The NTI $100 Million Club Print E-mail
Written by Dr. Hayao Nakahara   
Monday, 01 September 2008 00:00

Chinese

The record shows long-term growth is best achieved by continued aggressive investment.

Download a PDF of Table 3, which lists the 2007 NTI 100 Top PCB Makers.

Market research is something like playing poker with wild cards: You know the unexpected is coming, but you never know when or where. To put it another way, if it's not one anomaly, it's another.

The research for the latest NTI 100 (actually, 98 fabricators made this year’s list) began in the third quarter of 2007. Many PCB fabricators were helpful in providing accurate data, but others did not respond to the requests for information. Therefore, some amount of deduction was unavoidable in compiling this market overview and company-specific information. That’s wild card No. 1.

Then there’s the twist of the flexible printed circuit players. It is becoming very difficult, if not impossible, to correctly assess the revenues of FPC makers because so many prominent fabricators are now engaged largely in FPC “Jisso” activities or assembly. Depending on the assembly complexity, the bare board portion of the total value ranges from 30% to 85% and there is no average figure that can be applied. Therefore, this year, the author incorporated the total revenue – including assembled FPC – for all FPC makers. This does distort the entire revenue picture. However, the intent of this work is not to give an exact revenues review for all top fabricators, that should be considered when reviewing the PCB fabricator rankings (Table 1).

Table 1

Volatile exchange rates make it difficult to rank international PCB fabricators accurately. Non-US fabricators that have facilities overseas account for that output in local currencies and then convert the value into US dollars. The author then converts the consolidated output data into US consolidated output data into an average exchange rate of US dollars. When the gap is only a few million dollars between two closely contested fabricators, this procedure can place one company over another simply based on currency exchange. Therefore, a certain number of errors are unavoidable.

However, the Top 98 reveals a very interesting trend. The author has highlighted only certain points of interest, the final judgment is left to the readers’ imagination.

Monthly exchange rates of major PCB-producing countries were tracked throughout the last year, then each nation’s totals were divided by 12 to determine the “average” exchange rates. Those values were used in the revenue calculations.

The world exchange rates have changed drastically since the beginning of 2007 due to the weakening US dollar. The fall has been caused by many factors, including sub-prime mortgage problems and rising inflation. If the current exchange rates persist, the 2008 NTI list will change drastically, based simply on the currency exchange. It seems evident that some of the Japanese fabricators will have revenue exceeding $2 billion based on exchange rates combined with organic growth. We shall see, one year from today, what the extended impact of the devaluation of the US dollar has on the positions of PCB fabricators in a global economy.

Several fabricators that were previously ranked failed to make the 2007 cut. Some were ranked inadvertently due to the author’s errors. Daisho-Microline is one such fabricator; Marua Manufacturing of Japan is another. Innovex’s revenues fell to about $80 million after its North America plants were shuttered and production moved to Thailand. Casio Micronics also ended with about $80 million. Its flex business was recently purchased by Hitachi Cable. Aspocomp nosedived–it sold its plant in China and property in Chennai, India, (and the right to build a PWB plant) to Hong Kong’s Meadville Technology Group in a complicated deal. South Korean flex maker Sanyang Electro-Mechanics’ revenue dropped 59% to $44 million.

In their place are several new members. Some fabricators should have already made the list, but the author missed them. DAP of South Korea and Brain Power of Taiwan (its manufacturing plants are only in China) are among those in this category. Legitimate new members of the over $100 million club are Sun Wei Circuit Industry of Taiwan (with plants only in China). Sun Wei Circuits is probably one of the largest makers of silver-through-hole boards. Also, Jiangsu Suhang Electronics and Shennan Circuits of China had sales over $100 million in 2007.

Regional Breakdown

Of the 98 fabricators with revenue of $100 million or more in 2007, 31 are from Japan, 27 are from Taiwan, 10 are from the US and nine are from South Korea (Table 2). This reflects each fabricator’s global output, although some companies may not be identified with specific nationalities. Again, the readers are the final judges.

Table 2

Of the 98 fabricators, 82 are Asian companies. It is no coincidence to consider that of the $51 billion in PCBs produced in 2007, 83.7% were made in Asia.

Another interesting observation is that 32% were made by Japanese manufacturers either in Japan or overseas. Likewise, 25% were made by Taiwanese, 13% by US-based fabricators and 11% by South Koreans. These percentages are almost identical to the percentage of entries shown in Table 2 (in blue). Figure 1 shows the distribution.

Fig. 1

Although North America’s “domestic” production was only $4.45 billion (8.7%), North American-based companies produced about $2.23 billion worth of PWBs overseas.

The Great 98

Ibiden has been on the top spot for the last three years and is likely to maintain its position for the foreseeable future. It is now building a microvia board plant in Penang, Malaysia, with a total investment of $350 million (the Phase I investment is about $200 million). It expanded chip substrate capacity in the Philippines and started an IC substrate plant in Japan that required $400 million to build. When all these capacities start to contribute, the target of $2.5 billion will be attainable in a few years.

The most likely contender for Ibiden’s throne is Unimicron. It is building an IC substrate plant and a joint-venture B2it plant, both in Suzhou, with Japan’s Dainippon Printing, Unimicron continues to expand capacity in Taiwan as well, and it is determined to build new plants in Vietnam. Unimicron made 230 million pieces of “engine boards” for cell phone handsets in 2007 and is aiming at 300 million in 2008.

Today, over 60% of Nippon Mektron’s output comes from overseas operations. (Its overseas subsidiaries are named Mektec.) Its total bare board output is estimated at about $1.3 billion. Nippon Mektron is the king of flex and is one of the few large flex makers to remain profitable. It has four plants in China, two in Thailand, two in Taiwan and three in Europe, in addition to four in Japan.

Samsung Electro-Mechanics, known as SEMCO, is the largest fabricator in South Korea. Its largest business is IC substrate with total substrate revenue of $800 million. Its big challenge is how to serve its more-or-less parent, Samsung Electronics, which is expanding abroad and claiming to purchase PWBs from local sources. The Samsung Electronics Tiajing cell phone plant produces 75 million pieces per annum while its main plant in South Korea (Gumi) produces 80 million. SEMCO announced in February that it would build the largest plant in Vietnam to date, capable of 100 million pieces of cell phones per annum. It will be interesting to see who supplies microvia boards to this operation.

Shinko Electric Industry is probably the second or third largest supplier of flip-chip substrates to Intel. Its components business had revenue of $1.5 billion in 2007, but some came from assembly operations (camera modules and IC chip assembly).

NTK is as well known for its spark plugs as it is for ceramic package substrates (NTK stands for Nippon Tokushu Togyo also known as Nippon Specialty Ceramic Co.). It has been collaborating with Nan Ya PCB on organic flip-chip package substrates for Intel. NTK’s revenue includes ceramic chip substrates. Nan Ya PCB concentrates on the IC substrate business in Taiwan and produces regular motherboards and less-challenging IC substrates at its Kunshan subsidiary.

Compeq and Wus encountered a bit of a problem in 2007 due to the poor performance of Motorola, their major customer. According to Compeq, operating in China gets tougher every year, and unlike other Taiwanese fabricators aiming at Vietnam for their next potential investments, Compeq believes Vietnam will eventually encounter the same problems faced in China today. Therefore, its plan may be to invest more in Taiwan.

Wus’ Kunshan plant is known as one of the most capable high layer-count MLB manufacturers in China. In 2007, its MLB (18 layers and above) production value was nearly $80 million, one of the highest volumes for this category in the world.

HannStar Board and Gold Circuit Electronics (GCE) are kings of notebook motherboards. The two makers produced 63 million NB motherboards, or over 60% of the worldwide volume of 108 million units. The companies are further expanding, adding microvia versions to cope with new demand. GCE Taiwan concentrates on high layer-count MLB production, and 85% percent of the MLBs it produces in Taiwan have layer counts of 10 or higher.

Foxconn Advanced Technology (FAT), a PCB-producing subsidiary of Foxconn (its Chinese name is Hon Hai) has six plants in China. It makes flex circuits, flex assemblies and rigid boards of all sorts. Since it does not reveal its finances, $550 million is a wild guess. In that sense, 3M’s figure is also a wild guess. (The author has made similar comments in the past, but 3M has never responded. Of course, it knows where it stands.) 3M shut down plants in Japan and Eau Claire, WI.

Nitto Denko and Sumitomo Printed Circuit are also difficult to figure. The author believes the estimated figures in Table 3 are not far from the real numbers because they publish accurate data as “electronic components,” but do not breakout their flex portions.

More than half of Shirai Denshi’s revenue comes from sales through its Hong Kong office that sells products made in China (Techwise and Techwise-Shirai). Therefore, its total is not exactly produced internally; however, the author decided to honor its financial report. Naturally, there is a fair amount of double counting between Shirai Denshi and Techwise, a subsidiary of Kingboard Chemical. Techwise was originally built as a captive shop by Legend (now Lenovo), and was later taken over by Kingboard.

At one point, M-Flex depended on Motorola for 83% of its revenue. Now its dependence is less than half, and it has started to experience solid growth again. Its messy attempt to purchase MFS of Singapore is in the past.

Toppan-NEC ended production of regular MLBs at its Philippines plant, that now seems to be used as a back-end process facility for IC substrates. It is one of the world’s leading fabricators of high layer-count MLBs, as well as sophisticated IC substrates.

Sanmina-SCI shut down its plants in Phoenix, AZ, and Germany last year and its Costa Mesa, CA facility just recently. What was once the world’s largest fabricator now has only two PCB manufacturing plants in North America, one in both Owego, NY, and San Jose as well as plants in Kuching, Malaysia; Singapore; and Wuxi, China. The total revenue from these three overseas plants will exceed that of the North American plants in the future. The Kuching plant is going to be a central part of the Sanmina-SCI PCB division.

GMB (Global Brands Manufacture) PCB units consists of three separate entities: CMK-GBM, a 49% to 51% JV between CMK and GBM, which is a subsidiary of the shoe-making subcontractor; Pou Chen Group of Taiwan; GBM Chuanyi; and GBM Yuanmao. They are all located in China. The output is published in Taiwan and through TPCA, but the author has no idea what the reported revenue includes. GBM revenue was obtained through each operation directly.

Mitsubishi Gas Chemical’s PCB business consists of Japan Circuit Industry (JCI) and Tai Hong Circuit Industry in Taiwan, which has a single-sided board manufacturing plant in Dongguan, China. MGC is better known for its BT laminates than as a PCB manufacturer. (Recently, MGC increased production capacity of BT laminates to 1 million m2 per month in the northern part of Japan.)

Unitech of Taiwan expanded its business scope to solar panel manufacture. There will be many PCB manufacturers that will follow by expanding manufacturing into non-PCB related businesses. For example, Ibiden has been involved in the manufacturing of ceramic carbon filters for removing carbon particulates from diesel engine exhaust. This business has grown significantly in the past few years, from $250 million in 2003 to over $1 billion in 2007.

Kinsus Technology is a fast-growing IC substrate maker that began operations in 2001. Its first-year revenue was $3.5 million in 2001, but now it has grown to $400 million. Kinsus’s largest shareholder is Taiwan’s Asustek purchased land in Suzhou to build a plant to manufacture IC substrates, but final approval from the Chinese government has taken a long time.

Vertex decided to exit the PCB business in Taiwan. Its subsidiary in Suzhou, Global Flex, is listed on the Hong Kong exchange. Another Taiwan maker listed on the HKEX is notebook motherboard superstar HannStar Board. The Taiwanese government does not permit a Taiwan manufacturer to invest more than 40% of its capital into Chinese enterprises. Listing on the HKEX seems to be a way to get around this rule. There are at least a dozen medium-to-large scale Taiwanese fabricators that went out of business in the years after the IT bubble burst. Common to all of them is untimely overinvestment and lack of technologies.

Ruwel AG of Germany recently decided to give rein of its Grassau plant near Munich to a Russian copper foil and laminate maker, Lamitec-Dielectra, that owns 25% of Ruwel’s competitor, FUBA PCB. The takeover of the Grassau facility by Lamitec-Dielectra creates an interesting situation. Twenty-five percent of Ruwel was owned by Bear Stearns, but now that Bear Stearns is owned by JP Morgan, the internal rule must have changed. Its much-publicized Romania venture was halted soon after its debt was assumed by Bear Stearns and two other investment funds. Recently, the Ruwel Wetter plant was subject to a management buyout. Ruwel sells 15% of its production to Japanese electronics firms operating in Europe, prompting Ruwel to exhibit at the JPCA Show for the past several years.

Shye Feng is a little known Taiwanese fabricator with plants in Taiwan, China and Thailand (Apex Circuits). Until recently, the author did not know that Apex Circuit in Thailand is related with Shye Feng. The single-sided board business carries the name Shye Feng. Apex Circuits seems to be collaborating with Kyoden, a Japanese fabricator that recently purchased an ailing, yet once well-known, Japanese maker, Airex. Airex is a classic example of makers that depend too much on one big customer. In the case of Airex, the biggest customer is NEC with nearly 80% of Airex revenue coming from sales to NEC.

Kingboard Chemical (KB) is one of the largest laminate makers in the world today, together with Nan Ya Plastic, Isola and Matsushita Electric Works. It took over control of several PCB makers in China in the last several years. Kingboard has grown in leaps and bounds as a result. It controls Techwise (originally a captive shop built by Legend, now called Lenovo), Jiangmen Glory Faith, Top Faith, Elec & Eltek and a few other smaller fabrictors. KB seems to be trying to follow Nan Ya’s model, making materials and then manufacturing PCBs from these materials, creating a vertically integrated company. One big difference between KB and Nan Ya is the way they build manufacturing plants. KB’s PCB shops are acquired, while Nan Ya’s PCB shops are all built organically.

Meiko Electronics of Japan has been investing “Taiwan” style in Japan and China. It is building a $350 million complex west of Hanoi, Vietnam, to produce PCBs and assemblies. It has two gigantic plants in China, one in Guangzhou, the other in Wuhan. The current combined production capacity is about five million square feet per month. It recently bought the PCB operation of Japan Victor Corp. (JVC), known for its build-up microvia board technology – liquid dielectric resin is coated instead of using RCC or FR-4 for laser drilling. There is a reasonably good chance that Meiko will achieve $1 billion in revenue within a few years.

Last but not least, Meadville Technology group (MT) is one of the fastest-growing PCB fabricators in the world. Its PCB operation started modestly as OPC (Oriental Printed Circuit), which still exists in Hong Kong. In the late 1980s, it formed a JV with a local firm in Dongguan, Dongguan Shenyi Electronics (DSE), the majority shareholder is Meadville Technology. Then, it built Shanghai Meadville Electronics (SME), Shanghai Meadville Technology – Silicon Platform (SMT-SP), Dongguan Meadville Circuits (DMC) and finally Guangzhou Meadville Electronics (GME).

In early November 2007 MT made a complicated transaction in which it purchased a majority share (80%) of the newly formed JV with Aspocomp. By doing so, MT now owns the former ACP Electronics in Suzhou (originally a JV between Aspocomp and Chin Poon of Taiwan, which sold a minority share of 49% before MT’s purchase). The JV also owns a site in Chennai (which at this time is just land and a permit to build a PCB plant).

There was another JV, formed separately, which consists of Aspocomp Thailand and the only remaining plant of Aspocomp in Finland (Oulo). MT owns 20% of this JV and the balance is still owned by Aspocomp. MT is pursuing high layer-count MLB and huge volumes of microvia boards. MT has been collaborating with Tyco PCB, now a part of TTM Technologies, and Japan’s Toppan-NEC. It also formed a laminate JV with Hitachi Chemical in Guangzhou – it collaborated with Hitachi Chemical at its laminate plant in Hong Kong, Mica-Ava, in which Hitachi manufactures high Tg and halogen-free laminates. MT also has a reasonably good chance to achieve $1 billion in revenue within a few years.

Growth Secrets

Many of the top 100 fabricators from 1998 did not make it to 2007. (These companies will be covered in a separate report.) The examination indicates that growth came from two sources: acquisitions and internal growth. Common to both is “capital,” which means “capacity.” Without investment, growth is not possible. Many PCB fabricators with limited land and capacity try to grow by shifting to higher valued products. This strategy works for a while, maybe a few years, but sooner or later, runs out of gas.

The long-term success rate of those that grow organically is much better through acquisition. Examining the top seven fabricators that produced more than $1 billion worth of PCBs in 2007, only Unimicron grew by acquisition, and even that company did not do so exclusively, having spent millions of dollars on greenfield plants as well. Complaining about overcapacity in China is of no use, one cannot force companies to cut capacity. The only remedy is investment.

Many of China’s top 20 fabricators (based on local production only) have doubled in size, most of these companies are Taiwanese. These companies grew through investment. The small companies stay small and the big keep getting bigger. It’s the same theme, year after year. PCD&F

Dr. Hayao Nakahara is president of NT Information and a contributing editor to PCD&F. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Last Updated on Tuesday, 04 September 2012 19:37
 

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