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Growth Potential in the SMT Screen Printer Market
December 31, 1969 |Estimated reading time: 3 minutes
During fourth quarter 2003, SMT equipment vendors began to see positive signs of growth after a few tough years in the market. The question still remains: What type of growth is expected to take place over the next five years in the SMT industry? This article takes a snapshot of the screen printer market.
By Keith Robinson
In 2003, revenues in the SMT screen printer equipment market totaled $155.1 million. Historically, two major players, DEK and MPM, have dominated this market. Over the past few years, EKRA has increased its presence in this industry. In 2003, these three companies accounted for 68 percent of the SMT screen printer market, and are expected to continue to hold a majority market share over the next three to five years.
New equipment OEMs are facing increasing pressure from the used SMT equipment market. Several manufacturers now are faced with the reality of competing with their own brand of equipment reintroduced as secondhand equipment. Some large contract manufacturers who have not traditionally purchased used equipment now are reconsidering it, especially when setting up manufacturing facilities in low-cost regions such as China. Used screen printers represented 25 percent of the market in 1999. In 2003, the used segment for screen printers increased to 39 percent of the market.
Some major issues may help new equipment vendors grow. A majority of the used equipment sold through independent companies is "as is," with no after-sale support. In some instances, an electronics manufacturer will liquidate its equipment and take the good parts from a machine, installing them on the kept equipment, thereby cannibalizing the machine to be sold in the used market. Therefore, a buyer might be taking a serious risk when purchasing "as is," and making a machine operational could eat up any potential cost savings. As a result, some new equipment vendors now have a used equipment division, and provide better support, refurbishing machines to add more value for their customers. New equipment vendors with used equipment divisions also are providing spare parts and other services, something electronic manufacturers have difficulty obtaining when purchasing used equipment "as is" from an independent provider. At the same time, not all independent used vendors sell equipment "as is."
China currently is seeing increased screen printer sales because of the ramped-up rate of electronics manufacturing taking place there. China is poised to become the high-volume manufacturing hub in the electronics industry. In 2003, Asia-Pacific, excluding Japan, produced 43.6 percent of revenues in the SMT screen printer industry. With increased demand in Asian markets, several SMT screen printer companies are rethinking their strategies for the North American and European markets.
The combination of technology ad-vances in the medical industry and an aging baby boomer generation means future growth. The process to get a device app-roved is stringent, so medical device OEMs are reluctant to move manufacturing offshore. In 2003, the medical and aerospace/defense market accounted for 17.6 percent of sales in the SMT screen printer industry. This number is expected to in-crease over the next five years.
Another area of growth for SMT screen printer manufacturers is software sales. Equipment vendors and third-party manufacturers are seeing increased demand as electronic components and printed circuit boards (PCB) grow smaller. Some of the errors or faults on a PCB assembly can be traced back to screen printers. The most common faults are caused by a misalignment between the stencil and the board or the inability of a screen printer to print correctly. Therefore, mechanical parameters must be adjusted using real-time monitoring software that realigns the boards and adjusts squeezing time, board movement and other parameters. Most of these are process-oriented parameters controlled by machine software. Demand for this software also is helping drive revenues in the SMT screen printer market.
Although some trends will provide growth in SMT screen printers, some issues can restrain it as well. One restraint is the fact that several electronic manufacturers purchased new equipment in 1999 and 2000. The economic downturn means that several of these machines have logged low hours of usage and will not need to be updated for another two to three years.
Another restraint is the double-edged sword of used equipment. It does provide some growth opportunities but can limit new equipment sales. Since some EMS providers and OEMs have consolidated manufacturing operations, an excess of equipment is on the market. Price pressures also will limit revenue potential.
Conclusion
Demand is projected to be moderate in the SMT screen printer industry. Market expansion in Asian markets as well as software sales are expected to help growth in SMT screen printers. As more companies have dedicated used equipment divisions, these companies will be in a position to better serve electronic manufacturers compared to independent resellers that sell equipment "as is."
For more information, contact Julia Paulson, Frost & Sullivan, (210) 247-3870; E-mail: jpaulson@frost.com.