When discussing the hottest topics in the tech industry this year, AI computing power undoubtedly ranks at the top. However, many people focus solely on NVIDIA’s GPUs and Huawei’s Ascend chips, overlooking the foundational cornerstone that supports this computing power—high-end PCBs. Without them, even the strongest chips are just isolated islands.
Today’s domestic PCB market is no longer in its wild early days; it has formed a clear pattern with giants standing tall, each occupying their own territory. Shenghong, Huadian, Shennan, Pengding, and Dongshan are the five leading companies, each possessing unique skills and taking distinctly different paths. Today, we will analyze this exciting “battle of kings”.
Let’s get straight to the point and discuss the real capabilities of these PCB giants—Shenghong Technology, Huadian, Shennan (Shennan Circuit), Pengding Holdings, and Dongshan Precision. Who is holding back major innovations, and who is merely posturing (we will only mention these companies today).
1. Shenghong Technology: The “Lone Warrior” in the AI Computing Power Arena
Products: Focused on high-density boards (HDI) for AI servers and GPU graphics cards, closely tied to NVIDIA.Current Situation:
- Advantages: HDI technology reaches 6 layers, with precision 15% higher than peers; 70% of NVIDIA’s graphics card boards come from Shenghong. Last year, their technical team directly stationed at NVIDIA headquarters to redesign, with clients stating, “Shenghong understands GPUs better than we do.”
- Disadvantages: Too reliant on NVIDIA. Last year, when NVIDIA reduced orders, Shenghong’s stock price dropped 12% in one day.Investment Perspective:
I have discussed with several brokerage friends, and Shenghong represents a typical case of “high growth + high risk.” In Q1 2024, net profit is expected to rise by 300%, but don’t be blinded by the numbers—AI computing power is a hot trend, but NVIDIA can cut orders at any time. Suitable for aggressive investors, but don’t exceed a 30% position.
2. Huadian Co., Ltd.: The “Workhorse” of Automotive Electronics
Products: PCBs for new energy vehicles (especially high-voltage battery boards and intelligent driving system boards), with clients including Tesla and BYD.Current Situation:
- Advantages: Demand for automotive electronics is stable. Last year, new energy vehicle sales increased by 35%, and Huadian’s automotive board orders rose by 50%. Technically, they have achieved the highest reliability in automotive boards (failure rate below 0.1%).
- Disadvantages: Slow growth, like lukewarm water. Revenue is expected to rise by 15% in 2024, but profit will only increase by 8%.Investment Perspective:
Huadian may not be the flashiest, but it is the most “stable.” Automotive electronics is a certain path, unlike AI, which can change at any moment. I have a position in it, but not heavily. Suitable for those who want to “win by lying down,” especially for regular fund investments.
3. Shennan Circuit (Shen Electric): The “Technical Veteran” of the 5G Era
Products: 5G base station boards, high-end communication boards, and strong military boards.Current Situation:
- Advantages: Leading market share in 5G base station boards, with a solid technical foundation. Last year, they developed “millimeter-wave high-frequency boards” that solved the 5G signal attenuation problem, with Huawei and ZTE eager to procure. They are closely tied to “Big Brother Huawei,” enjoying the maximum benefits from Huawei’s rise in the industry chain.From communication base stations to AI servers (Ascend), the depth of cooperation is unmatched.In the field of packaging substrates (IC substrates), they are a domestic technology leader.
- Disadvantages: Slow in AI layout; their main focus remains in the 5G communication field.Investment Perspective:
Shennan is a “technical faction,” not a “trend faction.” 5G is still in its growth phase; it is like old wine, becoming more fragrant with age. I have been increasing my position recently because its technical barriers are more solid than Shenghong’s—clients are not dependent on ties but on real capabilities.Investing in Shen Electric is essentially betting on Huawei’s breakthroughs in AI and intelligent computing, so one must pay attention to Shennan. Its potential lies in the domestic substitution story of packaging substrates.
4. Pengding Holdings: The “Cash Cow” of FPC
Products: Flexible printed circuit boards (FPC), a core supplier in Apple’s supply chain.Current Situation:
- Advantages: FPC cash flow is very stable. Every time Apple releases a new model, Pengding’s FPC orders come in, with a 20% increase in net cash flow in Q1 2024.
- Disadvantages: Weak growth. FPC technology iterates quickly; when Apple cut orders last year, Pengding’s stock price plummeted.Performance is highly correlated with the sales cycle of iPhones and other products.Investment Perspective:
Pengding is a “defensive player,” like a bank deposit. Suitable for bear market allocations, but lacks excitement in a bull market. I only allocate 5% of my position, using it as a “ballast stone.”
5. Dongshan Precision: The “Adventurer” of FPC
Products: FPC + rigid boards, often found in new Apple models.They are an important supplier for both Apple and non-Apple systems.Current Situation:
- Advantages: New FPC technology, such as flexible boards for foldable smartphones, makes Dongshan Precision Apple’s first choice.
- Disadvantages: High leverage (debt ratio of 2.3 times); if Apple changes its mind, it will shake.Investment Perspective:
Dongshan is like a “high-risk, high-reward” gambler. If Apple’s new model sells well, its stock price soars; if Apple cuts orders, it drops sharply. I only dare to allocate 10% of my position, playing for thrills.
6. My Personal Judgment: Don’t Chase Trends, Focus on “Survival”
The industry is no longer about “who is the largest” but rather “who survives.” Shenghong: AI is a trend, but don’t become NVIDIA’s scapegoat. Huadian: Automotive electronics are stable, but don’t expect it to become “the next NVIDIA.” Shennan: With a solid technical foundation, betting on both 5G and AI, Shenghong: AI is a trend, but don’t become NVIDIA’s scapegoat. Pengding and Dongshan are somewhat similar, focusing on consumer electronics, closely tied to the sales of Apple and other electronic products.
Final Truth: PCB industry is shifting from “selling boards” to “selling technology.” Shenghong relies on NVIDIA, Shennan relies on technology, and Huadian relies on clients. As ordinary investors, don’t focus on “who rises quickly,” but rather on “who won’t die”—for example, Shennan, whose clients are not dependent on a single source, and whose technology is not reliant on luck. I have been increasing my position in Shennan, not because it is the most aggressive, but because it is the most “survivable.”
Follow me for insights into the development of the technology industry and to explore the technology industry in China!