2009 HKPCA/IPC Show, Dr. Hayao Nakahara,
N.T. Information Ltd.
Foreword
Annual HKPCA/IPC Show (“HKPCA” hereinafter) was held at Shenzhen Exhibition Center for three days from December 2 to 4. The author attended the show for the first two days. As usually, there were nothing exciting about the technologies shown on the floor, but the “heat” generated by the people who attended the show was felt from the very first day. PCB industry in China is still very exciting today because it is a growing industry despite all barriers in China which tend to dampen continued investment. PCB Show in China today is like NEPCON West thirty years ago. According to the official announcement, there were more than 350 eager exhibitors with in excess of 1,000 booth plots, trying to capture every sales opportunity. Lack of eye-catching technologies was well compensated by the enthusiasm of the visitors, which made this show an outstanding one.
Unlike other Asian shows, CPCA in March, KPCA in April, JPCA in June and TPCA in October, HKPCA show had very busy traffic, indicating “recovery mode” of our industry, and a large number of visitors from Europe, N. America and Japan were visible seeking opportunities in China.
Although 90% of the PCB output in 2008 was made by foreign transplants, China was responsible for 34% of the world in 2008 and will continue to be the largest PCB producing country. Its future prospect is still very bright from growth point of view as new gigantic manufacturing plants have been built and are being built in the interior west of China. Overcapacity? Yes, there is no denial. There are already several makers which have PTH board production capacity exceeding 5 million sq.ft per month, some more than 7 million sq.ft. Regardless, there will be more capacity added. In China, big gets bigger and bigger.
Recovery Mode
We all noticed that the world economy started to recover from one of the worst recessions in recent years from the middle of Q3. PCB industry is no exception. Some PCB makers felt recovery as early as in July. The world PCB output will end up with minus 15-20% this year, but all PCB makers are breathing better although December shipment is expected to be weak, which is a seasonal phenomenon. For example, German drilling equipment maker, SCHMOL, exhibited a machine for the first time in one year. A representative told this author that the business was absolutely “horrible” for the first eight months, but the shipment of its drilling machines started to rise strongly in September and it looks promising in 2010, which made the firm bring a sample machine for display.
Many small equipment makers are likely to end the year with only one-third of revenues compared to the past peak shipment year. However, PCB industry players are very resilient!
Material makers predicted that they would end the year with about 80-85% of the revenue in 2008, hoping to do better in 2010.
Very few PCB makers which the author interviewed were expecting growth this year. Many of them are expecting to lose 10-15% of revenues this year. A few exceptions are those China-invested makers, which are growing by 20-30% with their newly installed plants hamming.
Mergers & Acquisitions and Expansions
Main topics on the show floor were those related with TTM-Meadville and Viasystems-Merix mergers. Why are they merging? The author would not like to speculate the reasons of these mergers in this report. He wants to say that only time will tell success or failure, hopefully success for the industry sake. Unimicron of Taiwan absorbed one of the largest IC substrate makers, Phoenix Precision Technology (PPT) on December 1. This will make Unimicron $2 billion maker in 2009 and will become the largest PCB maker in the world taking over Ibiden which held the position in the last five years. Unimicron also invested €3 million in ailing German automotive PCB maker, RUWEL. Its purpose is to gain foothold in automotive PCB market.
DDi seems to be closing in to buy Canadian Coretec (it is done deal). Although the rumor is not confirmed, Kingboard Chemical seems to have bought some shares of NB motherboard specialist, HannStar Board (listed at Hong Kong Stock Exchange). There were several acquisitions in Japan, minor in scale, (Meiko-JVC, Kyoden-Airex, etc). Samsung Electro-Mechanics “finally” bought Taiwan’s UNICAP in Kunshan, China. There will be more mergers and acquisitions in this coming year. Bankrupted Ya Hsin in Wuzhong (Suzhou) was bought by its former general manager with 1RMB assuming all the debts.
In the mean time, Meiko Electronics broke ground in Wuhan to build the third plant and at the same time, it is finishing the construction of its PCB plant in Vietnam. Ibiden’s plant construction in Malaysia is nearly finished. It intends to commence production some time late in 2010. Hitachi Chemical Singapore completed the construction of extended inner layer plant in Loyang district and is moving equipment from another plant in Bedok, the property of which will be returned to Singaporean government with 8 more year lease agreement remaining. Japanese are avoiding the risk of putting all the eggs in one basket (China).
Whenever he brings a subject of expansions and new plants, American and European industry friends of this author always mention “overcapacity” in China although they do not seem to concern themselves as much as they say “overcapacity”. Yes, there is definitely overcapacity in China and will be. However, work tends to coagulate to the PCB makers with vast amount of capacity, growing faster and leaving dusts behind. Big gets bigger and faster here in China.
Unless equipment and material makers can sell into China market which absorbs 50% of all equipment and materials produced in the world, their survival rate is uncertain. After all, PCB industry exists because PCB makers exist and China has it all.
Among high layer count MLB makers, Viasystems was absent this year. In China, MLBs up to 60 layers and above are fabricated today. Some of them have complex structures such as mixed materials – Teflon and FR-4. Aspect Ratio seems to go beyond 20:1. The technologies of high layer count multilayer boards in China are almost at par with those seen in the western world. 50-60 layer boards are fabricated in large quantity by several makers in China, mainly for telecomm applications.
Most large makers are well known and probably, it is unnecessary for them to advertise in order to obtain new customers. But, they are the best indicators of technologies available because one cannot see the level of technologies practiced by looking at equipment and materials.
After viewing five PCB trade shows in one year, all in Asia, the author was not as thrilled as he should be. However, he was amazed by the eagerness of Chinese visitors keenly interested in every aspect of PCB manufacture. Their excitement was similar to that felt during NEPCON West during 1980’s. While the PCB industry in the western world is considered mature and shows no growth, China’s PCB industry is still in the “wild west”.
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