Volume: The breakthrough of electroless copper plating and electroplating has been validated by NVIDIA.
Price: No special highlights (stable), short capacity expansion cycle, difficult to increase prices. Foreign competitors like Amtech have low willingness to expand production but high willingness to raise prices.
After exploring the upstream trio of CCL – copper foil, electronic cloth, and resin, we look at the PCB manufacturing segment where the price and quality of chemicals account for 6% of PCB costs, while copper foil accounts for 8%. However, the chemical segment has a more favorable structure, currently dominated by the industry leader Amtech, which has been continuously raising prices, thus downstream manufacturers have a certain motivation to switch to domestic suppliers. Electroless copper plating and electroplating are core processes in PCB manufacturing, and chemicals affect reliability, hence the need for terminal NV confirmations when switching chemicals.
Tiancheng Technology’s electroplating solution and electroless copper have been validated by Shenghong Technology, Jingwang Electronics, Shengyi Electronics, Dongshan Precision, and other NV and SIC supply chain PCB manufacturers. They have officially obtained the NVIDIA supply chain code, being the only company in China, and currently, there are only three globally: Tiancheng Technology, Amtech, and Mediatek. The company’s prices are 30% lower than overseas competitors, and Amtech continues to raise prices with low willingness to expand production, leading domestic PCB manufacturers to have a strong desire to replace them. Tiancheng Technology is expected to gain more market share. The company currently has an annual production capacity of 20,000 tons, which will expand to 40,000 tons by the end of the year and nearly 100,000 tons by the end of 2026. Moreover, the company currently operates only one shift; if switched to two or three shifts, production capacity can be further increased.
Shenghong has replaced its six production lines with the company’s chemicals (Huizhou + Thailand factories), with a third line added in September. The total of Shenghong’s new and old lines exceeds 50, and the company’s goal is to replace half of them. The single line ASP is over 600 yuan (1/3 electroless copper, 2/3 electroplating). If 30 lines are replaced, it corresponds to about 200 million in revenue, with a gross margin expected to be between 50-60%.