Thank you for the write-up, very insightful! My understanding is that alot of PCB manufacturers are currently struggling due to over capacity, low PCB prices, and low demand. Have you heard this aswell? and when do you see a potential recovery in PCB prices/demand for PCBs? You suggest that further up the supply chain there could be some interesting companies in the "drill bits, solvents, resist ink" space - do you have any examples of publicly traded companies operating here? Also lastly how do you view PCB traders such as NCAB and ICAPE? (they operate in the low volume space) are OEMs struggling to access PCB manufacturers in the low volume space/has this been changing? and have you noticed whether the PCB manufacturing industry consolidating or not?
Thanks again and looking forward to hearing from you :)
I just did this post: Taiwan ETF Holdings (Early 2024)
A look at all 122 stock holdings of the iShares MSCI Taiwan ETF (NYSEARCA: EWT) + Franklin FTSE Taiwan ETF (NYSEARCA: FLTW) + their performance along with that of The Taiwan Fund, Inc (NYSE: TWN).
They hold many tech stock but 8213:TW was not one of ETF holdings (not sure about the closed end fund as they move in and out of stocks regularly - they also have good commentary in their factsheets covering the tech sector which might mention PCB mfg)
I won't call myself a PCB expert but I probably know more than an average person. Hopefully you will find my answers helpful.
1. Can you specify "a lot of PCB manufacturers are currently struggling"? Compeg and Tripod aren't. Also in terms of over capacity, it is probably helpful to home in on which type. There are many types: HDI, HLC, FPC, Rigid-Flex PCB...etc. To say PCBs have over capacity that's probably too broad.
I would however acknowledge that there is always cyclicality in PCB. Electronics are notorious for its bullwhip effect, so each electronic component will have its share of over/under supply. Techvest had a massive 2021, benefited from the Work-From-Home purchase boom. Clearly that is not a normal earning power yet in 2021 investors still perceive cyclicality as growth and bid up the stock price.
2. Japan has very high quality companies in such consumables. Union Tool(6278) for cutting tools, C.Uyemura(4966), JCU(4975) for solvents.
3. I doubt High-Mix Low-Volume (HMLV) works in PCB unless they can receive a steady inflow of prototyping. What usually happens is OEMs do pilot runs with HMLV guys but as soon as that ends they will run mass production elsewhere. Kintech 6210 made some money with the HMLV strategy but it didn't last. First Hi-tec 5439 also adopts HMLV but they have applications in high end offerings such as probe cards/load boards for wafers. I guess the key for NCAB or ICAPE is to see if they can come up with mission critical products and have strong tech.
4. Yes but in Taiwan the corporate culture is less cut throat and confrontational, maybe more like investing through private placements.
Thank you for the write-up, very insightful! My understanding is that alot of PCB manufacturers are currently struggling due to over capacity, low PCB prices, and low demand. Have you heard this aswell? and when do you see a potential recovery in PCB prices/demand for PCBs? You suggest that further up the supply chain there could be some interesting companies in the "drill bits, solvents, resist ink" space - do you have any examples of publicly traded companies operating here? Also lastly how do you view PCB traders such as NCAB and ICAPE? (they operate in the low volume space) are OEMs struggling to access PCB manufacturers in the low volume space/has this been changing? and have you noticed whether the PCB manufacturing industry consolidating or not?
Thanks again and looking forward to hearing from you :)
I just did this post: Taiwan ETF Holdings (Early 2024)
A look at all 122 stock holdings of the iShares MSCI Taiwan ETF (NYSEARCA: EWT) + Franklin FTSE Taiwan ETF (NYSEARCA: FLTW) + their performance along with that of The Taiwan Fund, Inc (NYSE: TWN).
https://emergingmarketskeptic.substack.com/p/taiwan-etf-holdings-early-2023
They hold many tech stock but 8213:TW was not one of ETF holdings (not sure about the closed end fund as they move in and out of stocks regularly - they also have good commentary in their factsheets covering the tech sector which might mention PCB mfg)
I did link to this post for my Monday Links collectionpost: https://emergingmarketskeptic.substack.com/p/emerging-markets-week-may-20-2024
well I wish I can see you on the pledge list.
I won't call myself a PCB expert but I probably know more than an average person. Hopefully you will find my answers helpful.
1. Can you specify "a lot of PCB manufacturers are currently struggling"? Compeg and Tripod aren't. Also in terms of over capacity, it is probably helpful to home in on which type. There are many types: HDI, HLC, FPC, Rigid-Flex PCB...etc. To say PCBs have over capacity that's probably too broad.
I would however acknowledge that there is always cyclicality in PCB. Electronics are notorious for its bullwhip effect, so each electronic component will have its share of over/under supply. Techvest had a massive 2021, benefited from the Work-From-Home purchase boom. Clearly that is not a normal earning power yet in 2021 investors still perceive cyclicality as growth and bid up the stock price.
2. Japan has very high quality companies in such consumables. Union Tool(6278) for cutting tools, C.Uyemura(4966), JCU(4975) for solvents.
3. I doubt High-Mix Low-Volume (HMLV) works in PCB unless they can receive a steady inflow of prototyping. What usually happens is OEMs do pilot runs with HMLV guys but as soon as that ends they will run mass production elsewhere. Kintech 6210 made some money with the HMLV strategy but it didn't last. First Hi-tec 5439 also adopts HMLV but they have applications in high end offerings such as probe cards/load boards for wafers. I guess the key for NCAB or ICAPE is to see if they can come up with mission critical products and have strong tech.
4. Yes but in Taiwan the corporate culture is less cut throat and confrontational, maybe more like investing through private placements.
Once again I really need that pledge.