singledeckblackjack| Hexun enters Shengyi Technology: The impact of rising copper prices is relatively limited, and high-end production capacity will continue to be expanded in the second half of the year

On May 22nd, Hexun entered Shengyi Technology (600183) to gain a comprehensive understanding of the company's core products and its significant advantages in its industry.

Shengyi Technology specializes in the design, production and sale of copper clad laminates, bonding sheets and printed circuit boards, covering single and double-sided circuit boards and high multi-layer circuit boards. As a solution to the functional requirements of the terminal, Shengyi Technology always adheres to the production concept of high standard, high quality, high performance and high reliability. independent manufacturing includes copper clad laminate, semi-cured sheet, insulating laminate, metal-based copper-clad laminate, resin-coated copper foil, film and other high-end electronic materials.

These products are widely used in high computing power, AI servers, 5G antennas, new generation communication base stations, mainframe computers, high-end servers, aerospace industry, chip packaging, automotive electronics, smart home, industrial control medical equipment, home appliances, consumer terminals and a variety of high-end electronic products, to meet the growing demand for high-performance electronic materials in the market.

Shengyi Technology is the second largest rigid copper clad laminate manufacturer in the world, with a global market share of more than 10%. With its leading technical level and excellent quality in the field of PCB products, it has won wide recognition from well-known customers at home and abroad, and the brand has a significant influence. It is worth mentioning that Shengyi Technology is also the core supplier of Huawei.

Recently, copper prices continue to rise, copper clad laminate as an important part of the industrial chain has attracted much attention, copper clad laminate manufacturers issued a price increase letter. Shengyi Technology said that the current price increase in the copper clad laminate market has long been foreseen by Shengyi Technology. At the end of 2023, the production capacity of Shengyi Technology is close to full capacity, so we begin to think deeply about the changes in market demand. From our perspective, the current market demand is mainly reflected in three aspects.SingledeckblackjackFirst, the expectation of price increase caused dealers to start hoarding, further aggravating the gap between supply and demand.SingledeckblackjackSecond, it is expected to replenish inventory, because overseas consumer electronics inventory is consumed too much and needs to be replenished; third, the new demand, especially the demand for AI servers, is particularly significant from the April data. However, the main reason for the price rise in the current market is the rise in the price of raw materials, especially the rising prices of fiberglass cloth and copper, coupled with the growth in demand for AI servers, which jointly promote the rise in the price of copper clad laminate. But it is worth noting that this price increase is not comprehensive, but structural. Unlike the across-the-board price increases caused by supply falling short of demand in 2021, only high-end copper clad laminate products have the conditions for price increases.

As far as Shengyi Technology is concerned, we have expected the rise in copper prices this time, and have made corresponding preparations ahead of time, so the impact on us is relatively limited. Despite the recent rapid rise in copper prices, as long as the rise is not long-term, but limited to a month or two, then the impact on us will be manageable. On the question of whether the price increase can be transmitted downstream, we think it depends on the subdivision structure of the product. After the price increase of high-end copper clad laminate, it is usually acceptable to downstream customers; however, if the price of low-end copper clad laminate increases, it may face the problem of market acceptance. Therefore, we need to flexibly adjust the product structure and pricing strategy according to the market situation and customer demand.

In addition, Shengyi Technology responded to the company's current capacity, pointing out that the company remained at full capacity even at a time when total demand was relatively weak and the industry cycle was at a low ebb last year. Looking to the future, we will continue to expand production capacity, and it is expected that we will continue to expand production in the second half of the year, and we try not to do low-end plates, but more on high-end plates.

In addition, Shengyi Technology also responded to the company's current capacity, saying that the company reached full production at the end of last year when total demand was not particularly good and when the industry cycle was at rock bottom. We will continue to expand production capacity in the future, and it is expected that we will continue to expand production in the second half of the year, and we try not to do low-end plates, but more on high-end plates.