • Xingsen Technology has a debt ratio of 61.4%, while the leading Huadong Technology has a debt ratio of 42.5%.

   • The survival rule in the industry is that only by daring to incur debt can you seize the market.

     • In 2024, the top 10 companies in the PCB industry will account for 46.3% of the revenue; small companies that do not expand production will not even get a share.

     • The AI wave does not wait for anyone; Huadong Technology relies on AI server PCB orders, with profits soaring by 71% in 2024; Shenghong Technology’s net profit tripled, all from spending money to expand production and seize opportunities.

     Xingsen Technology

     1. Where is the money being spent? Betting on FCBGA for domestic substitution.

        • Guangzhou + Zhuhai FCBGA packaging substrate base, with a total budget of 6 billion, has already spent several billion.

        • How big is the bet? China’s self-sufficiency rate is less than 10%; if successful, the market space exceeds 100 billion.

     2. • • Accounts receivable of 1.962 billion, with customers not paying back.

        • • Net profit in Q1 2025 is only 9.37 million, mostly lost on new production capacity.

        • 1. • • But this is the norm in the industry.

               • Huadong Technology, with a 25% increase in debt in 2024, but with an explosion of AI orders, profits increased by 71%, and stock prices doubled.

               • Shenghong Technology, with a debt ratio of 53.7%, only saw net profits triple this year, fed by Nvidia orders.

             • • Hongxin Electronics, with a debt ratio of 78.9%, saw net profits plummet by 75.8%, borrowing more leads to greater losses.

               • In the PCB industry, a debt ratio of 61.4% is the entry ticket, but Xingsen’s main focus is on FCBGA mass production.

                 • Seizing the domestic substitution cake, replicating Huadong’s comeback;

               • “Don’t be scared off by the debt ratio; borrowing money is a necessity in the PCB industry, but you must keep an eye on where the money is spent. Xingsen’s money is betting on FCBGA, wagering on the fate of the nation. Are you willing to follow? It depends on whether you believe that Chinese chips can win.”

                 In this industry, there are no guaranteed profits; only those who dare to gamble will feast, while the conservative will eat dirt.