The global printed circuit 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 printed circuit industry.

The Taiwan Printed Circuit Association (TPCA) has not released its 2013 manufacturers’ ranking for Taiwan, but I am sure the top spot will go to a newcomer. In 2012, Unimicron was ranked No. 1 by producing an assortment of high-end products including IC substrates and rigid-flex. Unimicron's revenue in 2013 declined 10% compared with the previous year due to lackluster sales from personal computers. That leaves the door wide open for Zhen Ding Technology (ZDT) to grab the top spot. It increased revenue in 2013 by more than 18% compared to the previous year. Annual revenue for 2013 could reach NT$65 billion (roughly US$2 billion). Not only will it grab the Taiwanese title, but also the world wide championship with this type of performance.

Who is Zhen Ding Technology? This is not a well-known company. It was founded in 2006 and were formed to complement a strategic manufacturing subsidiary of Hon Hai Precision - an EMS giant in Taiwan that supplies printed circuits for smartphones and tablet PCs. Its primary customer is Apple, so the major products they manufacture are flex circuits. Prior to the formation of Zhen Ding Technology, Hon Hai purchased huge amount of flex circuits from Taiwanese and Japanese manufacturers. Demand was so high, 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. Nowadays, ZDT has extra capacities and now supplies circuits to other assembling companies.

ZDT became a publicly traded company in December 2011. It made a huge splash in the industry by increasing its monthly revenue so much that it caused the entire printed circuit industry in Taiwan to increase by more than 10%. In October 2012, ZDT shocked the industry again by switching its primary revenue-producing category from general printed circuits to flexible circuits. 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.

So, the short-term business plan for ZDT is a success. Its aggressive and strategic business plan elevated it to the No. 1 position of the industry in just seven years. However, it is a marathon, not a sprint. Shareholders 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.

DKN Research Newsletter #1406, March 9, 2014 (English Edition)

Dominique K. Numakura, This email address is being protected from spambots. You need JavaScript enabled to view it.

DKN Research, www.dknresearchllc.com

For back issues of the newsletter: www.dknresearchllc.com/DKNRArchive/Newsletter/Newsletter.html

Headlines of the week (Contact This email address is being protected from spambots. You need JavaScript enabled to view it. for further information.)

1. JAIST developed the most heat-resistant plastic, with a high transparency through a biochemical process. It withstands at 390C.

2. Ushio developed the first parallel VUV light source unit for high resolution direct imaging equipment, valuable for processing flexible electronics.

3. Yamagata University and Ube Industries codeveloped the world's first flexible organic semiconductor by printing process.

4. NEC Schott Components unveiled a new packaging technology “GTAS” for lithium ion batteries.

5. Hitachi Chemical founded a joint venture for epoxy resin molding business with Hitachi and Sumitomo Electric.

6. Konica Minolta developed a white organic EL lighting panel with the world highest efficiency of 131 lm/W.

7. Kyocera commercialized a new 0.5mm pitch ZIF FFC connector 6808 Series capable for power lines of high density flex circuits.

8. AIST codeveloped a mono-layer carbon nano tube by a printing process. It could be valuable as the electrode material of various batteries.

9. SPIL's February shipments were NT$5.57 billion, down 7.5% from the previous month, but up 31.1% from the same month of the previous year.

10. Mitsubishi Materials developed the world thinnest bendable thermistor sensor built on 50 micron thick polyimide film. Total thickness can be thinner than 70 microns.

11. Murata developed the first SMT type ultrasound sensor for mobile applications. Size: 5.2 x 5.2 x 1.15 mm, Sensitivity: 100dB.