Estimated reading time: 5 minutes

EPTE Newsletter from Japan - After Motorola Shock

Motorola, the second largest cellular phone manufacturer, blamed shrinking profits from its cellular phone division for another bad quarter. Business has been off since the second half of 2006, and continued through this year, prompting Motorola to significantly reduce its manufacturing of cellular phones. Motorola's finances were in the red during the first quarter and analysts predict they will not return to black this year.

The slowdown at Motorola has sent ripples throughout the electronics industry, especially in Asia.  Supply orders sent to EMS companies, PCB manufacturers, and flex circuit manufacturers from Motorola dropped off significantly in the first quarter; the adjustment then trickled down to printed and flexible circuit material suppliers as well as component vendors. Taiwanese flexible circuit manufacturers are also feeling the pinch.  February shipments fell over 50% from the previous month and things have not picked up since.  Very recently, Motorola communicated their surplus inventory levels for materials and components were worked down, and orders should increase significantly in the near future. Unfortunately, raw material vendors will not benefit for a few months until ordering cycles throughout the pipeline commence.

Primary and secondary vendors switched gears during the slow seasons; however, raw material vendors such as major copper laminate manufacturers of flexible circuits (mostly Japanese companies), are idle, waiting for a rebound from Motorola.  They are relatively big companies and cannot change business direction quickly.  The operation rates for manufacturing are still low and they are currently losing money. 

Fortunately, global demand for cellular phones continues to grow, and other major manufacturers have captured this business leaving Motorola licking its wounds.  Nokia maintains over 30% market share, and Samsung Electronics, Sony Erickson and LG Electronics are steadily increasing their shares. Samsung Electronics is now the second largest cellular phone manufacturer, replacing Motorola.  After a long slow season, business has increased over the last few weeks for rigid printed circuit board and flexible circuit board manufacturers in Korea.

EMS companies and circuit board vendors, mostly in Taiwan, chose not to sit idle waiting for business to rebound from its customers. They are more flexible and can change market strategies easier.  They have targeted other cell phone manufacturers, and now receive orders from Sony Erickson and Apple - a new face for cellular phone vendors.  These new outlets are not only in the cellular phone market, but also the other electronics such as game machines and MP3 products. The vendors have quickly recovered from their slump.

The PCB companies in Japan have posted mixed results in the last six months. Some of them are still waiting for a business recovery from their current customers; unfortunately, it is not clear when this will happen.  Other Japanese manufacturers are considering new applications with new technologies, and some have received orders; however, we can't predict when their bulbs will blossom.       

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

Headlines of the week

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

1.      Fuji Sankei Business (Industrial media in Japan) 9/24

Has reported that Acer in Taiwan and Lenovo in China have been escalating a fierce battle of PC business, especially in China and Europe. Currently, Acer has some advantages by strategic M&A plans.

2.      Toray (Major material supplier in Japan) 9/25

Has increased the vacuum deposition capacity for the film products in China to 1500 tons per year. Toray plans to install two more lines in the near future.

3.      Omron (Major component supplier in Japan) 9/25

Has developed the world thinnest connector series "XP2S" (0.5 mm thick) for the termination of the high-density flexible circuits.

4.      TDK (Major device manufacturer in Japan) 9/25

Has developed a new multi-layer board technology with embedded IC chips. The new technology reduce the board thickness to 300 micron for 4 layer circuits.

5.      Hitachi (Major electric and electronics company in Japan) 9/25

Will roll out the 60" size plasma TV with removable disc drive devices in middle November.

6.      Densan Shimpoh (Industrial media in Japan) 9/25

Reports new aggressive business plans of Toppan NEC, a major PWB manufacturer in Japan. It will expand the business in China and Philippines.

7.      Andes Denki (Equipment manufacturer in Japan) 9/26

Has co-developed a new bio-sensing system to detect flue virus of human being with Hirosaki University. The new system complete a test in 15 minutes.

8.      TDK (Major device manufacturer in Japan) 9/26

Has developed bendable RFID tag assuming passport type applications introducing 30micron thick semiconductor chips.

9.      Hitachi (Major electric and electronics company in Japan) 9/26

Has unveiled a prototype model of the thin 32" LCD TV (19 mm thick) planning to commercialize in 2009.

10.   Hitachi High Tech (Equipment vendor in Japan) 9/27

Has developed a new modular type mounting machine series with a 20% higher trough-put compared to the standard machines. The new machines are able to place 95,000 chip components per hour.

11.  Sharp (Major electronics company in Japan) 9/28

Has developed a new LCD device with the highest contrast (2500:1) for the automobile applications.

12.  Matsushita Electric Works (Major PWB material supplier in Japan) 9/29

Will commercialize the industry thinnest connector series (0.6 mm thick) for the terminations of the small pitch flexible circuits.

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

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. "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