Weiner's World
Editor’s note: This blog was originally published in December 2015 at www.weiner-intl.com and is being reprinted here with special permission from the author.
A Challenge—Looking Forward to 2016 and Beyond
Are you part of the current mega-merger trend running through the entire interconnect supply chain? If not, and you are not already one of the larger or critical businesses in a supply chain, are larger customers and prospects by-passing you because they are uncertain of your future and sustainability? What are your plans for the future? Have you modified your goals—markets, financial, business, products, and services? Is your factory and its equipment aging and outmoded? Have your suppliers vanished? Has the technical support once provided to you diminished or disappeared? What are your plans to compensate for changes in your supply chain? Are you having difficulties gaining the attention of prospects for your innovations because you are too small or too new? What type of support (supplier, customer, trade association) do you need to grow? What ideas do you have for the future?
2015: The Year of the Deal
Global M&A activity totaled more than the prior five years combined ($3.5 trillion—more than $125 billion in just the semiconductor industry). Specialty chemical companies merged or announced their intentions to do so to form a few powerhouse supply-side giants for the interconnect industry. Merger mania joined several of the largest fabricators to form the biggest board house. Smaller operations began to really feel the pressure to change to survive—but in what ways? It is the year that redefined the industry as smart IoT "broke out," automotive electronics began to surge, and printed electronics may have found a new route to success through wearables.
Meanwhile, another major change to be noted that will affect the future is China's renewed national investment policy and funding designed to generate greater self-sufficiency.
December 2015
Unimicron Technology’s Board of Directors has approved plans to budget $152.9 million in capital expenditures (capex) for 2016. Its capex exceeded $300 million in 2013 and 2014, and is expected to total $300 million this year, too. The PWB and IC substrate maker reported net profits of $4+ million for the third quarter of 2015, ending a run of three losing quarters in a row. Unimicron is reported to be one of the any-layer HDI board suppliers for Apple’s next generation of iPhone.
Unitech president Hsu Cheng-hung stated that any-layer PCB demand for auto and IoT applications will rise in 2016. This will help offset declining demand for smartphone circuits. He stated that the company will expand its production capacity for any-layer PCBs by 10% at its Yilan site during the next quarter. Any-layer PCBs account for 25% of Unitech's total revenues and HDI boards account for 40%. Unitech’s capex will exceed $45 million in 2016.
A fire broke out at Tripod Technology's Taoyuan facility on December 21. The facility is dedicated to the manufacture of PCBs for optoelectronic, notebook and memory module applications. It is not expected to impact any of Tripod's shipments or schedules, according to a report in DigiTimes. The Taoyuan facility accounts for just 3% of Tripod's overall production capacity. The company's other facilities will make up for the production shortfall caused by the fire.
According to IPC's 2015 Analysis and Forecast for the North American PCB Industry, the North American PCB market is expected to improve in 2015 and grow modestly through 2017 following declining sales for the past four years. The drop to 5% of the world’s production, primarily in rigid boards, was not offset by strong increases in flexible circuit demand of the past three years.
The final passage of legislation in the U.S. to permanently extend the R&D tax credit will benefit the chip and board business in America providing continued incentive for innovation "at home.” It should greatly benefit the semiconductor industry, which spends about 20% for its revenue for R&D.
The global automotive PCB market size grew approximately 6.5% this year, to more than $5.2 billion.
Show Time!
The International Printed Circuit & APEX South China Fair held in Shenzhen was crowded from opening day into the final morning. Its record number of 531 exhibitors occupying 51,000 square meters and 2,379 booths spilled over into a third hall. Final attendance exceeded 40,000.
Though business has slowed and the future seems uncertain, a high level of energy was felt with both exhibitors and those seeking information on new and improved products, as well as systems for automation. It was interesting to see the proliferation of direct digital imaging systems (mostly LEDs). We counted over a dozen.
As expected, we did not find much that was dramatically new, but there were many improvements. One of the offerings of great interest in this day of increasing flex manufacturing was the horizontal reel-to-reel processing equipment shown by Grown's Electronic Technology Co., Ltd. of Shenzhen. The 10+ year-old company's automated un-wind/wind system appeared suitable for many applications including coating, dry film resist lamination, and plating and etching.
Orbotech’s booth was busy, as usual. The company showcased its recently launched Orbotech Diamond™ 8 DI mass production system for solder mask. This product joined the recently introduced, high accuracy Nuvogo™ 1000 DI system for flex solder mask applications.
Also on display and running live demonstrations was the Sprint™ 200 Legend Inkjet Printer system capable of providing 95 prints per hour of white legend ink. The company also demoed a new laser repair station, the Ultra PerFix™ 120, which removes excess Cu defects to improve yields.
Many attendees were seeking information on new industry directions as increased costs and overcapacity have initiated a migration of fabricators of lower tech boards to lower cost areas. Great interest was expressed in the next generation of wearable electronics, which gave a boost to new equipment and materials as well as processes for flexible circuits and displays. We believe that continued drive to put more on a chip, new stacked chip designs and packages indicated future growth for packaging than for circuit boards for the immediate future—even though global purchases for semiconductor equipment has slowed in recent quarters.
Some fabricators from the West, faced with the need to recapitalize (and digitize) their outmoded equipment of the 1980s and 1990s, bemoaned the fact that they could not readily see what was truly available back home, nor could they find local support for some of the offerings shown in China. The cost of updating and modernizing was also stunning to some. Other board builders from the U.S. Midwest were seeking ways of buying photo imageable solder mask, primary imaging resist, and Cu-clad laminates directly from Chinese specialty chemical and material companies at a lower cost than is currently available from more conventional sources.
The Smart Automation Pavilion focused on the developments of Industry 4.0., and it fit well with the show's global theme. It demonstrated how automation can improve production efficiency and quality, virtually making a factory system competitive anywhere in the world.
Hall 2 (and Hall 3, filled with overflow from Hall 2) offered many Chinese specialty chemical suppliers showing what appeared to be replicas of the standard products of DuPont, MacDermid, Taiyo, Atotech, Dow, etc. Stories were told of some of the mid-size to larger American fabricators buying Chinese-made solder mask, dry film photoresist and other supplies at lower costs than could be obtained in the U.S.
HTC and Huawei are both expected to launch their respective new smartphones in the first quarter of 2016, according to a Chinese-language Economic Daily News (EDN) report. Both will have large displays. The new HTC One X9 will also have a 13 megapixel camera with image stabilization.
Is There a Problem?
Chinese smartphone maker Meizu’s shipments will reach more than 20 million units this year, up more than 350% from 2014. Vice president Li Nan stated that Meizu will shift its focus to improve user experience and satisfaction in 2016, instead of boosting sales. He said that Meizu will ramp up its smartphone shipments by 25% to 25 million units in 2016. He also stated that the company looks to make a breakthrough in high-end models.
From a colleague at SEMICON Japan:
The hottest topic of discussion at SEMICON Japan 2015 was the IoT, with new applications for sensors (such as a 3D sensor), CCD module, RFID, big data management (such as the Cloud), smart robots, driverless cars, and “Pepper” (a "smart robot" with a heart) that is already on sale!
Technology talk at SEMICON included 3D wafer level system integration, copper through silicon vias (TSV) formation, wafer thinning, thin wafer handling, TSV-interposers with high-density redistribution and assembly, interconnection technologies, and systems in a package (SIPs).
Also discussed were fan-out wafer level packaging (FOWLP) and panel level packaging (PLP). These will grow in use due to increasing multifunctional demands. As a result more circuits will be designed into the chips, eliminating the need for some PCBs. Apple is reported to already have approved this technology for their A10 project (iPhone 7). TSMC is one of the suppliers already qualified by Apple. ASE, UMTC, Uni Group (China), and Samsung are all reported to be trying to get approval by Apple for this technology and application.
Please send us your comments and share your thoughts. Perhaps together we can find new solutions and opportunities for your company.
Weiner International hopes that our readers, contributors, and supporters enjoyed a festive holiday season and we wish you much success and joy in the New Year.
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Gene Weiner is president of Weiner International Associates. To contact Gene, click here.
