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EPTE Newsletter from Japan - Japan PWB Production - First Half of 2007

EPTE Newsletter from DKN Research

#734, September 16, 2007

(http://www.dknresearch.com/)

Japan PWB Production - First Half of 2007

Japan's Ministry of Economy, Trade and Industry (METI) released production data from the Japanese PWB industry for the first half of 2007. Performance for the industry can be reviewed, and projections can be considered for the second half of 2007 using six months of real data.

It is difficult to summarize in a few words about trends within the entire PWB industry because nothing "eventful" stood out looking at the industry as a whole; however, new trends within certain segments are apparent. During the first quarter of the year, the whole industry mirrored its performance from the second half of 2006. Depending on the product category, several PWB products bucked this trend and posted growth during the second quarter of the year.

Total revenue from PWB production for the first half was 494.9 billion yen (about 4.3 billion U.S. dollars), an 8.6% growth compared to the same time-frame of the previous year. Total production volume dropped to 12.17 million square meters, a 1.4% decline from the same period of the previous year. This translates into making more money and producing less. During the first half of 2006, Japanese PWB industry managers moved to higher price products to elevate their margins, and that business plan continued for the second half of 2006. The trend continued during an early part of 2007, and manufacturer's enjoyed double digit revenue gains, while volume fell by more than 5%. Japanese manufacturers changed direction during the last few months. They are placing emphasis on volume and are willing to shrink their margins in an effort to hold market share.

Each product category has different marketing strategies associated with them. Flexible circuits could be very typical. Manufacturers changed over to double-sided and multi-layer from single-sided circuits because of their higher selling prices. Total volume for flexible circuits declined by 2.7%, but revenue increased 3.0% during the first half of 2007 compared to the first half of 2006. Volume and revenue for single-sided flexible circuits dropped 4.6% and 7.6% respectively compared to the same period of the previous year, and average selling prices continue to decrease. On the other hand, revenue from double-sided and multi-layer flexible circuits continue to increase (+10.1%) despite vacillating production volume (-1.3%). Average selling prices for double-sided and multi-layer circuits remained high during the first half of the year.

Results from the rigid board circuits segment are mixed. Six to eight layer boards (+22.6%) and build-up boards (+15.8%) posted double digit growth rates compared to the same periods in 2006, but four layer, ten layer and higher layer count boards suffered negative growth for both revenue and volume compared to the same period in the previous year. Revenue and growth from double-sided rigid boards remained flat. Nowadays, single-sided rigid boards are considered an insignificant product in the industry; however they still reported a 4.6% revenue growth while volume declined 8.8%.

Module circuits listed mixed performances; revenue and volume from rigid type module circuits increased by 40.2% and 32.3% respectively. A pessimistic concern is that both revenue and volume declined significantly during the last month of the first half. Other module circuits showed virtually no revenue growth (-0.1%), but volume spiked by 11.2%. The majority of circuits are earmarked for the driver module in flat panel displays. It is understandable that the whole market has grown rapidly, but prices are continuously declining.

After analyzing data from the first half of the year, I would like to predict possible market trends for the second half of 2007; however, it is not easy to forecast because of the new industry trends that appeared during the second quarter of the year. If the industry maintains the status quo from the second quarter, the whole year should enjoy significant revenue growth, even though production volume will be flat or decline. Unfortunately, the outlook for the consumer electronic market in Japan is very unclear; I cannot be optimistic right now.

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

Headlines of the week

(Please contact haverhill@dknreseach.comfor further information of the news.)

1. Toshiba (Major electronics company in Japan) 9/10

Has developed a new 1.8" hard disc with 120 GB memory capacity introducing DTR (Discrete Track Recording) technology that increase the capacity 50%.

2. AUO (Major display manufacturer in Taiwan) 9/10

Has stated the volume operation of the second LCD assembling plant in China. It will expand the capacity from half million units of large size LCD panels.

3. Matsushita Electric Works (Major PWB material supplier in Japan) 9/7

Will start the R&D project of new lighting technology using organic EL elements.

4. Kaneka (Major material supplier in Japan) 9/10

Has unveiled the new solar cell module (125 W) using a-Si/micro structure crystalline technology.

5. Kyocera (Major electronic material supplier in Japan) 9/10

Will start the new business of wafer bumping for the wafer level packaging.

6. Showa Denko (Major chemical company in Japan) 9/10

Has started the volume production of the new 1.89" hard disc substrates (80GB memory capacity) for new vertical recording system.

7. Dai Nippon Printing (Major printing company in Japan) 9/11

Has commercialized three types of new IC tags. They are "water proof PSA type", "in-molding type" and "metal label type".

8. Mitsui Metal Smelting (Major tape circuit supplier in Japan) 9/12

Have been planning several projects to improve the TAB and COF business. The first priority is to get the customer's authorizations for the new Omuta Plant.

9. JUKI (Major mounting machine supplier in Japan) 9/12

Will increase the manufacturing of the SMT mounting machines 50% to 300 units per month.

10. ShinEtsu Chemical (Major chemical company in Japan) 9/13

Has developed a new silicone base die bonding material for the mounting of LED chips on lead frames.

11. Ryukoku University (Japan) 9/12

Has developed a new artificial retina technology for blind people. A thin film photo-transistor array were built on a flexible plastic film substrate.

12. Mitsubishi Kagaku Polyester Film (Film supplier in Japan) 9/14

Will invest 7 billion yens to increase the manufacturing capacity of optical PET films 10,000 tons to 65,000 tons per year. The company plans further expansion.

13. Matsushita Electric Industry (Major electronics company in Japan) 9/14

Will double the production capacity of the second PDP plant in Amagasaki in October. Matsushita plans further expansion. The total capacity will be 10 million units per year in this year.

14. Pioneer (Major electronics company in Japan) 9/14

Will build a new PDP plant in Yamanashi for larger PDP TVs than 70" sizes.

15. Hirose (Major connector manufacturer in Japan) 9/14

Developed a new low height coaxial cable connector (0.94 mm high) for portable electronics applications.

16. Hirose (Major connector manufacturer in Japan) 9/14

Has unveiled the prototype models of the world thinnest 0.4 mm pitch connector for the termination of the high-density flexible circuits.

17. Murata (Major component supplier in Japan) 9/13

Has commercialized an ultra small size film capacitor (0.6 x 0.3 x 0.3 mm) for high-speed circuits of portable electronics.

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.????????????????????????????????????????????2006?6????2400?

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

3.New???????????No.30.????????????????????????2007?9??

"The latest electronics package, Part XXX, Cellular Phones", Dominique Numakura, Electronics Packaging Technology, September, 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.New?????????????????????? 2007?4??? ??????

"Flexible Circuit Materials", (Japanese only) Dominique Numakura, Denshi Zairyo, April, 2007

6.????????????????????????????

?--???????????????2006?8?

"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. "Using Physics of Failure to identify Root Cause of Printed Board Failure", Craig Hillman, CircuiTree, August, 2007.

2. "The Real Lesson of the Xbox Failures", Mike Buetow, Circuits Assembly, August, 2007.

3. "Printing Miniaturized Components", Clive Ashmore and Jeff Schake, SMT, August, 2007

4. "BGA Escape/Routing Patterns for Fine-Pitch Devices", Syed Wasif Ali, Printed Circuit Design & Manufacturing, July, 2007.

5. "Optimizing the Wire Bond Process", Paul Reid, Advanced Packaging, July, 2007

7. "Under the Hood, How'd They Do That?", presented by EE Times and Techonline, May 2007