EMS Firm Tsukiden Electronics Seeing More Business in Prototypes

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Tsukiden Electronics Philippines Inc., a subsidiary of Tsukiden Kogyo Co. Ltd of Japan, is an electronic manufacturing service (EMS) provider in the Philippines offering surface mount technology (SMT) up to final product assembly. The company caters to different markets, including medical, industrial, telecommunications, automotive, and consumer electronics products.

Tsukiden Electronics started its operations in the Philippines as a PCB assembly subcontractor in Cubao, Quezon City, in 1987. In 1993, the company set up a new business—Laguna Electronics Philippines Inc. (LEI)—at the Laguna Technopark in Binan, Laguna Province, to transfer its assembly business. "It was a good opportunity for us because we were a growing business," said Karen Flordiles, marketing supervisor, in an interview during the 14th Philippine Semiconductor and Electronics Convention and Exhibition (PSECE) held last week in Manila.

According to Flordiles, the Laguna operations is the biggest for Tsukiden. "Our PCB assembly business in Laguna is larger than our combined PCBA operations in Japan. We have actually five companies doing EMS in Japan, all located in the Fukushima Prefecture, but the Laguna operations is the biggest. Here, we have 27 lines and around 635-million-shot count/month mounting capability."

The name Laguna Electronics was eventually changed to Tsukiden Electronics Philippines Inc. to harmonize the company branding. "All of our affiliates in Japan, Hong Kong, China, as well as our affiliates here in the Philippines are called Tsukiden. So, in 2010, we decided to change the name of the company from Laguna Electronics to Tsukiden Electronics Philippines Inc. But it’s the same operation, and the same organization."

Flexibility is Key

Being in the Philippines for the past 30 years, Tsukiden has witnessed the development of the country’s electronics manufacturing industry. For Flordiles, the biggest change was the shifting requirements of customers.

"Before, we are focusing on large volumes. Now, we are receiving a lot of prototype orders," she said.

Flordiles noted that nowadays, flexibility is key to success in this industry. "If you are just catering to a large customer, and that customer isn’t flexible, it can drag you down."

With the emergence of many smaller customers doing prototypes, Tsukiden has set up a department to focus on these projects. "We are supporting high-mix low-volume products so that we can adjust. The larger companies now have to adapt to the changing manufacturing environment," Flordiles said.

One of the challenges she mentioned was the raw material supply chain in the country. "Almost all of materials are coming in from China," Flordiles noted. Ever since, the challenge has been the raw material supply chain, according to her.

"In the Philippines, you have to import. And the cost of logistics is quite expensive," she said.

How can that be addressed? Flordiles said through the help of the government. "They should invite more companies that are doing raw materials to invest in the Philippines. Also, the support for the electronics industry. I am not speaking for the whole electronics industry, but it seems like, for our segment, we are stand alone. It’s like we are receiving less exposure. Innovation should be fostered," she explained.

There are quite a lot of opportunities in the sector, Flordiles noted. One example is indirect materials.

"One of our common concerns in the industry is the costly indirect material needs. For instance, in one of our businesses, we are getting all the carton boxes and foams in China. Compared here, the prices there are three times lower. Even the logistics," she said. But if more investments will come in, this problem will eventually be addressed.

"That's a big opportunity. Because in our supply chain here, there are just a few material suppliers. In the electronics industry, there’s really a lot that can still be explored, so the government should really focus on this area."

Nevertheless, Flordiles said the electronics manufacturing industry in the country is booming.

"We are seeing a lot of new customers coming in—from the US, Japan—since we also offer turnkey business. Before, it's just consignment—the customers supply us with the components, and we do the board stuffing. Now, we are building our turnkey capability, because what customers are looking for now are one-stop shops. They are like, 'Here's my design and my BOM, build it for me.' We are building that capability so that we can capture more business," she said.