The Japanese Ministry of Economy, Trade and Industry (METI) released June’s production data for the electronics industry in Japan last week. Now that a snapshot for the first half is available, we can review a few market trends and assess our plans for the remainder of the year.
Total revenue for the Japanese PWB industry in June came to 52.99 billion yen, a 7.1% increase from the previous month and 2.7% compared to the same month last year. Volume shipped totaled 1.42 million sq. meters, a 4.6% increase from previous month and 0.3% increase compared to the same month last year. This growth does seem insignificant; however, the gain could signal that the bottom was reached last year. Second quarter growth was positive this year. Growth in 2011 for the same period was negative compared to 2010. Could this signal a rebound for the industry? Optimists will answer yes, while the pessimists will take a wait and see attitude. Cumulative total revenue for the first half of the year was down by 1.5% compared to the same period of time last year, even though volume increased by 1.8%. In a couple of past issues of the DKN Research Newsletter I pointed out the dreadful performance of the industry in 2011 (it was almost as bad as the worst year ever – 2009). Unfortunately, the latest performance data is showing signs of a worsening market.
The main reason for my pessimism with the market projections is the volatility in sales for three of the prime product categories in the Japanese PWB industry. Buildup multilayer boards, double-sided and multilayer flexible circuits and rigid base module substrates for semiconductors have posted dramatic swings in monthly shipments since last autumn. Revenue predictions are continually updated, and on average, most manufacturers are losing business.
There are a few reasons for this instability. A few years ago, most of the customers for the Japanese PWB manufacturers were domestic electronics companies and device manufacturers. Japanese PWB companies enjoyed relatively high margins due to their technological capabilities and high benchmark for quality. However, the Japanese electronics market has changed very quickly during the last few years, and no one really expected it to change that fast. Flat panel TVs made in Japan are no longer in the global market causing Panasonic and Sharp to suffer huge losses from non-performing investments in this segment. A few Japanese semiconductor manufacturers have lost there competitive edge -- industry giants such as Elpida Memory and Renesas Electronics are suffering the worst financial set backs in their history. The new smartphones from Apple and Samsung have made inroads to the Japanese markets. Japanese electronics companies do not have a budget that can pay higher costs to use domestic PWB manufacturers, so these PWB companies are trying to shift some of their business to the overseas markets. Some of the larger manufacturers have had success in securing substantial orders; unfortunately, the new markets are not as friendly as the Japanese manufacturers are accustomed. Price dictates almost every decision, and potential customers (and even loyal ones) will switch vendors to save money. This makes for extremely volatile swings in business.
Not many choices are available for the PWB industry in Japan. Small improvements will not rescue the whole industry; management teams have to generate long-term survival plans and execute their strategies as soon as possible. Time and money are running out.
Dominique K. Numakura
DKN Research, www.dknresearch.com
Headlines of the week
1. Showa Denko (Major chemical company in Japan) 7/27
Has terminated the production of carbon nano tube “VGCF-H” for composite resins in June.
2. ASE/SPIL (Major IC assembling firms in Taiwan) 8/2
Has been increasing the use of copper wire bonding. It will be 60% by the end of 2012.
3. Hitachi Consumer Electronics (Device manufacturer in Japan) 8/2
Has commercialized a new gamma ray camera with 256 pixels. The sensor device can distinguish cesium 137 and iodine 131.
4. Kyocera (Major electronic device manufacturer in Japan) 8/6
Has commercialized a new two color inkjet printer head with a resolution of 300 dpi and a printing speed of 152 meters/min.
5. DNP (Major printing company in Japan) 8/8
Has started the volume production of encapsulation material, back sheet and back electrode sheet for photovoltaic cells.
6. Sharp (Major electronics company in Japan) 8/9
Has unveiled a new portable type lithium ion battery with 400W capacity for the back-up power source at home.
7. Toshiba (Major electronics and electric company in Japan) 8/16
Has developed a new motor magnet without dysprosium, an element of rare earth.
8. TEL (Major equipment supplier in Japan) 8/13
Has agreed to acquire FSI International, a cleaning machine manufacturer in the U.S. to expand the product lines.
9. TOK (Specialty chemical company in Japan) 8/16
Has founded a new JV in Korea for local manufacturing and distribution of photo resists with Samsung C&T.
10. N Tech (Device manufacturer in Japan) 8/23
Has developed a new light weight and small size heat pipe module for power LED with 100 ~ 1000W. Its has 50% lighter compared to traditional heat sinks.
11. DIC (Specialty chemical company in Japan) 8/22
Has commercialized a new pressure sensitive adhesive tape with high heat conductivity and low flammability for power devices.
Please find the full articles here.
DKN Research Newsletter
#1226, August 26, 2012 (English Edition)
Electronic Packaging Industry News from Japan & Asia