Friday, August 13, 2010

Demand For Electronics To Drive PCB Growth

The rising demand for LCD / LED back-lit televisions as well as electronic industrial and medical equipment will drive the growth of printed circ'uit board (PCB) manufacturing and the PCB assembly industry this year.The companies that are expected to reap benefits include GUH Holdings Bhd, Japan-based Ibiden Co Ltd, P.I.E. Industrial Bhd, and Vitrox Corp Bhd, which are involved in PCB manufacturing, PCB assembly, and PCB optical inspection equipment manufacturing.GUH, a PCB manufacturing specialist, expects its sales of PCBs used in LCD/LED televisions to register a strong single digit growth over last year’s. The orders for the third quarter ending Sept 30 are expected to be about 5% stronger than last year’s corresponding period, which was about RM28mil for LCD/LED PCBs. "The group’s revenue from its entire range of PCBs is also expected to be about 5% stronger in this third quarter, compared to RM70mil achieved in the previous year corresponding period,” group managing director Datuk Kenneth H’ng said. In 2009, the group posted approximately RM273mil, of which RM105mil, or about 40%, came from PCB sales to LCD/LED back-lit televisions.H’ng added that the group’s monthly production of double-layer PCBs, which were popularly used in LCD/LED televisions, had increased by about 10% to about 50,000 sq metre since the start of the second quarter 2010. GUH are currently undertaking a RM20mil expansion exercise to increase the production facilities in Suzhou and Penang, which is expected to be completed early next year.Once completed the group’s monthly production of double layer PCBs would increase by another 10% from the present 50,000 sq metre.The group had so far secured orders till August .According to the California-based research house, DisplaySearch, the growth of LCD televisions would increase by 29% to 188 million units this year.China and Japan are two key areas of growth for LCD televisions, according to the report which was released in late June 2010.The growth of LCD sales in China is expected to grow by 35% in 2010, while in Japan, the growth is expected to increase by 36%, which is three times faster than other developed markets in North America and Europe. Over the next four years LCD TV growth emphasis will shift to emerging markets like Asia Pacific, which includes India and Latin America, the report said.P.I.E. Industrial Bhd expects its PCB assembly business to increase by about 30% in 2010 from about RM90mil last year, which was about 40% of the group’s 2009 revenue of RM226mil. The drivers of growth are coming from scanning and sensor control devices used in the industrial and medical electronics sectors. Although the business has increased, the margin has reduced, due to the higher cost of electronics raw materials, as a result of a global shortage, and the ringgit strengthening. The global production value for PCB products will grow from about US$42bil to about US$53.7bil between 2006 and 2010 at an average compounded annual growth rate of about 6.3%.Vitrox Corp Bhd, a leading automated equipment manufacturer in the country, has also received strong orders for its PCB optical inspection equipment this second half.Group managing director Chu Jenn Weng said from July 2010 till October 2010, around 40% to 50% of the orders for the group’s automated equipment comprised advanced optical inspection equipment used for checking defects in the PCB and PCB assembly industries.“We are investing RM20mil this year to expand our research and manufacturing operations by building another 120,000 sq ft facility next to its present 30,000 sq ft plant.“This facility, scheduled for completion in the second half 2011, will also be developing a future range of advanced optical equipment for the markets in Asia.“In 2010, the advanced optical inspection equipment for the PCB industry is expected to generate between 40% and 50% of the group’s revenue, compared to less than 10% last year,” Chu said.According to Global Industry Analyst, a California-based research group, the PCB assembly inspection equipment market was expected to grow to US$1.34bil in 2011 and US$1.4bil in 2012 from US$1.2bil this year.Meanwhile, Ibiden Co Ltd, the world-renowned PCB manufacturing specialist for the smart phone market, is targeting for its plant in the Penang Science Park at Bukit Minyak to start operations in the second quarter of 2011.Ibiden Electronics Malaysia Sdn Bhd (IEM) managing director Toru Yamazaki said in an interview that some RM800mil had been invested into its first plant which would hire about 900 employees, of which 15% would comprise technicians and engineers.\IEM was scheduled to commence operations in the third quarter of 2009, but due to the global economic crisis, it postponed its business plans.”We are planning for a second plant in 2012, which will form the second phase. The investment for phase two is estimated to be about RM400mil.Yamazaki said in the first year, the target was to produce 20,000sq metre of PCBs for the smart phones and higher-end mobile phones, utilising about 60% of the production space of the plant, which had a built-up area of about 700,000sq ft."The plant in Penang is now 95% completed.”Presently our operation in Beijing is the largest in the world. The operations in Penang will be number two in terms of size and importance, when we commence operations next year.”We plan to expand further in Penang to make the group’s operations here the largest in the world,” he said.

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