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EPTE Newsletter: Recent Market Trends in Japanese PCBs

The Ministry of Economy, Trade, and Industry (METI) released Japan’s August production data. Let’s look at how Japan’s electronics industry did during the COVID-19 pandemic.

Shipments during the first half of the year did not follow any typical trends. Even though the pandemic was in full swing by mid-March, the first month of the year was uneventful. January’s revenue was off by 0.8% compared to the same month last year, but volume decreased by 14.0% comparing the same time period. Volume was down, but revenue is up. The average unit price increase was a glimmer of light for the industry.

The next couple of months were even better than January. Revenue jumped by 20% during February and March. The majority of the increase came from the buildup of rigid multilayer boards. The timing of this spike paralleled with the pandemic spike in China. An increase in smartphones and other hardware increased during the work from home transition.

The supply chain in China was in disarray, and alternative suppliers and manufacturers were sought for procurement of key components and printed circuits. Some business shifted to Japanese manufacturers because of their technical capabilities. Even though their prices were higher than their Chinese counterparts, Japanese manufacturers were still operating, and negotiating prices was not possible. Japanese manufacturers enjoyed an increase in business at their usual margins.

Things were good during the first half of the year. The supply chain in China was quickly brought back online, and Japanese manufacturing saw a significant drop in business during August. Historically, business does fall off during August and rebounds during September. I’m not sure what this year will look like.

The flexible circuits segment remains under pressure. Shipments during August declined by 34.6%, and revenue declined 36.7%. The majority of customers for Japanese flex circuit manufacturers are foreign mobile companies. They are now using other manufacturers from Taiwan and Korea. This trend will not change for Japanese vendors if there is no significant change in business circumstances.

Business trends from the module circuits segment are different depending on product types. Rigid module circuits are showing a small positive growth each month. Unfortunately, the market share for Japanese manufacturers is small in the global market. The market in Japan is not proportionate with the shipment of semiconductor substrates. The other module circuits that include tape circuits declined significantly during the first half of the year. This is probably attributed to spot demand from a specific application.

Overall, the market continues to decline for the Japanese printed circuit industry. I am optimistic that new ideas and manufacturing enhancements will elevate Japanese manufacturers and create new avenues of revenue streams.

Headlines

1. Fuji Research (market research firm in Japan) 10/22

Changed the forecast of the global power semiconductors in 2020. The forecast has declined to -8.5% from +3.9% because of the COVID-19 pandemic.

2. TSMC (semiconductor manufacturer in Taiwan) 10/23

Expects 30% growth in 2020, even though it has lost the business of Huawei. High-performance computing (HPC) will fill the loss of smartphones.

3. AIST (R&D organization in Japan) 10/26

Co-developed new photovoltaic cells based on crystal silicon with a thin electrode of titanium oxide. The new cells have a higher conversion rate than 20%.

4. Fujikura (flex circuit manufacturer in Japan) 10/27

Commercialized a new phased array antenna module (PAAM) with self-developed RF IC for millimeter-wave bands for 5G telecommunication systems.

5. Renesas Electronics (semiconductor manufacturer in Japan) 10/30

Started the volume production of new microprocessor “RA6T1” for motor control produced by 40-nm technology (package: LQFP 10 x 10 mm, 64 pins).

6. Yano Research (research firm in Japan) 10/27

Released a new market research report about ADAS of the automobiles. The global market will be double over the next five years to 2.46 trillion yen.

7. TIT (technical college in Japan) 10/29

Has been developing new wireless 5G telecommunication systems with a millimeter-wave band to apply to small satellites.

8. Sanken Electric (device manufacturer in Japan) 10/28

Will co-develop high-performance intelligent power modules (IPM) with ST Microelectronics for industrial and automobile applications.

9. Toshiba Device and Storage (device manufacturer in Japan) 10/29

Rolled out a new 3.5” HDD “MG08-D Series” (capacities: 4, 6, and 8 terabytes; data transferring: 256 MB/sec).

10. Torex Semiconductor (device manufacturer in Japan) 10/30

Commercialized two new small-size regulator ICs for all solid-state lithium ion batteries (package sizes: 0.9 x 1.2 x 0.4 mm and 1.5 x 1.8 x 0.33 mm).

10. Murata (device manufacturer in Japan) 10/30

Updated the financial forecast for March 2021. The revenue increased by 60 billion yen to 1.49 trillion yen. Net profit increased by 39 billion yen to 189 billion yen. COVID-19 will positively affect the business.

Dominique K. Numakura is the managing director of DKN Research LLC. Contact haverhill@dknreseach.com for further information and news.