Get documents about "Chapter 2 Electronic Components Industry
Document Sample
Industry Insights Electronic Components Industry
Chapter 2 Electronic Components Industry
Circuit Boards, Connection Components, and
Introduction Energy Components (See Figure 2-2-1). Below
Electronic components are the foundation of is a brief summary of the LED, Passive
the electronic industry and can be further Component, Printed Circuit Board (PCB),
categorized into five major groups: Compound Connector and Rechargeable Battery industries.
Semiconductors, Passive Components, Printed
Electronic
Components
Compound Passive Printed circuit Connection Energy
Semiconductors components boards components components
Light emitting Fuel cells
Resistors Rigid PCBS Connectors
diodes
Laser diodes Inductors Flexible PCBS Rechargeable
batteries
Capacitors IC substrates
Battery packs
Filters
Oscillators
Source: ITIS Program, IEK/ITRI(2007/11).
Figure 2-2-1 Scope of the Electronic Components Industry
scale.
LEDs
The mainstream LED industry in Taiwan has
The LED industry can be classified into been operating as three individual stages,
three stages based on its production process: specializing in either the upstream, midstream
Epitaxy for upstream, Chip for midstream and or downstream processes, interacting and
Packaging for downstream. Most LED cooperating closely with one another in order
manufacturers in Taiwan operate on a small to minimize business risk. It is very different
39
2008 Taiwan Industrial Outlook
from the well-integrated up-, mid- and In the RCL passive components industry,
down-stream business in developed nations Taiwan has about 600 companies, of which
where the emphasis is on vertically-integrated more than 200 companies make resistors and
business on a massive economic scale. capacitors, and more than 100 companies
However, since the mass production of the supply inductor products. The top ten resistor
GaN type LED began, the industrial structure manufacturers make up more than 80% of the
in Taiwan has been moving towards a total sales in the resistor industry; and the top
two-stage model consisting of an ten capacitor and inductor manufacturers make
up/mid-stream side for Epitaxy/Chip processes up more than 60% of the total sales in each of
and the down-stream side of packaging. the sectors. It demonstrates that the RCL
Major downstream packaging manufacturers passive component business sector is a highly
in Taiwan are Yi-Kuang, Jin-Tai, Kuan-Bao, concentrated and highly competitive industry.
Kuan-Tin, Bai-Hung, Tung-Bei, Hung-Chi etc. More action in mergers and expansions is
Midstream companies only include Kuan-Rei expected, illustrating the trend of increasing
and Tin-Yuan. As for the upstream, Kuo-Lien, economic scale among the key competitors in
having received the technology transfer from the industry.
ITRI, started the production of epitaxy wafer in In the RF passive component industry, the
1993. Following that, with help from overseas major oscillator manufacturers in Taiwan are
Chinese and ITRI technology transfer on the TXC, His-Hua, Jia-Gao, Tai-Yi, An-Ji and
MOVCD epitaxy process development, many Tai-Lai. The TXC Corporation, registered in
LED manufacturers have started investing in December 1983, is the No.1 crystal component
backward integration in recent years. Taiwan supplier in Taiwan, specializing in the
now has more MOVCD machines than any manufacture of radio frequency components.
other country. The company took a series of actions to expand
its product lines and TCXO technology patents
Passive Components
by acquiring the CTS research center in
Passive components can be classified into Chicago and establishing the TCXO production
two main groups: the first one is RCL Passive line in Singapore.
Components which include resistors, capacitors Within the capacitor and filter industry, the
and inductors; the other group is RF Passive SAW Filter process is a type of IC
Components which include capacitors, filters semiconductor sector in which only a very few
and oscillators. manufacturers have their own complete
40
Industry Insights Electronic Components Industry
production process (such as Jia-Sou). Most technology, whereas Taiwan is fully dependent
other companies contract out parts of the on imports. As for the PI resin, there is only
process, and only keep the core technology of one manufacturer, Da-Mai, providing less than
the process. TXC keeps its own packaging 20% of the market demand in Taiwan in 2003.
technology, which accounts for a high s
In the sector of epoxy resin business, Taiwan’
percentage of the manufacturing costs. TXC market is mainly supported by Mitsubishi Gas
and Jia-Sou are now the top two manufacturers of Japan, with less than 3% of the market being
of the SAW Filter, occupying more than 40% of supplied locally.
the market in Taiwan.
Connectors
Printed Circuit Boards (PCBs)
The Connector industry in Taiwan can be
Taiwan has a well integrated rigid PCB divided into three sectors, the upstream side of
industry (Mono-layer, dual-layer and raw materials, the midstream side of connector
multi-layer) There are more than thirty public production, and the downstream side of
companies such as Shin-Shing, Nan-Ya, applications.
Hua-Tung, Nan-Shin, Gold Circu, Yao-Hua, Upstream includes the raw materials of
Jien-Ting, Hannstar Board, Jia-Ting, Jo-The, metal, plastics and electrolyte solution. The
Jin-Kuo and Yu-Fu. The industry is dependant commonly used brown copper, PBT and
on key materials such as Copper-clad laminate tin/lead electrolyte solutions can be supplied
(CCL), electro-deposited copper foil (ED locally in Taiwan. For supplies of Phosphorous
copper foil) and glass fiber, which are also copper, LCP and pure tin/tin copper electrolyte
becoming key industries in the global market in of high-end solutions, manufacturers have to
terms of the production scale, quality and price. depend on imports. Connector manufacturers
The rigid PCB industry is well supported by have a very close relationship with upstream
these key material producers with very high raw material suppliers and supply shortage
self-sufficiency rate in the domestic industry. would never be an issue.
As to the flexible PCB and IC substrate The midstream manufacturers cover the
sectors, the self-sufficiency rate of the key sectors of metal stamping, plastic injection,
materials (e.g. PI, rolled copper foil, epoxy electro plating and assembly production.
substrate) is relatively low. In the example of Electrolyte processes are normally contracted
rolled copper foil, the US and Japan control the out due to concerns of technology barriers and
mining of raw materials as well as the core cost. There are about 170 connector
41
2008 Taiwan Industrial Outlook
manufacturers in Taiwan of which most are not more than 100 companies. However, only ten
public companies such as Lun-Ten and of the larger manufacturers have survived the
Shi-Yin, even though they are large scale vigorous competition. Many of the smaller
producers. manufacturers had to migrate to Mainland
China looking for lower costs in terms of land
Rechargeable Batteries
and labor.
Rechargeable batteries consist of anode and
cathode electrodes, electrolyte solution, Overview of the Electronic
separation film and the cell body; out of which Components Industry in 2007
the raw materials of the anode/cathode The global electronic information industry
electrodes, electrolyte solution, and separation underwent a period of explosive growth
film are the key materials, accounting for more between 1999 and 2000 due to the Y2K issue
than half of the manufacturing costs. and the fast growing Dot Com business. The
Ni-H battery development originated in electronic components business also benefited
s
Taiwan’ rechargeable battery industry. The from this. The short supply triggered multiple
industry includes the sectors of Ni-H battery orders from the demand side to assure enough
and Lithium battery (e.g. lithium ion and supply of the components, resulting in a false
lithium polymer). Traditionally, the Ni-H message of strong demand. The electronic
battery industry has been led by Japanese component manufacturers responded with
manufacturers worldwide. Taiwanese products massive capacity expansion. The electronic
t
can’ compete with Japanese products on component industry boom finally ended with a
technology or quality, nor can they compete fate of the “economic bubble”in 2001.
with Chinese products on price. Taiwan can Fortunately, the emerging economic states of
only emphasize the consumer products such as the four BRIC countries, Brazil, Russia, India
after-sales service market for mobile phone and China, and high-profile world sporting
business, electronic toys and electric bicycles. events such as the 2004 Athens Olympic and
Downstream application products using the 2006 Soccer World Cup in Germany helped
rechargeable batteries such as notebook PCs to drive the global electronic component
and mobile phones require the battery assembly market. Mainland China being the main focus
process before they can be used. The low entry market, attracting the most global investment
barriers of small investment capital size and surpassed Japan and became the biggest global
easily available technology initially attracted manufacturing hub for electronic components.
42
Industry Insights Electronic Components Industry
In 2007, the global electronic components 152.5 billion. Connectors, PCBs and Passive
market, driven by the downstream Components are still taking the lead in this
communication & information business, had a industry.
growth rate of 7% from 2006, reaching US$
Unit: Million USD
180,000
161,152
160,000 152,507
143,119
140,000 131,503
121,745
120,000 108,804
100,000
80,000
60,000
40,000
20,000
0
2003 2004 2005 2006 2007(e) 2008(f)
Source: ITIS Program, IEK/ITRI(2007/12).
Figure 2-2-2 Global Electronic Components Market Demand 2003-2008
Global electronic component manufacturing The new strategy is over concern of technology
in 2007 was focused in Asia, where China transfer risks and also to shorten the time to
accounted for 70%. This ratio will remain market. Canon digital camera production is one
unchanged until 2011 when production costs in example. Another strategy is to contract our
China become unaffordable. Production is then part of the process back to Japan to assure
expected to move to South East Asia, especially product quality. Kyocera is one example
Vietnam. moving its mobile phone component
Japan has been known for its excellence in production line back to its R&D location, in
technology in the electronic component Kagoshima Prefecture of Japan. 100% yield
industry. Its superior electronic component rate of the production line is to be expected
products always play the leading role in the with this new strategy. It seems that these
consumer electronic market. Japanese strategies are very different from that in
companies have recently adopted a new trend Taiwan.
of moving the production line back to Japan.
43
2008 Taiwan Industrial Outlook
America Others A merica Others
8% 2% 6% 1%
Jap an
33% Japan
30%
Asia Asia Europe
48% Europ e 55% 8%
9%
2007 2011
Source: ITIS Program, IEK/ITRI(2007/12).
Figure 2-2-3 Global Electronic Components Market Share (By Region) 2007 and 2011
Downstream application market analysis new demand for PCBs, connectors and LEDs.
indicates that the growth of the global Aside from automobiles, potential markets will
electronic components industry is mainly from include medical, security and national defense
information communication products such as applications. Furthermore, new demand could
the mobile phone and PC markets. These two arise from the creative innovations for
markets account for more than half of the intelligent buildings and safety and security
electronic components market. It is estimated requirements on issues such as the threat of
that, by 2011, the wireless module business will terrorism as well as the natural disasters. The
further drive the industry upward due to the fast systems of these new applications will be
growth of the “Ubiquitous Network”. integrated using wireless communication as
The wireless network and safety features well as a variety of sensors.
required by future automobiles will create a
Others Others Computer
Comp uter
15% 17% &
&
Idustrial Peripheral Peripheral
Idustrial
6% 28% 23%
5%
Automotiv Automotiv
12% 15%
Telecom
Telecom Consumer
Consumer 28%
12%
14% 25%
2007 2011
Source: ITIS Program, IEK/ITRI(2007/12).
44
Industry Insights Electronic Components Industry
Figure 2-2-4 Global Electronic Components Market Share (By Application) 2007 and 2011
The electronic component downstream Mainland China. IC substrate and LED chip
market such as communications and consumer manufacturing also started moving to Mainland
products in Taiwan has continued growing in China in 2007 and the proportion of overseas
2007. Business in the mobile phone, video production is expected to increase. However,
game and digital camera sectors has continued China has a new policy discouraging
to expand, especially in the areas of investment in highly polluting industries such
information & communication products. It is as traditional PCB production, plus the new
s
estimated that Taiwan’ electronic components labor law and new tax law will definitely
output could reach US$ 22.5 billion, soaring increase the cost of running a business in
11% from 2006. China. As such, Taiwanese businessmen will be
Considering the pressures of manufacturing considering relocating their current Chinese
costs and market demand, Taiwanese production to somewhere else, most likely in
components overseas production has increased South East Asia.
to 54% of total output, of which most is in
Unit: Million USD
30,000
24,268
25,000 22,541
20,310
20,000 18,076
16,548
14,292
15,000
10,000
5,000
0
2003 2004 2005 2006 2007(e) 2008(f)
Source: TIS Program, IEK/ITRI(2007/12).
s
Figure 2-2-5 Taiwan’ Electronic Components Output 2003-2008
Impacted by the rising costs of raw materials component industry has been decreasing since
and declining product price, the ratio of added 2004. However, with the total output
value per unit in s
Taiwan’ electronic increasing, the added value of the industry as a
45
2008 Taiwan Industrial Outlook
whole continues to grow, reaching US$ 5,072 2006.
million in 2007, or a growth rate of 8% from
Unit: Million USD
6,000
5,072
5,000 4,696
4,332
4,037
4,000
3,107
3,000
2,000
1,000
0
2003 2004 2005 2006 2007(e)
Source: ITIS Program, IEK/ITRI(2007/12).
s
Figure 2-2-6 Taiwan’ Electronic Components Output Added Value 2003-2007
product inventory was more than JPY 2.0
Important Issues in the billion.
Electronic Components
Industry
Short-Supply of NB Lithium Battery for up
to Two Quarters
Short-Supply Caused by Fire
Damage to Matsushita (MBI) Battery MBI has three lithium battery production
Production Line lines making lithium batteries of the
specification 18650. Their capacity is about 13
s
Japan’ lithium industry has been hurt by a
million units per month, accounting for 16% of
series of incidents in recent years. There was a
the total capacity of the top five manufacturers
huge recall in 2006 on batteries manufactured
s
globally. MBI’ plant is ranked as No.4
by SONY and SANYO. A fire in September
worldwide. The fire at the MBI plant not only
2007 destroyed a battery production plant
caused direct damage of JPY 2 billion, but also
s
owned by Panasonic’ Matsushita Battery
triggered the short-supply of 13 million units
Industrial (MBI) in Osaka Japan. The loss on
per month. It is expected that the short-supply
the damaged manufacturing equipment and
issue will remain for a quarter or two,
46
Industry Insights Electronic Components Industry
s
depending on the progress of MBI’ recovery s
MBI’ fire incident has also created
efforts and capacity adjustments by other opportunities for some second tier
s
suppliers. It is inevitable that Japan’ lithium s
manufacturers such as Taiwan’ E-one and
battery industry output in 2007 and 2008 will s
China’ Lishen who could be able to penetrate
be affected by this. the major markets.
Unit: Million Cell/M MBI LGC Sony
SDI Sanyo Need
100
80
60
40
20
0
06Q1 06Q2 06Q3 06Q4 07Q1 07Q2 07Q3 07Q4
Source: Institute of information Technology; ITIS Program, IEK/ITRI(2007/12).
Figure 2-2-7 Global 18650 Lithium Battery Supply
More Severe Competition between Japan recently been a Japanese oligopoly. However,
and Korea in Lithium Battery Industry
Korean suppliers such as Samsung SDI and LG
Japan has the largest global capacity in Chemicals are catching up in the market,
lithium batteries, mainly supplied by Sanyo, increasing their market share from 2% in 2000
SONY and MBI, accounting for 70% of total s
to 21% in 2007. Panasonic MBI’ fire incident
market worldwide. Japanese products are good gives Korean manufacturers the opportunity for
for their stable quality and high self-sufficiency additional expansion, which could further drive
rate in raw materials. Japanese battery suppliers their market share up to 35% in 2008. It is
therefore have an excellent competitive speculated that Korea might surpass Japan and
advantage in the electronic markets requiring become the biggest lithium battery supplier in
high safety such as mobile phones and the world.
notebook PCs.
The global lithium battery industry has until A Prosperous Future for the LED
47
2008 Taiwan Industrial Outlook
Industry Every NB manufacturer will soon use
backlight technology in their products, with
The LED business has been another star in
strategies either for horizontal expansion or
the electronic components industry in
vertical expansion. In terms of horizontal
2006-2007. LEDs have been mainly used as the
expansion strategy, it can be seen from Table
light sources of indicators. The performance of
2-2-1 that in 2005 smaller Notebooks were the
LEDs in terms of light-emitting efficiency and
major products, whereas by 2007, many larger
intensity has been greatly improved in the past
15 inch screen products could be seen in the
3-4 years. Energy saving has become a hot
market. In terms of vertical expansion strategy,
issue as oil prices continue to rise. The nature
Notebooks that were originally positioned at
s
of LED’ low electricity consumption and low
the high-end of the market are gradually
manufacturing cost has enhanced their appeal
expanding into mid-level price products. With
and attracted a lot of interest recently.
the decreasing price gap between LED
NB Backlight Using LED to Take the Lead
backlight modules and CCFL backlight
in 2008
modules, and a strategy to differentiate the NB
SONY VAIO Type T was the first PC to use
product, the LED backlight module market is
an LED backlight module in 2005. With
expected to continue to grow. In 2008, the
improvements in LED technology, LED
penetration of the LED backlight module is
backlight modules have entered the high-end
predicted to be 15% of the NB market,
NB market. It is expected to become more
reaching as high as 40% by 2010.
competitive with the declining production price
of LED backlight module.
Table 2-2-1 Notebook PCs with LED Backlight
System Company Release Date LED Backlight Module Products
SONY 2005/11 11.1 Inch VAIO type TX series Product
2006/1 13.3 Inch VAIO type SZ series Product
Fujitsu 2005/8 10.6 Inch LOOX T series Product
2006/4 12.1 Inch Lifebook Q series Product
2007/6 13.3 Inch Lifebook S6410 Product
Toshiba 2005/4 7.2 Inch Libretto U100 series Product
2007/6 12.1 Inch Portege R500 Product
ASUS 2007/2 U1 series Product
HP 2007/2 12 Inch Compaq 2510p series Product
48
Industry Insights Electronic Components Industry
DELL 2007/7 XPS M1330
Apple 2007/6 15 Inch MacBook Pro Product
Source: ITIS Program, IEK/ITRI(2007/12).
The large size LED backlight module is LCD-TV using a backlight, which is still the
mainly used in LCD-TVs and LCD-monitors. only commercial product in the market.
Its market share is still very low. In the The application of the LED backlight
example of LCD-TVs, SONY of Japan and module in the LCD-TV market has not been as
Lumileds of the US jointly marketed the first good as expected. From the angle of industrial
LCD-TV “QUALIA 005”based on white light environment, the LCD-TV market is very
backlight. However, the product was competitive pricewise. It is not uncommon to
terminated due to the issue of its high price and see the product price halved within 6 months of
some technology issues such as LED heat its release. The price war restricts the use of
dissipation, driver and color control problems. high price components.
In 2006, Samsung commercialized a 40-inch
Source: NRI(2006).
Figure 2-2-8 Declining Price of LCD-TV
In the LCD-TV backlight market, the savings are not necessarily the consumers’
advantages of a thinner product and energy major concerns. High unit price and weak color
49
2008 Taiwan Industrial Outlook
performance plus the existing business model world economies, increased construction and
t
couldn’ satisfy the market demand. manufacturing activity, and expansion of the
It is forecast that, even with some degree of electricity network both in the country and in
future potential, the LED backlight module the cities. In 2005, the global lighting market
t
market won’ have a major impact on the was US$ 74.6 billion and is expected to grow
market until the year 2011 when high intensity to US$ 90.4 billion by 2010. As to its energy
color/white LED technology becomes mature consumption, in 2005, lighting systems
and LED prices decline. consumed 19% of global electricity as most
light sources are still based on the low
LEDs unlikely to replace Traditional
Lighting in the Short-run efficiency light sources such as traditional
The global lighting market is very dependent incandescent bulbs (8-25 lm/W), which roughly
on economic growth, population growth and accounts for about 1/3 of the current light
related industrial development (e.g. sources. With rising oil prices and the
construction and automobile production). The development of new light-emitting technology,
short-term impact will depend on technology alternative light sources should have the
innovation, environmental concepts (energy opportunity to penetrate the market.
s
efficiency standards) and consumer’ whims.
Recently, the demand in the lighting market
has continued to grow, driven by the growing
Unit: M illion USD Channel letter/Contour Architectual M achine Vision
Residential Consumer Protasble Safety /Security
1,000
Enterainment Retail Disp lay Outdoor Area
Off-Grid
800
600
400
200
0
2006 2007 2008 2009 2010 2011
Source: Strategies Unlimited; ITIS Program, IEK/ITRI(2007/12).
50
Industry Insights Electronic Components Industry
Figure 2-2-9 LED Lighting Applications
It would be impossible for LEDs to markets of commercial lighting and building
completely replace the traditional lighting lighting.
without the involvement of the government
Profit Squeezed by Rising Costs of
(e.g. Laws to regulate mercury usage or Raw Materials
incandescent bulbs). Therefore, in the short
International raw material prices have risen
term LED marketing will focus on the
sharply, driven by the economic cycle recovery
commercial lighting, which has lower
s
and the rapid growth of emerging nation’
sensitivity to the commercial light consumers.
markets. Over the last 5 years, the impact has
t
The LED product doesn’ have to satisfy the
also driven up the prices of key metal materials
requirements of existing lighting systems.
required by the electronic components industry.
Instead, it could be designed based on the
The price of Indium used in the transparent
commercial requirements. Furthermore,
conductive ITO thin film has gone up by five
residential lighting systems are driven by price.
times. The price of copper used in the PCB
s
The government’ intention on whether or not
copper foil and conductive bridge has also gone
s
to subsidize the industry, or the consumer’
up 50%, even after taking into account
willingness to accept LEDs can all affect the
increasing copper stocks and a copper price
success of LED lighting in the home. It could
drop of 20% in October 2007. Furthermore, Ni
first be considered in the areas requiring lower
and Co used in the anodes of rechargeable
light levels such as kitchens or bathrooms. It is
batteries have risen by 4-5 times.
predicted that the LED lighting market could
reach US$ 980 million by 2011, mainly in the
Table 2-2-2 Metal Raw Material Price Comparison
Unit: %
Price & Price Hike
Applications of Electronic
Metal Materials Price Price Applications Industries
Hike Components
2002 Mar 2007 Oct
Gold (USD/troy oz) 320 825 257 IC Packaging, Machinery IC, Electronic &
Components Communication
Copper (USD/ton) 1,550 7,880 508 PCBs, Other Electronic & Electronic & Communication
Machinery Components
Nickel (USD/kg) 6.54 31.9 487 Rechargeable Batteries Electronic & Communication,
51
2008 Taiwan Industrial Outlook
Solar Energy
Cobalt (USD/kg) 15.24 66.13 433 Rechargeable Batteries Electronic & Communication,
Solar Energy
Indium (USD/kg) 85 450 529 ITO Optic-electronic
Platinum (USD/troy oz) 513.75 1,445 281 Resistors, Thermocouples, Electronic & Communication
HD, Inductor Materials
Crude Oil (USD/barrel) 25 86 344 Plastics & Chemicals (e.g. Electronic & Communication,
Fiber Glass) Opto-electronic
Source: ITIS Program, IEK/ITRI(2007/12).
Squeezed Gross Profit actions such as adjusting product portfolio and
In the example of PCB manufacturing, price, reducing labor and manufacturing costs
copper foil accounts for 15-20% of the raw to maintain the profit margin. However, in the
materials. The profit was seriously eroded long run, raw material prices will continue to
when the copper price underwent a big hike in rise. Some manufacturers have even been
2006. In 2007, copper price again rose to a trying to get involved in vertical integration
peak of US$ 8,000 per ton, creating huge investment in copper foil substrate production.
pressure on production costs. PCB Most companies are still facing the issue of
manufacturers responded with a series of profits being squeezed.
Cost weight of material Gross Profit Copper($/Kg)
70% 8
60% 7
6
50%
5
40%
4
30%
3
20%
2
10% 1
0% 0
2001 2002 2003 2004 2005 2006 2007(e)
Source: ITIS Program, IEK/ITRI(2007/12).
Figure 2-2-10 PCB Manufacturing Gross Profit versus Copper Price
Japan and Korea Raise Concerns over Key s
Metal Raw Materials; Taiwan’
52
Industry Insights Electronic Components Industry
Opportunities in Substitution, Material such as Nickel, Cobalt, Indium, and Platinum
Reduction and Recycling
used in the electronic components are all on the
Japan and Korea have become aware of s
list. In addition, in July 2007, Japan’ METI
being dependant on China for the supply of key also proposed a five-year development on the
metal raw materials. Action is necessary to precious metals of Indium, Dysprosium, and
reduce their dependency on these key metal Tungsten.
materials, which are facing soaring prices and Korea has proposed a metal technology
an export quota control policy brought in by the development strategy targeted at non-lead
Chinese government. Japan started a metal metal packaging materials, metal film material
reserve system as early as 1983, in which ten used on displays and metal materials used in
precious metals are protected. The key metals connectors and special sensors.
Tasks to Upgrade R&D Capabilities Aggressive R&D Tasks Leading Role in Pioneering R&D Tasks
•Metal Materials for Medical Devices •Super High Heat Resistant Alloys for •IC Materials in Lead Frame
•Metal Materials for a Living Body the Power Generation Devices •Film Materials in Display
•Metal Materials for Intelligent Robot •Super Light Alloys for the •Materials in PC & Communication Key
High •Metal Materials for Virtual Reality (VR) Transportation Machineries Components
Market Growth
• Pb-free Copper-Zn Alloy
Market Growth
Market Growth
•Ultrahigh Purity Precious Metals •
•Special Plated Steel for Precision
•Metal Powder Alloys
componet
•High Purity and Clean Metal Materials
•Forming Material for Aluminum Reactor
•Precious Metal and General Materials
for Key Components
National R&D Supporting Mid -Term Goal to Commercialize Short -Term Goal to Commercialize
•Metal Materials for Special Weapons •Magnesium Alloy Materials •Aluminum Compressive Materials
Medium
•Rare Earths & Bonded Magnet •Shadow Mask Materials
Materials
•Amorphous Magnetism for Key
•Copper Alloy Resistant to Sea Water Components
•Surface Mounted Metal Materials •Materials for Connector
•Metals for Special Sensor
Individual R&D in the Industries Improved R&D Tasks Improved R&D Tasks
Low •General Steel •Special Steel for General Structure •Materials for Copper & Aluminum Wires
•General Non-Iron Metals Applications •Copper-Brass Structure
Applications
Low Medium High
Competitive Advantages of R&D Capability S
ource: KIET of Korea(2005/12).
Figure 2-2-11 Korea 2020 non-ferrous Metal Technology Development Strategy
Taiwan is facing the same issue as Korea and of metal ores. However, metal materials are not
Japan with regards to securing supplies of emphasized on such a scale in Taiwan that the
s
precious metals. The focus of Taiwan’ industry long-term industrial competitiveness might be
is in the sectors of electronics, information, and threatened. It could be an opportunity for
communication. Taiwan has no natural reserves Taiwan to develop competitive advantages in
53
2008 Taiwan Industrial Outlook
metal material recycling, substitution, and materials such as Zinc Oxide or Magnesium
reduction of material consumption. Hydroxide to replace Indium used in ITO.
In the past two years, downstream Material reduction is another approach, such as
manufacturers could respond to the pressure the use of nano-materials of Indium Oxide to
from rising raw material prices by taking action reduce the consumption of Indium metal.
such as adjusting the product portfolio, price Recycling is also a direction for R&D. In 2006,
transfer and reducing the manufacturing costs. SHARP announced it had developed a process
However, the long term solution has to depend to recover Indium from recycled LEDs. In
on R&D. In the example of Japan, huge R&D 2007, its operations demonstrated that 99% of
efforts have been made to develop new the Indium can be recovered.
Reducing Consumption
Recycling on Metal Materials
on Precious Metals
Opportunities
Opportunities Developing & Using
Alternative Metal
Improving Process Efficiency Materials
for Waste Reduction
Developing Thinner &
Lighter Products
Source: ITIS Program, IEK/ITRI(2007/11).
s
Figure 2-2-12 Taiwan’ Future Opportunities in Metal Material Development
The Trend of System Products 3,900-4,600 is an example of the other end of
Moving Toward M-Shape Market the market.
Due to the formation of an M-shape society, High Growth for System Products with High
consumer products have to be directed toward Performance Requirements
an M-shape market. Low priced notebook PCs The high performance components market is
s
in the range of US$ 100-200, such as ASUS’ very promising due to the special requirements
s s
EeePC, Intel/Microsoft’ UMPC and MIT’ of downstream applications for high
OLPC are designed to satisfy the low-end performance, appearance and new features. As
market. The high-end luxury Nokia Vertu series with the successful case of Nokia Vertus, some
mobile phone with a price tag of US$ companies are also attracted by this segmented
54
Industry Insights Electronic Components Industry
market. It is predicted that high-end mobile developed nation market, while high-end
phones will take as much as 44% of the market mobile phones (price range US$ 150-200) will
by the year 2015, as shown in Figure 2-2-14. also focus on the developed nation market but
Low-end mobile phones in the price range US$ with more luxury features. The flag-ship
30-70 will focus on the Indian market, while mobile phones (price range US$ 200 and up)
mid-level mobile phones in the price range include PDA features, and the platinum level
US$ 70-100 will focus on Chinese market and mobile phones (price range US$ 3,000 and up)
other BRIC Nations (Brazil, Russia, India and feature shell and key components made of
China). Mid-high level mobile phones (price precious platinum metal.
range US$ 100-150) will focus on the
24 Hr Private
Blue Diamond Assistant
High Service
Genuine
Resolution 20 mm Leather
Display Speaker
Ruby Liquid metal Diamond
Diamond Super-hard Alloy Shape
Super-
Substrate Frame Body Sculpture
Keypad
Source: United Daily News Vertu.com.cn; ITIS Program, IEK/ITRI(2007/11).
Figure 2-2-13 Low-end PC and High-end Mobile Phone
55
2008 Taiwan Industrial Outlook
Unit: Million Platinum level Flag-ship High-end
1200 Mid-high level Mid-level Low-end
1000
800
600
400
200
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: NRI(2007/02).
Figure 2-2-14 Future Trend Analysis on Mobile Phone Market
s
Japan’ suppliers have the competitive is TDK who developed the core technology for
advantage based on their well established core making magnetic material from ferrous salts.
strategies on materials. Their core technology TDK has long been the leader in the magnetic
has been embedded in a black box in the tape industry and has also entered the resistor
development process. They further reinforce production business. In 2004, based on their
the core technology through M&A building data storage core business, they became the
their economic scale advantage. It is an first media manufacturer to join the
s
important issue for Taiwan’ manufacturers to development of the next generation DVD
find ways to compete effectively with Japanese Blue-Ray technology.
companies. Some Japanese manufacturers have moved
For example, Murata of Japan is the world their production facilities to the countries with
largest ceramic capacitor manufacturer. They low labor costs such as China and Vietnam to
developed the material core technology to reduce their manufacturing costs. Others have
transfer both ceramic and multi-layer electrode kept their production lines in Japan but have
onto a thin sheet or other baked shape. The embedded their core technology in the black
ceramic technology is further applied in many box of the process equipment. They are able to
other electronic components. Another example differentiate their products by quality and price.
56
Industry Insights Electronic Components Industry
Kyocera is integrating their R&D and requirements of simplicity, robustness and
production line in mobile phone key durability. Their purpose in the PC market is to
components. Semiconductor photo-resistor satisfy the customers need to collect real-time
s
manufacturer JSR and Shin Etsu’ jointly information rather than for luxury performance.
developed soaked photo-resistor is another The electronic components industry can benefit
example of the advantages of cooperation with from mass sales in the low-end product market;
equipment suppliers. even if the profit margin is low. However, the
rising threat from Chinese competitors will be a
Taiwan has Advantages in Low-end Market,
but Facing Pressure from China serious concern for Taiwanese electronic
The low-end products in the M-shape market component manufacturers.
are positioned to meet the s
market’
OEM
OEM:
Hinge Quanta ECS
Quanta, ECS
Hinge:
SHIN ZU SHING
SHIN ZU SHING, Passive
Passive
Jarllytec
Jarllytec Component
Component:
YAGEO, Walsin
YAGEO Walsin
PCB:
PCB
Hannstar Board
Hannstar Board,
Gold Circu
Gold Circu Connector
Connector:
COXOC
COXOC
keyboard:
keyboard
SunRex, ENE
SunRex ENE Battery Park:
Park
Panel:
Panel Simplo, celxpert
Simplo celxpert
Chimei, AUO
Chimei AUO
Source: ITIS Program, IEK/ITRI(2007/12).
Figure 2-2-15 Low-end PC Supply Chain in Taiwan
Humanization Interface Can Drive the Market Demand
57
2008 Taiwan Industrial Outlook
Electronic pets with humanization interface looking forward to 2020 and 2030. The
such as Aibo the dog and Pleo the dinosaur humanization interface is emphasized. The
have become the new trend in the recent years. quantity of electronic components required
“Life form” designs with virtual human such as touch screens, sensors, micro-motors,
interfaces can perform very intricate actions and audio/video control in the end-product
and respond with very lifelike audio and video interface designs is expected to grow. These
effects. In the example of Pleo the dog, Pleo products of non-tool ICT type are based on
can respond with realistic pet actions such as innovative and creative designs from the
tail/head movement, sneezing, yawning and human emotional scenarios that require the key
playing. The humanization interface will be a attributes of true feeling analysis. How to
key feature in future electronic product design. respond to this trend in the required
Figure 2-2-16 illustrates the anticipated components will be an issue for Taiwanese
humanization trend of system product design manufacturers to study in the years to come.
Sense of
Smell
Applications of Animal
Technology (e.g. Disease Sense of
Sense of Transfer Technology detect, Satety Vision
Taste on Taste Virtual 3D Display
Taste of Seasonal Food Odor Trasnfer (Glass free 360C Projection technology)
Imitation Technology (e.g. The Technology (e.g. TV
fridge that can imitate the taste) that can transfer Odor)
Electornic Page
Taste Sensor evaluate
Materials for Body
Wearable Display (e.g.
Response
Electronic Paper that could
change the displayed
images/colors based on the
human mood)
Touch Transfer
Technology to Detect Human Beings Technology
Sense of Sense of
Hearing & Objects (e.g. Feeling technology Touch
using the magnetic wave)
Interface of Feeling (e.g. Technology to
transfer the feelings)
SENS
Source: Mitsubishi Research Institute, MRI(2007/02).
Figure 2-2-16 Humanization Trend of System Product Design for 2020 and 2030
58
Industry Insights Electronic Components Industry
2008, is expected to have a growth rate of
Development Trends for the roughly 7.7%, lower than that of 2007. Its total
Electronic Components output will reach US$ 24,268 million. Future
Industry in 2008 growth will be mainly in the areas of LEDs, RF
As a result of the impact of the subprime Passive Components, IC Substrates and Battery
mortgage crisis in the US, the global electronic Packs.
component growth rate is expected to be about
Conclusions
5.7% in 2008, slightly lower than 2007.
However, the growing market in some In 2007, global electronic component market
emerging regions will substitute for a weaker demand, driven by the downstream
American economy and drive the global information/communication market growth,
business, pushing the global electronic reached US$ 152.5 billion, a slight increase of
component market to the size of US$ 200.2 7% over 2006. The mainstream markets for
billion by 2011. However, the low-end products Connectors, PCBs and Passive Components
will be the main business in the emerging remain the same. It is predicted that in 2008 the
nations, meaning that a more severe price war market will have a moderate growth rate of
in those regions is inevitable. On the other 5.7%. The future market will be stimulated by
hand, high-end and high-performance products the fast economic growth from the emerging
will continue to be the major market in the markets, the strong market demand in the
developed nations such as the US, Japan and vehicle information networking, digital home
the EU. appliances and medical applications. By 2011
Taiwan’ electronic
s component output, the global market could reach US$ 200.2
impacted by the global economic slow down in billion.
Table 2-2-3 2008 Global Electronic Component Market Demand Forecasting
Unit: Million USD; %
Products 2007(e) 2008(f) Growth Rate
Light Emitting Diodes (LED) 6,532 7,221 10.5
Laser Diodes 3,158 3,200 1.3
Resistors 6,300 6,700 6.3
Inductors 7,750 8,250 6.5
Capacitors 19,350 20,700 7.0
Filters 1,946 2,120 8.9
59
2008 Taiwan Industrial Outlook
Products 2007(e) 2008(f) Growth Rate
Oscillators 4,444 5,001 12.5
Rigid PCBs 30,515 31,584 3.5
Flexible PCBs 6,382 6,445 1.0
IC Substrates 7,380 7,680 4.1
Connectors 45,550 48,300 6.0
Battery Packs/Rechargeable Batteries 13,200 13,952 5.7
Total Electronic Components 152,507 161,152 5.7
Source: ITIS Program, IEK/ITRI(2007/12).
s
In 2007, Taiwan’ electronic component Taiwanese manufacturers. It is predicted that in
industrial output was US$ 22,541 million, or 2008, the growth rate will decline to about 8%
equivalent to an annual growth rate of 11%; due to the global economic slowdown, but it
PCBs, Connectors and Passive Components will be driven forward by the fast growing
being the main products. The proportion of business in LEDs, RF Passive Components, IC
overseas production continues to rise to as Substrate and Battery Packs.
much as 54%. The issue of a highly s
Taiwan’ overseas production is largely
concentrated downstream market still remains a concentrated in Mainland China. It is predicted
problem. However, the increasing profit against that much of this might migrate to Vietnam due
2006 in general has been partly due to the to the increasing production costs triggered by
integration efforts on the value chain made by new Chinese policy.
s
Table 2-2-4 2008 Taiwan’ Electronic Component Industrial Output Forecasting
Unit: Million USD; %
Products 2007(e) 2008(f) Growth Rate
Light Emitting Diodes (LED) 1,694 2,004 18.30
Laser Diodes 101 99 -1.98
Resistors 772 803 4.02
Inductors 300 314 4.67
Capacitors 2,451 2,695 9.96
Filters 78 89 14.10
Oscillators 596 667 11.91
PCBs 7,083 7,376 4.14
FPCs 1,165 1,155 -0.86
IC Substrates 2,122 2,373 11.83
60
Industry Insights Electronic Components Industry
Connectors 4,024 4,253 5.69
Rechargeable Batteries 326 335 2.76
Rechargeable Battery Packs 1,829 2,104 15.04
Total Electronic Components 22,541 24,268 7.66
Source: ITIS Program, IEK/ITRI(2007/12).
s
The fire that destroyed Panasonic MBI’ profit. Chinese manufacturers with their lower
lithium battery production line further costs can take this opportunity to penetrate the
exacerbated the short-supply problem in the market.
market. The incident, however, gave Korean As to the high-end products, luxury
competitors the opportunity to expand their performance and high standards of design and
market shares. Energy saving LEDs have appearance, good innovation and creativity are
become a hot issue due to rising oil prices. essential requirements in this market. Taiwan is
However, the penetration of LED products into unlikely to benefit much due to the nature of
the general lighting market would be very this type market, even though a higher profit
difficult in the short term. LCD backlight margin is expected. Japanese suppliers have
development is the key to its growth. The price better competitive advantage as they have their
of precious metals used in electronic core technology embedded in the black box
components has increased by 4-5 times in the under the process equipment. The
recent years. Both Japan and Korea have competitiveness is further reinforced through
strategic plans for supply of these materials. In M&A to create economic scale and strengthen
this regard, Taiwan should consider exploring the core technology. The most effective ways to
the directions of substitution, recycling and compete with Japanese companies is an
reducing consumption. s
important issue for Taiwan’ manufacturers.
End products in the future will be polarized The humanization interface could drive
into the two ends of the M-shape society. The market demand. A new trend is to create a “Life
low-end PC products will aim to satisfy the form”design with a virtual human interface in
customers’demands for real time information, the toy market. The required amount of
but not for the luxury performance that requires electronic components such as touch screens,
expensive specialist components. It could sensors, micro-motors, and audio/video
therefore easily drive the general electronic controls in the end-product interface designs is
component market growth, but with lower unit expected to increase. To penetrate this high
61
2008 Taiwan Industrial Outlook
s
growth, high profit margin market, Taiwan’
electronic component manufacturers need to Year 2003 2004 2005 2006 2007
devote more effort to studying the demands of NTD/US 34.42 33.42 32.17 32.53 32.84
future life and undertake joint research in this Note: Exchange rate of US$ to NT$
field in conjunction with multinational systems (IEK/ITRI, ITIS)
companies.
62
Industry Insights Electronic Components Industry
63
