Analysis and Development of Japanese PCB Market in the First Half of 2007

Japan's Ministry of Economy, Trade and Industry (METI) released Japan's printed circuit board (PWB) industry production data for the first half of 2007. Using the actual data for the six months, the industry's performance can be reviewed and the second half of 2007 forecasted.

As a whole, there is no major event in the printed circuit board industry. Therefore, it is not easy to summarize the development trend of the industry in a few words; however, some of the new trends in some of the market segments are obvious. The industry performance in the first quarter of this year is the same as in the second half of 2006. Depending on the product category, some printed circuit board products overcome this trend and achieved growth in the second quarter of this year.

In the first half of this year, total printed circuit board production revenue was 494.9 billion yen (approximately US$4.3 billion), an increase of 8.6% from the same period last year; total output decreased by 1.4% from the same period last year to 12.17 million square meters. This will increase revenue and reduce production. In the first half of 2006, managers of the printed circuit board industry in Japan gradually turned their eyes to high-priced products to increase their profits. In the second half of 2006, the business plan was continued for the second half of the year. In early 2007, this trend still exists. Manufacturers’ revenue increased by double digits, but output fell by more than 5%. In the past few months, Japanese manufacturers have changed their direction of development, focused on increasing production and are happy to save market share at the expense of profits.

Japanese manufacturers have adopted different marketing strategies for each product category, especially in flexible circuits. Due to the higher price of double-sided and multilayer circuits, manufacturers gradually shift from operating single-sided circuits to managing double-sided and multilayer circuits. Compared with the first half of 2006, the total flexible circuit output decreased by 2.7% in the first half of 2007, but revenue increased by 3.0%. Compared with the same period of last year, the output and revenue of single-sided flexible circuits decreased by 4.6% and 7.6% respectively in the first half of the year; the average selling price continued to decline. On the other hand, although the output of double-sided and multi-layer flexible circuits decreased by 1.3%, its revenue increased by 10.1%. The average selling price of double-sided and multi-layered circuits in the first half of this year remained high.

The rigid board circuit section provides mixed results. The six- to eight-storey boards and laminates both achieved double-digit growth over the same period of last year, with growth rates of 22.6% and 15.8%, respectively. However, the revenue and output of four-story, ten-story and higher-layer boards have experienced negative growth over the same period of last year. The double-sided rigid board's revenue and growth rate remained flat. At present, single-sided rigid boards are regarded as an important industry product; however, the revenue of these products only increased by 4.6%; the output has decreased by 8.8%.

The performance of various module circuits is also different; the revenue and output of rigid module circuits have increased by 40.2% and 32.3%, respectively. Unfortunately, in the last month of the first half of this year, both revenue and output fell sharply. Revenue from other module circuits barely increased (decreased by 0.1%), but output rose by 11.2%. Most of the circuit is used as a driver module in flat panel displays. It can be imagined that the overall modular circuit market is growing rapidly and prices are falling.

After analyzing the data for the first half of this year, I intend to provide a forecast of market trends that may occur in the second half of 2007; however, as new industry trends emerge in the second half of this year, such forecasts are not easy to formulate. If the industry maintains the status quo in the second quarter, even if the output is flat or even falls, its annual income will also increase substantially. Unfortunately, the outlook for the Japanese consumer electronics market is unpredictable; at present, I am not optimistic about this.