The largest PCB fabricators in Japan and Taiwan stretched their leads in 2005.
It is the time of year that we compile the annual list of the world's largest PCB manufacturers. As noted in the past, with each year it gets harder to collect accurate data on bare board sales: As (many) fabricators of flexible circuits become more engaged in assembly, it gets increasingly difficult to separate the assembly sales from that of the bare boards. Therefore, it is unavoidable that the data collected, particularly from flex makers, are on occasion ambiguous.
There are quite a number of "duplications" in the data of the Taiwanese fabricators as they expand their production in China. A similar situation prevails for Japanese fabricators.
In 2005, there was too much ambiguity among PCB makers with annual revenues of less than $100 million. To prevent errors with the report these companies have not been included in the rankings. The decision was made that the 2005 rankings include only those firms with annual revenues of $100 million or more. There were 93 such PCB makers last year, up two from 2004. (With so much expansion in the Asia Pacific, however, this number may soon exceed 100, and next year's list may have to be changed to the NTI-100+.)
The author would like to thank all the PCB makers that generously contributed data to make this report possible. I take total responsibility for any errors.
Where necessary, revenues have been converted to U.S. dollars. The exchange rates used were:
Japan: 110 yen
Korea: 1024 won
China: 8.1 RMB
Taiwan: NT$32.5
Europe: 0.84 euros
Table 1 [PDF format] lists the PCB fabricators that generated revenues of $100 million or more in 2005. As mentioned, the assembly portion of flex circuits has been eliminated where possible, but the occasional ambiguity exists and interpretation of the data is left to the discretion of the reader.
Once again this year Japan had the largest number of entries, with 34, followed by Taiwan with 25. The U.S. came third with 13 entries over $100 million is revenues. Figures 1 and 2 show the number of entries and the total output by representative makers in each region.
FIGURE 1. Number of entries in NTI rankings, by region (% of list in parentheses).
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FIGURE 2. 2005 PCB revenues and share, by region ($M).
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It is often said that in many industries 20% of manufacturers supply 80% of the products. Is this applicable to the PCB industry? In 2005 a total of $42.1 billion worth of boards were produced worldwide. The top 93 fabricators built 70% of that total (Table 2 [PDF format]). Moreover, the top PCB-producing regions were responsible for 99% of the world's output.
The Top 93 fabricators (3.3% of estimated number of PCB manufacturers in the world) with revenues of $100 million or more produced a combined $29.6 billion worth of PCBs last year. That accounts for about 70% of the world output. There are approximately 50 fabricators with revenues between $50 million and $100 million and, according to this author's investigation, whose revenue adds up to about $3.6 billion. This makes the total output by the top 145 fabricators (4.8%) to be about $33.2 billion, or about 72% of the world output. If we extend the number of fabricators to include the top 300 - about 10% of the world's fabricators - the total revenue produced is estimated to reach more than 90%. Hence, as far as the PCB industry today is concerned, the 20/80 rule doesn't apply. Instead it is really the "10/90 rule," as in 10% of the manufacturers produce 90% of the value of the product.
There are quite a number of exceptions, particularly among Taiwanese fabricators, but by and large the trend is that the big makers get bigger ever year.
In 2000 when the IT bubble peaked, seven U.S.-based fabricators resided among the top 20, with Sanmina-SCI on top with $1.53 billion in revenue, followed by Viasystems Group with $1.25 billion. The other five companies were all in upper positions. With time, the situation has completely changed. Last year, only three U.S.-based makers were ranked in the top 20, all in lower positions. Viasystems now derives all its revenue from China. At Multek, 85% of its revenue comes from China and this percentage is increasing. Innovex has moved almost all its production to its subsidiaries in Thailand. Parlex has been bought and is no longer based in the U.S. Maybe we should no longer classify these fabricators as U.S. companies!
Financial Performance
Revenue is one thing, financial performance is another. Table 3 [PDF format] shows the financial performance of select NTI-listed fabricators based on their financial disclosures. This author selected these makers solely on the basis that the data were relatively easy to obtain.
After-tax (AT) profit depends on tax credits. For many Taiwanese makers, AT profit is larger than operating profits. This phenomenon is beyond the comprehension of this author.
Many PCB fabricators lament that profits are elusive, but as the table shows some companies make very respectable AT profits. Note that Ibiden, Nippon Mektron and Shinko Electric Industries are part of larger organizations and in each case the PCB segment of the business outperformed the company as a unit.
It is interesting to note that many privately owned Japanese makers show rather poor profit, if any. Since the tax rate is very high, above 40% normally, they often write off as much equipment as allowed by law and distribute a certain amount of profit to the employees under the label of "special bonuses." Income taxes paid by individuals are much lower than the corporate rate, resulting in savings. At the same time, these special bonuses boost employee moral. Hence, in the case of privately owned firms in Japan, a straightforward interpretation of financial reports can be misleading.
The Japanese continue to invest to the tune of $2.3 billion to $2.5 billion over the 2006-07 timeframe. More than 30 Taiwanese PCB fabricators are expanding in China despite fears of overcapacity. Their estimated total investment: more than $1 billion. These investments, coupled with their current lead, mean Japan and Taiwan are bound to hold a larger share of the top rankings in the years to come. A major driver for growth is microvia technologies in cellphone motherboards and package substrates, both of which are growing at rates of 50% more than that of PCBs as a whole. All the fastest-growing companies are involved in at least in one of these two areas, many in both.
Sales of Taiwanese exchange-listed fabricators grew 37% in Taiwan in the first six months of this year. May and June were a bit slow, but it appears business will get stronger in the second half. PCB demand is also strong in Japan, thanks to new cellphone business and continuing export of high-end digital cameras, flat-screen TVs, games, automotive electronics and a host of other electronics.
Hence, the share of PCB manufacturers in these two countries continues to grow. It is possible that at least seven fabricators may top $1 billion in sales in 2006: Ibiden, Nippon Mektron, CMK, Shinko Electric, Samsung Electro-Mechanics, Unimicron and Nanya PCB. PCD&M
Dr. Hayao Nakahara is president of NT Information and consulting editor to PCD&M. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..
