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EPTE Newsletter: 1H Performance of Global PCB Industry

The Japanese Ministry of Economy, Trading, and Industry (METI) has released PCB production data for June. Taiwan, Germany, North American, China, Korea, and other countries also released their data. Listed below is a recap of PCB production data for the first half of 2014.

June PCB shipments in Japan rebounded remarkably. Revenue came in at 40.67 billion yen, representing a 5.8% increase from the previous month, while volume reached 1.143 million square meters, representing a 4.8% increase from the previous month. Revenue and shipped volume posted a record month for 2014. However, when we drill down and compare these levels to the same month last year, volume grew 7.8%, but the revenue declined 1.9%. This tells us that volume targets were reached due to price cuts. These trends are typical with build-up type multilayer rigid boards; the core products produced from the Japanese PCB industry. Volume increased 8.6% from the same month of the previous year, but revenue has declined 4.1%. This reflects a 12% price drop during the last 12 months. The majority of the circuits are earmarked for cellular phones from domestic manufacturers, and PCB manufacturers are forced to cut prices to remain competitive in this limited market.

The gap between revenue and volume is larger when looking at double side and multilayer flexible circuits--another core product from the Japanese PCB industry. Volume increased 6.2%, but revenue dropped 27.4% when comparing month to month from the previous year. Selling prices dropped more than 33% in just a year. The primary customers for circuits are the foreign manufacturers of smart phones and tablet PCs. Japanese manufacturers are in the midst of a price war with their Taiwanese and Chinese competitors.

The module circuits or semiconductor substrates posted a growth in revenue and shipments over the last two months. Their primary customers are overseas packaging firms.

Reviewing the first half of 2014, the cumulated revenue total was just north of 230 billion yen, a 1.2% decline when comparing year over year. Unfortunately, there are no signs of a rebound in sight for the domestic electronics industry and we are not predicting a better year than 2013 (the worst year since 2008).

Taiwan reported NT $194 billion revenue for the first of the year. This is a 7.49% increase for the same period of time last year. Flex circuit manufacturers posted double-digit growth, coming in at almost 20%. Circuit manufacturers continue to receive increased orders during the second half of the year, so Taiwan should enjoy a double digit growth for 2014.

The electronics industry in North America rebounded during the second quarter; however, the cumulated PWB shipments for the first half of the year came in at a 0.3% decline comparing year over year. This year will probably remain flat.

The PCB industry in Germany posted a 3.2% growth rate for the first half of the year. The manufacturers received increased orders during the second quarter. Business is extremely choppy in Germany, so it is difficult to forecast sales; however, we should not expect a growth of more than 5% for the year.

Unfortunately, I do not have the numerical data from the Korean PCB industry. First, a recap: Samsung Electronics, the largest customer for the PCB industry in Korea, is facing stiff price competition from new Chinese manufacturers. The Galaxy line, the flagship product for the company, continues to lose world wide market share. When Samsung sneezes, the Korean circuit board manufacturers catch cold. The competition is forcing lower prices and volume shrinkage from the overseas production in Vietnam or China. We do not forecast positive growth performance from the domestic PCB market in Korea.

The global PCB industry will post double-digit gains for 2014. Taiwan and China will remain the top dogs in the global market. Other markets that include Japan, North America, Western Europe, and Korea will remain flat for the year.

Dominique K. Numakura, dnumakura@dknresearch.com DKN Research, www.dknresearchllc.com

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Headlines of the Week

(Please contact haverhill@dknreseach.com for further information on the news.)1. Sumitomo Electric (Major cable manufacturer in Japan) 8/7The manufacturer has developed an ultra-small wireless power supply module for wearable devices, replacing wired coils with flexible circuits. Thickness: 0.25 mm.2. Mitsubishi Heavy Industry (Major manufacturer in Japan) 8/11The manufacturer has begun a room-temperature wafer bonding service for 3D devices such as MEMS and biosensors. It covers various wafers other than silicon. 3. OKI Group (Major electronics company in Japan) 8/18The company has commercialized a new large scale screen mask washer capable up to 1,400 mm square for the manufacturing process of FPDs, touch screens, PWBs, etc.4. Fujitsu Group (Major electronics company in Japan) 8/18The company will begin operations at the Akisai Vegetable Plant, a 100% closed agriculture pilot plant in Aizuwakamatsu.5. KOMORI (Equipment manufacturer in Japan) 8/22The manufacturer has unveiled a new high-resolution gravure offset printer for the manufacturing process of touch panel screens. It is capable of 30 micron L/S and 5 micron mesh.6. Toshiba (Major electric & electronics company in Japan) 8/22The company has began the pilot plant operation of a binary generation system consisting of wind power, solar energy, and biomass. 7. ASE (Major packaging firm in Taiwan) 8/26The firm has agreed to co-develop new MEMS devices with Bosch using wafer level packaging. They have already developed the world's smallest acceleration sensor.8. Tohoku University (Japan) 8/26The university has co-developed a new all solid state lithium-sulfur secondary battery with Mitsubishi Gas Chemical. The battery will have extremely high energy density.9. Tokyo University (Japan) 8/27The university has developed a pure organic material that changes electric conductivity and magnetism at the same time. The material could generate new switching devices.10. TDK (Major device supplier in Japan) 8/26The supplier has developed a new reliable Piezo actuator with 75% electric/mechanical coupling coefficients for automobile applications. It works in high temperature up to 170°C.11. Mitsubishi Material (Major material supplier in Japan) 8/27The supplier has developed a new fluorine recycling process for electrolytic solutions of lithium ion batteries.

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