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EPTE Newsletter from Japan: New Champ of the PCB Industry

The global PCB industry continues to grow as business shifts from Western countries to Far Eastern countries. Japan was the leader in the industry for a number of years in terms of output value, but business continues to move to Taiwan. This business trend began a few years ago and helped Taiwan transition into a major player in the industry.

The Taiwan Printed Circuit Association (TPCA) has not released the 2013 manufacturers’ ranking for Taiwan, but I am sure the top spot will go to a newcomer this year. In 2012, Unimicron was ranked number one by producing an assortment of high-end products including IC substrates and rigid-flex. Revenue for Unimicron in 2013 declined by 10% compared with the previous year due to lackluster sales of personal computers. That leaves the door wide open for Zhen Ding Technology (ZDT) to grab the top spot. The company increased revenue in 2013 by more than 18% compared to the previous year. Annual revenue for 2013 could reachNT $65 billion (roughly US $2 billion). Not only will the company grab the Taiwanese title, but also the worldwide championship with this type of performance.

Zhen Ding Technology (ZDT) is not a well known company. It was founded in 2006 and formed to compliment a strategic manufacturing subsidiary of Hon Hai Precision, an EMS giant in Taiwan that supplies printed circuits for smart phones and tablet PCs. Its primary customer is Apple, so the major products manufactured are flex circuits. Prior to the formation of ZDT, Hon Hai purchased huge amount of flex circuits from Taiwanese and Japanese manufacturers. The demand was so high that ZDT built five large plants in China. Early on ZDT had growing pains due to low quality and low process yields. The company worked out the problems and improved quickly. Unsubstantiated data suggests the company hired over 100 Japanese engineers to support improvement projects. Currently, ZDT has extra capacities and now supplies circuits to other assembly companies.

ZDT became a publicly-traded company in December 2011. It made a huge splash in the industry by increasing monthly revenue so much that it caused the entire PCB industry in Taiwan to increase by more than 10%. In October 2012, ZDT shocked the industry again by switching their primary revenue producing category from general printed circuits to flexible circuits. And it worked. ZDT’s revenue was more than the total for all other manufacturers. This doubled the size of the flex circuit industry. For this reason, I expect ZDT will wear the crown as the new world champion of the global industry in 2013.

The short term business plan for ZDT is a success. Its aggressive and strategic business plan elevated it to the number-one position of the industry in just seven years. However, it is a marathon and not a sprint. Share holders have a short memory span and are interested in “what have you done for me lately.” Next year will be a pivotal on for ZDT. Let's see if they have any more surprises up their sleeves.

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. JAIST (Technical institute in Japan) 2/14The organization has developed the world's most heat resistant plastic with high transparency through a bio-chemical process. It withstands temperatures of up to 390 degrees C.2. USHIO (Major lighting equipment supplier in Japan) 2/17The supplier has developed the world's first parallel VUV light source unit for high-resolution direct imaging equipment used with flexible electronics.3. Yamagata University (Japan) 2/18The university has co-developed the world's first flexible organic semiconductor via a printing process with Ube Industries.4. NEC SCHOTT Components (Device manufacturer in Japan) 2/25The manufacturer has unveiled a new packaging technology, “GTAS,” for lithium ion batteries.5. Hitachi Chemical (Major electronics material supplier in Japan) 3/3The supplier has created a new joint venture for epoxy resin molding with Hitachi and Sumitomo Electric.6. Konica Minolta (Major optical device manufacturer in Japan) 3/4The manufacturer has developed a white organic EL lighting panel featuring the world's highest efficiency of 131 lm/W.7. Kyocera (Major electronics company in Japan) 3/3The company has commercialized a new 0.5-mm pitch ZIF FFC connector 6808 Series capable for use with power lines of high-density flex circuits.  8. AIST (R&D organization in Japan) 3/4The organization has co-developed a mono-layer carbon nanotube via a printing process. It could be valuable as an electrode material of various batteries.9. SPIL (Major packaging firm in Taiwan) 3/5 February shipments of NT $5.574 billion declined 7.5% from the previous month, but increased 31.1% from the same month of the previous year.

10. Mitsubishi Materials (Major material supplier in Japan) 3/10The supplier has developed the world's thinnest bendable thermistor sensor built on 50 micron thick polyimide film. Total thickness can be thinner than 70 microns.

11. MURATA (Major device manufacturer in Japan) 3/11The manufacturer has developed the world's first SMT-type ultrasound sensor for mobile applications. Size: 5.2 x 5.2 x 1.15 mm; sensitivity: 100dB.

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