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EPTE Newsletter from Japan--How Long Will the Slump Continue?

The slow down felt within the consumer goods market has been a concern among economic forecasters since last autumn. Triggered by the declining real estate market and the sub-prime mortgage debacle in the U.S., the general consensus now points toward a long economic slump.

January is a historically slow month for Japanese electronics manufacturers due in part to a lull after a busy fourth quarter that includes the Christmas buying frenzy and New Year vacations. Other countries, with a long Luna New Year vacation, such as Korea, Taiwan and China, also post slow sales during February. The industry expects this slow down every January and February; however, sales are much lower than expected compared month over month from the previous year.

A special announcement last week from Japan Electronics & Information Technology Industries Association (JEITA) relayed information about January shipments and speculated on future market trends. Electronic component shipments for the month were lower than the same month a year ago, breaking a four year winning streak by posting the first month of negative growth. Sales for major component suppliers have slowed down for the past three months; however, JEITA expects a market rebound during second or third quarter.

The slowdown within the Japanese PWB industry began during December 2007--an oddity since the slow season doesn't start until January. Most of the product category lines for rigid boards and flexible circuits suffered consecutive sales declines during December and January, having a domino effect on industry material suppliers whose businesses went south for the two same months.

The Taiwanese PWB industry is feeling the pinch more than their Japanese counterparts, having suffered its largest monthly drop in shipments during February. Industry experts were predicting a slow down in shipments after the Chinese New Year vacations; unfortunately, volume shipped to its lowest level in two years (the only exception occurred during February 2007 and is blamed on the Motorola Shock). The outlook seams bleak for flex circuit manufacturers. Revenues posted for 2007 were 30% below the previous year and 2008 forecasts predict further reductions. Shipments for February were at their lowest levels in three years since a peak during December 2006, and represents only one third of that month's volume. Manufacturers remain cautiously optimistic for their future, hoping for a strong rebound during the second quarter.

The Chinese PWB industry expects a decline from imports and exports during January, and this year was no exception. What has everyone nervous is the amount of the decline and the growth rate compared to the same month a year ago. Monthly PWB imports and exports grew about 20% comparing the same month year over year; unfortunately, the January 2008 volume number came in at a record low of about 10%. Upper management within the Chinese PWB industry view this as a signal from their customers that inventory consolidations have begun for the New Year.

I cannot comment on the Korean market since numerical data has not been released, but my Korean business associates see similar market trends. I plan on attending the KPSA Show 2008 in Seoul next week and will share with you my observations.

The Asian PWB and electronic component industries are unquestionably experiencing a slow down. Is it the beginning, middle or end of the slump? I have listened to market analysts predict "at least one quarter" or "at least in this year"... they really don't know. It may never bloom again for those companies waiting for something to happen. Now is not the time to let the grass grow under your feet.

Dominique K. NumakuraDKN Research, http://www.dknresearch.com/

Headlines of the Week

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

1. Ube Industries (Major polyimide film supplier in Japan) 4/7Has transferred its whole business of the adhesiveless flexible copper laminate to Ube Nitto Kasei, one of the subsidiaries.

2. Silver Seiko (Equipment supplier in Japan) 4/7Has started flexible circuit business targeting low cost market of LCD displays.

3. Airex (Major circuit board manufacturer in Japan) 4/6Has sold the whole printed circuit business to Kyoden, a major printed circuit board supplier in Japan.

4. NEC Tokin (Major device manufacturer in Japan) 4/7Will build a new facility as the R&D and manufacturing center to strengthen the business of laminate batteries. It will consolidate Li Ion battery business.

5. Aicel (Equipment supplier in Japan) 4/7Will roll out a new sheet punching machine for the optical films of FPD devices. The machine is capable to keep 10 micron accuracies.

6. DNP (Major circuit board manufacturer in Japan) 4/8Will found a new JV in Hong Kong with UniMicron, a major substrate manufacturer in Taiwan for the production of the high density circuit utilizing B2it technology. Actual production will be done at Kunsan Plant of UniMicron.

7. NEC Electronics (Major component supplier in Japan) 4/8Has roll out 5 new models for small size photo couplers. The new devices reduce the SMT spaces to half.

8. ShinEtsu Chemical (Major chemical company in Japan) 4/10Has made a prototype circuit for the manufacturing process of the next generation MRAM memories.

9. Brother Industries (Major electronics companies in Japan) 4/10Has developed a tiny projector for the scanning retina display using MEMS technology. The devices can be mounted on the frames of the glasses.

10. Harima Kasei (Supplier of soldering materials in Japan) 4/10Has rolled out a new VOC-free and lead-free solder paste.

11. Hitachi Cable (Major cable and tape circuit supplier in Japan) 4/10Will increase the manufacturing capabilities of the micro BGA substrates utilizing the facilities of Casio Micronics.

12. Nichicon (Major component supplier in Japan) 4/11Has developed new thin chip type tantalum capacitors, "F95 Series". Size: 2.2 x 1.25 x 0.65 mm for 1 to 22 micro Farad range.

13. TDK (Major device supplier in Japan) 4/11Has developed new thin power supply module series for the thin flat TVs. The total thickness can be thinner than 20 mm including circuit boards with newly developed small devices.

Interesting Literature Concerning the Packaging Industry

Articles from DKN Research

1. "Screen Printing for High-Density Flexible Electronics," Robert Turunen, Masafumi Nakayama and Dominique Numakura, Printed Circuit FAB, October, 2007, http://pcdandm.com/cms/content/view/3846/95/.

2. ??????????????????*???????????????????????????????? 2007?10??? ??????

"Total Process Solution for the High-Density Multi-layer Flexible Printable Electronic Circuits," (Japanese only) Dominique Numakura, Denshi Zairyo, October, 2007.

3.New ????.??.???(RTR)??????????????????????????2008?3??????

"Roll to Roll Production of Flexible Circuits, Possibilities and Issues," Dominique Numakura, Joho Kiko, Tokyo, March 2008. (Japanese only)

4. "Coombs' Printed Circuits Handbook, 6th Edition, Part 15-Flexible Circuits," Dominique Numakura, McGraw Hill, New York, September, 2007.

5. New "Screen Printing Process for High Density Flexible Electronics," Robert Turunen, Dominique Numakura, Masafumi Nakayama and Hisayuki Kawasaki, IPC Printed Circuit Expo/APEX and the Designers Summit, April 2008.

6. New ???????????????????????????????????????????????????????????????2008?2?

7. "Global Market of Flexible Circuits, Market Trends and Technical Design Trends by Applications," Dominique Numakura, Electronic Journal, February, 2008. (English power point file is available.)

From the Major Industry Magazines

1. "A Different Look at PCB Manufacture in China," Chris Jorgensen, CircuiTree, March 2008.

2. "ESD Control for Class: ESDS Devices," Roger Peirce, Circuits Assembly, April 2008.

3. "Flexible Circuits Market: Surging Ahead," Ashwin T. Ananthakrishnan, SMT, March, 2008

4. "SIPs Give More to Moore," W. R. Bottoms, Printed Circuit Design & FAB, April, 2008.

5. "IC Package Drives Contact Technology Innovation," Ila Pal, Advanced Packaging, March, 2008.

7. "Microflex Circuit Applications for Medical Devices," Luke Volpe, MD & DI Magazine, January 2008.