-
- News
- Books
Featured Books
- smt007 Magazine
Latest Issues
Current IssueBox Build
One trend is to add box build and final assembly to your product offering. In this issue, we explore the opportunities and risks of adding system assembly to your service portfolio.
IPC APEX EXPO 2024 Pre-show
This month’s issue devotes its pages to a comprehensive preview of the IPC APEX EXPO 2024 event. Whether your role is technical or business, if you're new-to-the-industry or seasoned veteran, you'll find value throughout this program.
Boost Your Sales
Every part of your business can be evaluated as a process, including your sales funnel. Optimizing your selling process requires a coordinated effort between marketing and sales. In this issue, industry experts in marketing and sales offer their best advice on how to boost your sales efforts.
- Articles
- Columns
Search Console
- Links
- Events
||| MENU - smt007 Magazine
Today's SMT Placement Equipment Market
December 31, 1969 |Estimated reading time: 6 minutes
By Keith Robinson and Raman Monga
In the beginning of 2001, the SMT industry entered one of the worst recessions in the history of the market. SMT placement equipment manufacturers experienced revenue declines of more than 40 to 50 percent. As a downturn in the communications industry became clear, major electronics companies announced job cuts, restructuring and lowered forecasts. Since then, many companies are struggling for survival.
Currently, several electronics assembly manufacturers have idle SMT lines in their manufacturing facilities that are the result of limited demand for new electronics products, such as cell phones and computers. With idle SMT lines in the market, several electronics assembly manufacturers do not need to purchase new SMT placement equipment.
Global unit shipments for wireless handsets are anticipated to increase with new demand from China, which has emerged as a safe haven during the worst slump in the SMT industry. To meet the rapidly increasing domestic demand, companies are rushing to help build China's telecommunications market because of its potential (and because Western Europe and the United States already have high penetration rates for cell phones). Several foreign companies have located facilities in China. With China joining the world trade organization (WTO), the flow of capital, technology and management experience from multinationals is expected to gain momentum. As a result of the phenomenal growth in China, however, many Southeast Asian nations like Malaysia and Singapore have witnessed an exodus of electronics companies.
The current market picture favors large players that have a strong global reach - especially the ones that can serve Asia effectively. The electronics manufacturing shift to China is likely to have long-term effects on some of the smaller SMT placement equipment vendors in United States and Europe. The best future growth prospects are likely to be in developing countries where electronics markets are less evolved. Some of those opportunities exist in South and Central America, where countries are attempting to build their electronics presence.
Used Equipment Market
Another trend impacting the SMT placement equipment market is price erosion. Continued pricing pressure has forced several manufacturers to refocus on differentiating themselves through more advanced technologies and better customer service. Some of the SMT equipment vendors have adopted a comprehensive pre-owned program, allowing manufacturers to trade their noncompliant technologies and upgrade with the latest equipment. Additionally, companies are offering refurbished machines with a full warranty and complete service agreement. Leading SMT placement equipment manufacturers are offering leasing and financial support, allowing its customers to remain flexible and optimize cash flow. Leasing has become beneficial for customers because it offers protection against obsolescence and declining technology, as well as providing tax advantages for assemblers.
The used SMT placement equipment market continues expanding. With several idle SMT lines, electronics manufacturers are selling their unused equipment to save on expenses and to increase their profit margins. They are flooding the used equipment market today and this is evident by the number of used equipment sales that have taken place.
Some companies have realized that used equipment does provide advantages for smaller electronics assemblers. They can purchase a used, high-end machine at a fraction of the cost of a new one. Third-tier service providers then have the capability to compete with some of the larger subcontractors because they can afford high-volume machines close to the cost of a low-volume new machine. The used equipment market is expected to negatively impact the sale of new low-volume placement equipment over the next three years because the used equipment entering the market today has not been in operation for long periods of time.
In the future, SMT placement equipment manufacturers will have to work harder to educate potential customers on the benefits of newer equipment opposed to the used equipment that is abundantly available in the marketplace. SMT placement equipment manufacturers also must work closer with the customer's design teams and component manufacturers to better understand future trends and customer needs. Producing new products that can accommodate new technologies may be the key to selling future SMT placement equipment.
The next technology trend to help boost sales for new SMT placement equipment is the placement of fragile optoelectronic components. Developing equipment that can place these components could help rejuvenate new equipment sales because assemblers would have to upgrade their equipment.
Key Strategies
Medical Device and Automotive Industries. With computing and communications end-user industries unlikely to experience the phenomenal growth of 2000, SMT placement equipment manufacturers can focus on the medical device and automotive industries. As the baby boomer generation continues aging, the medical device market is expected to experience solid growth over the next 10 to 15 years. Newer devices continue to be introduced into the market, which also is expected to help create new demand for placement equipment manufacturers. Another advantage to targeting the medical device industry is that it does not fluctuate in demand, like computing and telecommunications. Demand is stable in this industry. One market that validates this is the diabetes insulin device market, which is expected to see growth rates of 15 percent and above between 2003 and 2006. The financial performance of electronics manufacturing services (EMS) providers that target the medical industry, compared to other industries, also validates this.
The trend of increased electronics on vehicles is likely to continue. The key products expected to help fuel this growth are global positioning systems (GPS) and telematics. Beginning in 2005 and beyond, car designs are expected to advance and incorporate new applications, furthering the automotive industry as a future growth segment.
Alliance with a Third-party Software Vendor. One strategy SMT placement equipment vendors can implement is an alliance with a third-party software vendor. OEMs and EMS providers want more compatibility within their SMT lines. Because electronics assemblers have different types of placement equipment on their manufacturing floor, they would prefer to have a standardized process of collecting data that will work across several different types of platforms. Third-party software vendors work closely with several types of equipment vendors, and can make SMT lines more compatible, which is a major concern for electronics assemblers when they purchase SMT equipment.
An important advantage of a third-party vendor is that less is spent on research and development for software. Because software is the core competency of the third-party vendor, they typically are better positioned to develop new products faster and more efficiently. In some instances, third-party vendors provide software for industries outside the electronics market. They have a good understanding of what those industries are looking for in their manufacturing process since the electronics industry covers a wide scope of markets. Third-party vendors also can provide assistance in making sales to industries, such as the automotive and aerospace/defense markets where software is widely used.
Conclusion
The changing dynamics of the industry means that companies must shift from a product specialist to an integrated SMT solutions provider. The good news for the SMT industry is that the worst finally may be over, although the market is likely to remain flat this year. The acceleration in the trend toward miniaturization also is likely to create opportunities for growth for the SMT placement equipment market, and the increased use of advanced packaging technologies and optoelectronics will force some electronics assembly manufacturers to buy new, as opposed to used, equipment. Once economic conditions improve, it is anticipated that the SMT placement equipment market will continue on its path of growth.
Keith Robinson and Raman Monga may be contacted at Frost & Sullivan, 7750 IH 10 W, Suite 910, San Antonio, TX 70229; (210) 348-1000; Web site: www.frost.com.