Thursday, December 11, 2008 | Dominique K. Numakura - DKN Research
The subject in last week's newsletter provided an in-depth analysis for the global electronics industry, specifically pointing out the lackluster performances year-to-date, and a downward trending forecast for the remainder of the year. The electronics industry in Japan seems to be bucking this trend; however, major electronics companies in other markets are not letting the grass grow under their feet and are formulating new business plans.
Bad news continues to pour into my office from many different sources. The severity of this news differs from one company to the next, but it all points toward a pessimistic forecast for the industry. Listed below are a few examples of actions taken by companies that range from employee redeployments (a nice way of saying layoffs) to forced vacations during a company shut down.
The largest EMS company in Taiwan reduced its work force by 10,000 employees during the first three quarters of 2008. Most of the layoffs came from its Chinese operations, and the company plans to lay off another 10,000 employees by the end of 2008. The company scheduled a one-month shutdown/vacation in the middle of January to coincide with the Chinese New Year holiday and most administrative employees in the main office will have their work week reduced to four days. This reduction in payroll stems from weak personal computer sales felt throughout the world.
A large EMS company in Singapore has a similar plan and announced a mandatory shut down for two weeks during the Christmas holiday, as well as an additional two weeks over the Chinese New Year. This affects all of its manufacturing plants in China and is blamed on lower-than-expected orders from North America and Europe. The company also projects a 10 to 20% reduction in its work force at large manufacturing plants in Far Eastern countries over the next few months, and will institute new payment terms to vendors to improve their own cash flow. The company will also look into operations in the U.S. and Eastern Europe to improve and stabilize their bottom lines.
Many EMS companies are planning long holidays during Christmas and the Chinese New Year, and are asking employees to lower their expenses. In some cases, these companies have eliminated all overseas business trips.
A significant manufacturer of motherboards in Taiwan reduced orders for components and materials by 20 to 30% in the middle of October. This reduction was without warning and the company's new standing orders are likely to remain at this level for the next few months.
The operation rates from several LCD panel manufacturing companies in Taiwan declined to below 50% and has sent ripple effects throughout the workforce causing even more layoffs in China and Taiwan.
Most of the display module manufacturers in Korea lowered their production rates between 10 and 20% throughout the fourth quarter and are ready to reduce production rates even further during the first quarter of 2009, if necessary. Accordingly, circuit board manufacturers and flex circuit manufacturers in Korea are facing serious declines in orders.
On the other hand, management teams from Japanese electronics companies have a more optimistic outlook toward the future. They have not had a knee jerk reaction to the slowdown and have adopted a wait and see approach hoping for a quick rebound. However, the Japanese industry cannot be the exception to this global down turn. Many of these Japanese electronics companies cannot survive in the long run if they do not take appropriate action now.
Dominique K. Numakura
DKN Research, www.dknresearch.com
Headlines of the Week
(Please contact firstname.lastname@example.org for further information on the news.)
1. Nitto Denko (Major flex circuit and electronics material supplier in Japan) 11/27
The supplier will invest millions to create the Nitto Denko Asia Technical Center in Singapore for organic electronics technologies.
2. JEITA (Japan) 11/28
JEITA reported that the September shipment of electronics materials in Japan was 42.3 billion yen--a 14% increase from the same month of 2007. First half shipment of electronics components in Japan was 227 billion yen--an 8% decline from the same period of 2007.
3. Panasonic Electric Ltd. (Major PWB material supplier in Japan) 11/28
The supplier will release a new series of LED light sources, EVERLEDS Trimless Universal Down Light, for display lighting in stores.
4. CIPA (Camera and Imaging Products Association) 12/1|
Japanese camera manufacturers shipped 13.59 million units in October--a 10.8% increase from the same month in 2007, but revenue has declined 2.4%.
5. Kyushu University (Japan) 12/1
The university has developed a new chemical process to synthesize copolymer of polyethylene and polyester.
6. Asahi Glass (Major glass material supplier in Japan) 12/1
The supplier has unveiled a new photosensitive material--AL PolymerX2000--with low dielectric constant (2.6~2.7) for the packaging of semiconductors.
7. Panasonic Electric (Major PWB material supplier in Japan) 12/3
The supplier has developed a new manufacturing process for white organic EL devices for lighting sources.
8. Sharp (Major electronics company in Japan) 12/3
The company is recalling the XV-101T LCD projector because of the possibility of fire accidents.
9. PWB Industry in Taiwan 12/3
October shipments of rigid circuit boards in Taiwan declined after months of growth.
10. Tanaka Denshi Kogyo (Rare metal product supplier in Japan) 12/5
The supplier has unveiled a new copper bonding wire as an alternative to gold bonding wire. The new wire does not need special surface treatment.
Interesting Literature Concerning the Packaging Industry
Articles from DKN Research
1. "Screen Printing for High-Density Flexible Electronics," Robert Turunen, Masafumi Nakayama and Dominique Numakura, Printed Circuit FAB, October, 2007, http://pcdandm.com/cms/content/view/3846/95/.
2. "Total Process Solution for the High-Density Multi-layer Flexible Printable Electronic Circuits," Dominique Numakura, Denshi Zairyo, October, 2007 (Japanese only).
3. New "Roll to Roll Production of Flexible Circuits, Possibilities and Issues," Dominique Numakura, Joho Kiko, Tokyo, March, 2008 (Japanese only).
4. "Coombs' Printed Circuits Handbook, 6th Edition, Part 15-Flexible Circuits," Dominique Numakura, McGraw Hill, New York, September, 2007.
5. New "Screen Printing Process for High Density Flexible Electronics," Robert Turunen, Dominique Numakura, Masafumi Nakayama and Hisayuki Kawasaki, IPC Printed Circuit Expo/APEX and the Designers Summit, April, 2008.
6. New "Global Flexible Circuit Industry, Market Trends and Technology Trends by Applications," Dominique Numakura, International Symposium of KPCA Show, April, 2008 (English PowerPoint file is available).
From the Major Industry Magazines
1. "Creating a Streamlined Manufacturing Process for Operational PCBs," Mark Laing, CircuiTree, November, 2008.
2. "RoHS Conversion for Medical Devices," Kim Sharpe, Circuits Assembly, November, 2008.
3. "The Silver Debate: Sn/Cu-based Solder Explained," Gerjan Diepstraten, Harry Trip, Ineke van Tiggelen-Aarden and Di Wu, SMT, November, 2008.
4. "3D Chip-Package-Board MODELING," Vikram Jandhyala, Dipanjan Gope, Swagato Chakraborty, Feng Ling, Xiren Wwang, Devan wiliams and James Pingenot, Printed Circuit Design & FAB, November, 2008.
5. "The Great Debate: Copper vs. Gold Ball Bonding," Christopher Breach, Advanced Packaging, October, 2008.
6. "Compatibility of polymers and fluxes: Getting to the heart of the matter," Andy Mackie and Christopher Nash, Global SMT & Packaging, September, 2008.