iSuppli expert identifies major shift.

While the rest of the global printed circuit board (PCB) fabrication industry fights a major battle due to a downturn in the electronics marketplace, the latest forecasts from iSuppli Corp.'s Market Intelligence Service Group (El Segundo, CA) indicate China's PCB makers have actually had a good year. Global PCB revenue will decline, from the $34 billion posted in 2000, to less than $29 billion in 2001--a decrease of about 15 percent. Meanwhile, Chinese PCB revenues have grown approximately 25 percent during 2001 to more than $4 billion, taking significant market share from every region.

In the report, Passive, Electromechanical and Batteries Practice, Printed Circuit Boards: Goodbye North America, Hello China, Shawn Arnold, principle analyst, indicates, "The global shift in PCB manufacturing has been felt most in North America, where more than 10 percent of the companies making PCBs merged, were closed or entered bankruptcy during 2001. We are forecasting a similar rate of consolidation and closure for North American suppliers in 2002, and globally the PCB industry--outside China--will mothball about 10 percent of capacity this year and permanently close marginal plants. When the PCB industry does begin to pick up in the second half of 2002, revenues are expected to improve about 4 percent globally, including an approximate gain of 6 percent in China. But, the shrunken PCB manufacturing base in North America will never return to its former vitality, even with the revenue growth of 12 percent we are forecasting in 2003 and 2004.

"While virtually every electronics manufacturer should be looking to the new low cost sources for PCBs that are emerging in China, prudent buyers will be watching the water to choose their partners," Arnold noted. "By this we mean water supply--a key resource in PCB manufacturing--which is a severe problem in northern China, from Shanghai to Beijing, and expected to get worse until several proposed waterways are completed in the 2007 time frame. And, since these new water resources will be controlled by for-profit regional water agencies once completed, cost advantages currently enjoyed by PCB manufacturers in this region could be wiped out permanently. So, 'show me the water' should be one of the first topics in every dialog between prospective partners."

For more information on the report, visit http://www.isuppli.com/reports.