Waiting for the 'other' bubble to burst: with no end in sight to its IT recession, American fabs wait (and hope) for China to overheat. (North American PCB Market).Last year was notable for capacity reductions and price erosions. Trying to hang onto customers being courted by Asian manufacturers, particularly from Taiwan and China, North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. PCB PCB: see polychlorinated biphenyl. PCB in full polychlorinated biphenyl Any of a class of highly stable organic compounds prepared by the reaction of chlorine with biphenyl, a two-ring compound. makers dropped prices. Their revenues dropped, too--by 28%. All in all, it was another disappointing year. 2003 doesn't look promising, either. Going forward, what can we expect? Data from the PCI (1) (Payment Card Industry) See PCI DSS. (2) (Peripheral Component Interconnect) The most widely used I/O bus (peripheral bus). Market Research Report and N.T. Information Ltd. hold some clues. TABLE 1 capsulizes U.S. PCB sales by board type. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. PCI, U.S. revenues dropped 28.4% last year. An analysis of the top fabricators suggests a loss of more than 30% (more on this in a moment). The 2003 forecast is negative, thanks to the very conservative investment forecast for IT equipment--the main source of revenue for the region's PCB industry. About 90% of U.S.-made MLBs fall in the high performance category (high-performance laminates and prepregs--FR-4 with Tg [greater than or equal to] 150[degrees], plus BT, cyanate ester Cyanate esters are chemical substances generally based on a bisphenol derivative, in which the hydrogen atom of the phenolic OH group is substituted by a cyanide group. The resulting -OCN group is named a cyanate ester. and polyimide Pronounced "poly-ih-mid." A type of plastic (a synthetic polymeric resin) originally developed by DuPont that is very durable, easy to machine and can handle very high temperatures. Polyimide is also highly insulative and does not contaminate its surroundings (does not outgas). ) (TABLE 2). A wild guess is that 75% of the single/double-sided category is double-sided. Composites are mostly CEM-1, used mainly for single-sided print-and-etch products. The import and export data in Table 2 are from the U.S. Department of Commerce. However, more than $2 billion worth of PCBs were imported to the U.S. from Asian nations Noun 1. Asian nation - any one of the nations occupying the Asian continent Asian country country, land, state - the territory occupied by a nation; "he returned to the land of his birth"; "he visited several European countries" , of which half were MLBs, according to statistics from the MLB-producing countries in the Asia Pacific. Therefore, actual consumption may be higher than indicated here. Most exports were to Mexico. The one healthy area is flex circuit See flexible circuit. production (TABLE 3). The four large U.S. flex producers are M-Flex, Innovex, Sheldahl and Parlex. Each has production plants overseas: M-Flex in Suzhou, China, Innovex in Thailand (two plants), Sheldahl (20% ownership in a JV in Jiujiang Jiangxi, China) and Padex in Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. and Suzhou. (It is very difficult to determine how much of their output is from overseas production.) (Note: Japan's Nippon Mektron, the world's largest flex maker, had 2002 revenue of approximately $860 million, 18% greater than the U.S. output.) TABLE 4 shows laminate laminate, n a thin slice of porcelain or plastic fabricated in a dental lab, which is cemented to the front of the teeth to cover gaps, whiten stained teeth, or reshape chipped or broken teeth. and prepreg consumption by total area, including imports. Since MLBs represent the largest segment of production, it is not surprising that thin-core laminate and prepreg combined for almost 75% of the total value. The Commerce Department reported a surge in laminate imports from China during December, a trend that can be expected to continue. In the first half of 2001, laminate sales sank to 40% of their peak. The decimation DECIMATION. The punishment of every tenth soldier by lot, was, among the Romans, called decimation. continued in 2002. The 3/12 orders suggest that considerably more market erosion is ahead, although it may be a gradual decay The reduction of strength of a signal or charge. decay - [Nuclear physics] An automatic conversion which is applied to most array-valued expressions in C; they "decay into" pointer-valued expressions pointing to the array's first element. . The IT market recovery is not expected to begin until the second half, and inexpensive Taiwanese and Chinese imports will put pressure on U.S. OEMs' prices. An expected surge in imports will steepen steep·en tr. & intr.v. steep·ened, steep·en·ing, steep·ens To make or become steep or steeper. steepen Verb to become or cause (something) to become steep or steeper the fall of U.S. laminate shipments. White Out North of the border, the situation looks similar. Canada's shipments declined 31% in 2002 (TABLE 5). About one-third of the nation's output came from Viasystems Canada. Viasystems Canada posted Canada Post Corporation (French: Société canadienne des postes) is a Canadian postal service operated as a crown corporation. The successor to the Post Office Department of the Government of Canada, Canada Post was created on October 16, 1981 by the $320 million in sales in 2000 (including its St. Germain, Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , operation. In 2002 sales dropped to $120 million. The Granby facility was closed and Viasystems now operates in Pointe pointe n. In ballet, dancing that is performed on the tips of the toes. [From French pointe (des pieds), point (of the feet), tiptoe; see point.] Claire and Kirkland, both near Montreal. There are a few other notable makers in Canada including Coretec and PC World. Rexcan has closed. A fair amount of Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. production is exported to the U.S. To the south, in Mexico, are three fabricators of size: Multek Mexico in Guadalajara, and Kyosha Mexico and Saehan Mexico, both in Tijuana. Multek makes double-sided and multilayer boards. Kyosha is a Japanese company and Saehan is Korean; both specialize spe·cial·ize v. 1. To limit one's profession to a particular specialty or subject area for study, research, or treatment. 2. To adapt to a particular function or environment. in single-sided boards. Each of these had approximately $15 million revenue last year (TABLE 6). There are another 20 to 25 smaller companies in Monterrey, Mexico City Mexico City Spanish Ciudad de México City (pop., 2000: city, 8,605,239; 2003 metro. area est., 18,660,000), capital of Mexico. Located at an elevation of 7,350 ft (2,240 m), it is officially coterminous with the Federal District, which occupies 571 sq mi , Tijuana and other industrial cities. The recent migration of consumer electronics to China is not a good sign for Mexico. Mexico once boasted of making more than 30 million TVs, but the manufacture of small sets has shifted to China, stagnating its single-sided board market. The cost of labor is nearly three times that of China. Television assembly is labor intensive Labor Intensive A process or industry that requires large amounts of human effort to produce goods. Notes: A good example is the hospitality industry (hotels, restaurants, etc), they are considered to be very people-oriented. See also: Capital Intensive, Trading Dollars , so the migration is natural. Large sets are still made in Mexico because their weight means higher transportation COSTS. The last recession started in late 1989 and the recovery began in the second quarter of 1991. The U.S. economy gained speed throughout the '90s. The IT bubble A bit in bubble memory or a symbol in a bubble chart. began in mid 1990 and accelerated in the latter half of the decade before bursting in November 2000. Fabricators will concentrate on staying afloat and profitability this year. Expansion is not on their agenda. New equipment sales in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. are almost null A character that is all 0 bits. Also written as "NUL," it is the first character in the ASCII and EBCDIC data codes. In hex, it displays and prints as 00; in decimal, it may appear as a single zero in a chart of codes, but displays and prints as a blank space. . Suppliers are concentrating on Asia. Fabricators have also set their sights there. The largest and third largest makers in China? Viasystems and Multek. Their combined output last year was $460 million, about 11% of China's total. A smaller flex maker, World Circuit, is in Shanghai and Shenzhen. Photocircuits, through its association with CMK CMK Consumer & Market Knowledge CMK C. M. Kornbluth (Lemony Snicket) , is now collaborating with GBM GBM 1 Glioblastoma multiforme, see there 2. Glomerular basement membrane (Global Brands Manufacture). Rumors For other uses, see Rumor (disambiguation). Rumors is a farcical play by Neil Simon. At its start, several affluent couples gather in the posh suburban residence of a couple for a dinner party celebrating their tenth anniversary. abound of other North American manufacturers considering production in China. In 2000 the North American MLB MLB Major League Baseball MLB Minor League Baseball MLB Middle Linebacker (football) MLB Motor Life Boat MLB Matt Leblanc (actor) MLB Mother Love Bone (band) capacity was 104 million [ft..sup.2] per annum Per annum Yearly. , according to Kirk-Miller Associates. At the end of 2002 it was 57 million [ft..sup.2], and by the end of March it was 53 million [ft..sup.2]. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke" put differently , multilayer capacity has been cut in half. Double-sided capacity--60 million [ft..sup.2] at the peak--now stands at 37 million [ft..sup.2]. In view of this, it is unthinkable that the region would regain its 2000 levels--$11.5 billion--in the next decade, if ever. North American makers will add capacity in the future, but they'll do so mostly in China. At the moment, the future doesn't look too promising. We must wait until China's bubble bursts. Sadly, the once-mighty U.S. industry will slip into third in 2004, behind Japan and China.
TABLE 1. U.S. PCB Sales, by Board Type
REVENUES
2002 2003 2004 2005
Single/double-sided FR-4 851 789 797 817
MLB 3,196 2,997 3,111 3,321
Teflon 101 105 118 136
Composite 56 50 49 49
Additive 7 3 2 1
Rigid subtotal 4,211 3,943 4,077 4,325
Flex 712 718 746 784
Total 4,922 4,661 4,823 5,109
% GROWTH
2002 2003 2004 2005
Single/double-sided FR-4 -17.6 -7.2 1.0 2.5
MLB -34.7 -6.2 3.8 6.7
Teflon -8.3 4.1 12.8 14.9
Composite -27.3 -11.0 -1.5 0.8
Additive -57.5 -63.8 -41.3 -4.6
Rigid subtotal -31.3 -6.3 3.4 6.1
Flex -3.9 0.9 3.8 5.1
Total -28.4 -5.3 3.5 5.9
In $ millions. Source: PCI Market Research Report, Q1 2003
TABLE 2. U.S. Multilayer Board Sales
REVENUES
2002 2003 2004 2005
Conventional MLB 809 636 613 604
High Performance 2,387 2,361 2,499 2,718
Total Shipments 3,196 2,997 3,111 3,321
Exports 213 195 198 209
Imports 431 473 558 631
Total Purchases 3,414 3,276 3,471 3,743
% GROWTH
2002 2003 2004 2005
Conventional MLB -59.7 -21.4 -3.6 -1.5
High Performance -17.4 -1.1 5.8 8.8
Total Shipments -34.7 -6.2 3.8 6.7
Exports -14.2 -8.5 1.9 5.2
Imports -27.7 9.8 17.8 13.2
Total Purchases -34.9 -4.1 6.0 7.9
In $ millions. Source: PCI Market Research Report, Q1 2003
TABLE 3. U.S. Flex Circuit Sales, by Application
REVENUES
2002 2003 2004 2005
Communications 67 62 65 73
Computer/office 196 180 183 187
Industrial/instrumentation 91 91 100 112
Military 96 108 113 114
Consumer 5 5 5 5
Automotive 254 263 286 303
Inventory change 0 7 -7 1
Total 708 716 746 795
% GROWTH
2002 2003 2004 2005
Communications -24.0 -7.5 6.4 10.9
Computer/office -18.8 -7.9 1.7 2.0
Industrial/instrumentation -10.5 0.0 10.5 11.1
Military 4.4 13.0 4.2 0.8
Consumer -9.1 -0.9 5.2 5.7
Automotive 12.4 36 8.5 6.2
Inventory change -- -- -- --
Total -4.2 1.1 -4.2 65
In $ millions. Source: PCI Market Research Report, Q1 2003
TABLE 4. U.S. Laminate and Prepreg Use, by Area
CONSUMPTION
(MILLIONS [ft..sup.2])
2002 2003 2004 2005
Rigid FR-4 43 41 41 41
Thin-core laminate 132 124 126 131
Mass lam (value added) NM NM NM NM
Teflon 1 2 2 2
Composite 11 10 9 9
All rigid 187 175 178 183
Prepreg 316 302 317 333
Total 503 477 495 516
% GROWTH
2002 2003 2004 2005
Rigid FR-4 -7.1 -5.6 0.2 0.0
Thin-core laminate -29.8 -6.3 2.1 4.0
Mass lam (value added) NM NM NM NM
Teflon -3.4 6.1 13.5 12.2
Composite -15.1 -9.2 -2.9 -0.2
All rigid -24.8 -6.3 1.5 2.9
Prepreg -22.8 -4.4 5.2 4.8
Total -23.6 -5.1 3.8 4.1
Includes imports. Source: PCI Market Research Report, Q1 2003
TABLE 5. Canada's PCB Sales, by Board Type
REVENUES
REVENUES 2002 2003 2004 2005
Single/Double-sided FR-4 138 126 126 131
MLB 205 215 236 267
Teflon 0 0 0 0
Composite 0 0 0 0
Additive 0 0 0 0
All rigid 343 342 362 398
Flex 24 24 27 30
Total production 367 366 389 428
% GROWTH
REVENUES 2002 2003 2004 2005
Single/Double-sided FR-4 -29.9 -8.6 0.0 4.0
MLB -31.9 4.9 9.8 13.1
Teflon 0.0 0.0 0.0 0.0
Composite 0.0 0.0 0.0 0.0
Additive 0.0 0.0 0.0 0.0
All rigid -31.1 -0.3 3.4 6.1
Flex -3.9 0.0 12.5 11.1
Total production -30.8 -0.3 3.5 10.0
In $ millions. Source: PCI Market Research Report, Q1 2003
TABLE 6. Mexico's PCB Sales, by Board Type
REVENUES
2002 2003 2004 2005
Single/double-sided FR-4 22 25 20 28
MLB 10 8 9 10
Teflon 0 0 0 0
FR-1/CEM-1 32 33 35 37
Additive 0 0 0 0
All rigid 64 66 70 75
Flex 0 0 0 0
Total 64 66 70 75
% GROWTH
2002 2003 2004 2005
Single/double-sided FR-4 -5.0 13.6 4.0 7.1
MLB -10.0 -20.0 12.5 11.1
Teflon 0.0 0.0 0.0 0.0
FR-1/CEM-1 -4.3 3.1 6.0 5.7
Additive 0.0 0.0 0.0 0.0
All rigid -14.7 3.1 6.0 7.1
Flex 0.0 0.0 0.0 0.0
Total -14.7 3.1 6.0 7.1
DR. HAYAO NAKAHARA is president of N.T. Information (Huntington, NY) and consulting editor to PCD&M. He can be reached at 631-673-8571; nakanti@yahoo.com. |
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