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EPTE Newsletter from Japan - PCB Production in January 2007

Topics of the Week

PCB Production in January 2007

January's printed circuit board (PCB) production data was released by The Japanese Ministry of Trade and Industry (METI) last week.  Listed below is a synopsis of the report:

January PCB revenue posted a 5.1% decline (79.614 billion yens) compared to the previous month.  January production typically experiences a seasonal decline after the Christmas season; however, comparing the same month to last year, the industry showed a strong growth of 12.5%.  On the other hand, January PCB production volume was down 3.4% at 1.94 million square meters compared to December, and a decline of 0.8% compared to January 2006.  Revenues posted double digit growth, while volume production showed almost not growth.  Japanese PCB manufacturers have shifted output toward higher margin segments to help survive in a competitive arena while realizing higher profits.

The rigid PCB segment is on par and trending as usual for this time of year. Volume for the single side rigid board segment declined 8.0%, and revenue also dipped by 2.9% compared to the same month in 2006. Production volumes for other circuit categories show no significant changes, and revenue is quite minor compared to other Japanese PCB segments. The double sided boards (+2.8%) and 4 layer boards (1.9%) posted small gains compared to the previous year, while  6 and 8 layer boards (+26.1%) and the other rigid boards made by the build-up process (+18.2%) enjoyed double digits growth compared to the same month in 2006. 

The flexible circuit manufacturers show similar trends. January's total revenue grew 0.1%, and total volume declined 1.5% compared to January 2006.  This shows no significant changes from last year; however, once you crunch the data by product category there is remarkable differences: revenues for the single sided flexible circuits declined by 5.5% and volume declined by 13.7%.  The single sided flexible circuits segment is in a downturn because Japanese manufacturers are moving to high margin products such as fine lines and ultra-thin circuits. Double sided flexible circuits and multi-layer flexible circuits have nominal growths compared to last year (4.1% growth by revenue and 9.5% growth by volume). Since 2004, the flexible circuit industry in Japan has struggled through long slow seasons, and has declined each year over the past two years.  Posting a flat growth could be a welcomed site for the flexible circuit industry and could be a positive sign of things to come after a two year slide.

The module circuits segment is trending differently compared to the other circuit categories. Total revenue in January declined by 7.9% and volume declined 5.3% from December, and could be blamed on seasonal fluctuation. Total revenue grew by 23.1% and volume grew 6.3% compared to the same month last year; however, there are significant differences between the rigid module segment and other modules.  Revenue for the rigid module circuits grew by a whopping 50.7%, and 32.4% volume.  The steady growth signifies a consistent growth trend.  Revenue for other module circuits, mainly the flexible tape circuits, declined by 7.0%, and volume increased by 1.4% compared to the same month last year.  Unfortunately, volume is flat but market prices have substantially decreased.  Slowing demand and lower prices for flat panel displays could be one reason for this problem.

Overall, performance in the New Year for the Japanese PCB industry was so-so. Concerns within the management teams for Japanese PCB manufacturers are unclear at this time, and some industry analysts expect the effects of Microsoft's new operating system "VISTA" to grab hold on February's numbers.  However, many people in Japan are not optimistic about the contributions of VISTA.  They are also concerned that there is no major sporting sport event scheduled for this year such as the Olympics, or World Cup Soccer.  FPD and PCB manufacturers are considering conservative projections this year.

Dominique Numakura, DKN Research (dnumakura@dknresearch.com)

Headlines of the week

1.      Sumitomo Bakelite (Major PWB material supplier in Japan) 3/19

Plans to expand QOL business (Quality of Life Business) from this year targeting 35 million income by 2009.

2.      Fuji Keizai (Market research firm in Japan) 3/19

Has released a market research report regarding to the fuel cell market. Fuji expects over 10 billion market by 2020.

3.      Fujitsu (Major electronics company in Japan) 3/19

Will start the recycle business of the IT products such as personal computers and servers by global level from April 2007.

4.      YAMAHA (Major instrument manufacturer in Japan) 3/20

Will sell its subsidiaries, Yamaha Metanics and Yamaha Olin Metals by the end of September because of shrinking demands of lead frame business.

5.      IDC Japan (Market research firm in Japan) 3/20

Reported that 2006 PC shipment in Japan declined 2.3% to 14.28 million units. Home customers hesitated to buy new PC before VISTA release.

6.      Fujitsu (Major electronics company in Japan) 3/20

Has rolled out a new 2.5" disc drive for automobile and industrial applications. The new drive is reliable against mechanical shocks and vibrations under broad temperature ranges. (-30 degree C to +85 dereeC)

7.      Rohm (Major component supplier in Japan) 3/20

Has commercialized 0603 size Schottky/Zener/PIN diodes for the portable electronic products.

8.      Hitachi (Major electronics company in Japan) 3/20

Has introduced the removable hard disc drive "XR01Series " for the new flat panel TVs.  (50" PDP TV and 37" LCD TV)

9.      NEC LCD Technology (Major LCD supplier in Japan) 3/22

Has started the supple supply of the new bright LCD panels. The new panel works under the sunshine.

10.  Dai-Nippon Printing (Major printing company in Japan) 3/22

Has developed a new barrier film for the flexible organic EL display panels.

11.  Hitachi GST (Major disc drive manufacturer) 3/23

Has decided to close the manufacturing plant in Mexico by 2008. The production will be transferred to China plants.

12.  Citizen Watch (Major watch and component supplier in Japan) 3/23

Will close the non-profitable component business in 2007 including small size LCD, camera modules for cellular phones and floppy disc drivers. 

Interesting literatures about the packaging industry

Articles of DKN Research

1.  "2006 Global Material Projection for Flex Circuit" DKN Research, October, 2006. http://www.dknresearch.com/Products.html

2. "Introduction for the Printed Circuit Boards of Car Electronics, Flexible Circuits", (Japanese only), Dominique Numakura, Nikkan Kogyo Shinbun, June, 2006, 2400 yens.

3. "The latest semiconductor package, Part XXI, Teardown Analysis of FDD, CD Drive", Dominique Numakura, Electronics Packaging Technology, January, 2007 

4. "Five Year Projection of the Global Flexible Circuit Market" Robert Turunen, Dominique Numakura and James J. Hickman, The Board Authority, Volume 7, August, 2006

5. "Technical Trends and Market Projection of the Materials for the Flexible Circuits", (Japanese only) Dominique Numakura, Denshi Zairyo, October, 2006

6. "Leading Edge Material and Application of Polyimide (Materials for the Advance Flexible Circuits)", Dominique Numakura, CMC publication, August, 2006

7. "Business Trends and Technology Trends of the HDI Flexible Circuits -

Roadmap for the Ultra High-Density Advanced Flexible Circuits", Dominique Numakura, KPCA, October 31, 2006

From the Major Industry Magazines

1. "Flex-Based Interconnection Structures for High-Speed Applications", Joseph Fjelstad, CircuiTree, February, 2007.

2. "Organic and Printed Electronics: The Next Big Things?", Daniel Gamota and Jie Zhang, Circuits Assembly, February, 2007.

3. "First Article Inspection: Understanding the Problems", Greg Ross, SMT, February, 2007

4. "The PCB Design Outsource Proposition. Is outsourcing the right solution for your company?", Joseph Zaccari, Printed Circuit Design & Manufacturing, February, 2007.

5. "Fluxless Wafer Bumping by Electron Attachment", Christine Dong, Richard Patrick, Eugene Kawacki and Gregory Arslanian, Advanced Packaging, January/February, 2007

6. "From Chips to Systems via Packaging - A Comparison of IBM's Mainframe Servers", Hubert Harrer, George A. Katopis and Wiren Becker, IEEE Circuits and Systems Magazine, 4th Quarter, 2006

7. "Under the Hood-Latest DESIGN GEMS Unearthed",  presented by EE Times and techonline, December 2006