Chinese PCB and equipment market

SHANGHAI, CHINA: In 2008, the sales revenue of PCB (Printed Circuit Board) products in Chinese market has achieved RMB118.8 billion, and the single sided printed board, double sided printed board, multilayer printed board, and flexible printed board account for the 2.5 percent, 6.9 percent, 73.8 percent, and 16.8 percent of the total market, respectively.

The global financial crisis exploded in the fourth quarter of 2008 brought serious negative influences to Chinese PCB industry, but thanks to the high growth during the prior three quarters, the sales revenue of PCB products in China achieved the increase of 2.2 percent in 2008.

In order to confront the economic crisis and guarantee the industry's healthy development, Chinese government constituted the Readjustment and Development Plan of Electronic Information Industry, to prevent the industry's large-scale slide in some extent.

Frost & Sullivan forecasts that the Chinese market demands for PCB products reach RMB97.2 billion with the decrease of 18.2 percent in 2009, and the market is expected to rebound in 2010 with the gradual emergence of incentive policies' effects and the recovery of consumers' confidence.

According to Shuguang Zhang, Consultant of Automation & Electronics of Frost & Sullivan, the demands for electronic products directly decide the development of PCB industry, and there are several hot topics in current market:

Firstly, the promotion of 3G mobile communications. With the popularization of 3G technologies, the enormous market demands for the smartphone, the application terminal of 3G technologies, will be released gradually.

At the same time, the appearance of netbook, which is remarkable for its low price and compact size, makes it possible for the notebook to penetrate into the middle/low end market fast. All of the market evolution processes mentioned above closely relate to the prices adjustment of 3G communications.

On the one hand, all of the three mobile communication operators in China wish to get the first-move advantages in the new domain of 3G market; on the other hand, they are unwilling to abandon the 2G market at once with the consideration of the existing stable revenue and previous large investment in it.

It is just the ambivalence that makes the ending time of 3G introduction stage unclear. It is anticipated that it is the China Unicom that firstly triggers the large-scale price reduction among the three operators due to its least interests in 2G market.

Secondly, the spread of the digital TV related products. Under the condition that the government plays the leading role in the whole process, the technical upgrading status is the main determinant of its fast market expansion.

Thirdly, Appliances to the Countryside. Chinese government's original intention to advance this activity is to enlarge domestic demands and raise the living standards of farmers. However, as the result of stiff policies such as the troublesome subsidies procurement procedure, the lack of effective supervision system to prevent execution deviations, and the concussion from the emulational products, it is still far from the expected results.

Last but not least, the development of automotive electronics industry. During the economic crisis, while the European and US auto market suffered dismal sales records, the Chinese auto industry inversely realized continuous growth, and speeded up its oversea expansion through merger and acquisitions. At the same time, the closely correlated automotive electronics industry is driven ahead.

Despite those hot issues, Chinese PCB manufacturers still keep conservative attitudes toward the market, and most of them cut their equipment procurement budget greatly, and delayed the construction of new production lines, which lead to the sharp shrink of the Chinese PCB production equipment market.

Frost & Sullivan predicts that Chinese market demands for PCB production equipment will be RMB19.4 billion in 2009, about 17.8 percent lower than 2008. The total market is estimated to resurge from 2010, and it is expected to arrive at the same market volume in 2008 in two years.

The manufacture process of PCB products could be generally divided into six phases: board processing, assembly, drilling, cutting, printing, and inspection. Foreign manufacturers take up the largest market share in Chinese PCB equipment market, and their equipment prices are often two to ten times of local ones'.

The equipment types with high localization ratio include etching tank, cut sheet laminator, exposure systems in the board processing process, screen printing machine in the printing process, and electric tester in the inspection process.

In 2008, the factories located in China totally provided the PCB production equipment with the sales revenue of RMB 8.0 billion, and 92.5 percent of them are contributed by local manufacturers. The PCB production involves masses of equipment, and there is no single equipment manufacturer who could provide all or most of the equipment types. The top four PCB equipment manufacturers in China, Han's Laser, Kejie, Bürkle, and CSUN, only take up the market share of 8.5 percent in sum.

Nowadays, China still lags far behind Europe and US in the development of PCB industry: a) the core technologies to produce complicated multilayer PCB are held in foreign giants; b) the supply of high-end production equipment mainly relies on importation; c) it is lack of matured industry standards; d) the coordination role played by industry associations does not work effectively.

In the post-crisis times with the coexistence of challenges and opportunities, the common issue for each Chinese PCB enterprise to consider seriously is how to realize its economic growth while taking on the necessary environmental responsibilities.