Dominique Numakura's Newsletter from Japan
Nov 10, 2006
Cellular Phone Business in Korea
The past week my travels have taken me to Korea. The purpose for my visit is two fold: first, I was committed to a speaking engagement at a business seminar attended by managers for printed circuit board and other related companies, and second, I used the opportunity to visit many Korean manufacturing companies for rigid circuit boards and flexible circuits.
There are similarities in business trends for the circuit board industry in Korea and Taiwan, but there are also several differences. Korean manufacturers have complained about a lackluster business environment for more than a year. This can be attributed to the cellular phone business. The industry has experienced a rebound in sales over the last few months; however, electronics companies expect robust growth right now.
Conversation relating to the electronics industry in Korea always centers on the cellular phone business. This industry experienced rapid growth rates the past five years. The standouts are Samsung Electronics and LG Electronics. They both significantly increased global market share in the cellular phone market, and ranked third and fourth respectively as the top cellular phone manufacturers. Nokia in Finland and Motorola in the U.S ranked first and second. Total production for the two companies exceeded total production for all Japanese manufacturers, probably more than ten. It was assumed that these two Korean manufacturers would ratchet up to the second and third ranked positions in a short time. Unfortunately for them, Motorola's cellular phone business flourished during the last two years while their business did not post strong gains. Rankings for cellular phone global market share remain unchanged.
As Korean cellular phone manufacturers were increasing global market share, other electronic companies enjoyed the fruits of their labor. Multilayer board manufacturers and flexible circuit manufacturers especially flourished, and the cellular phone business for major flexible circuit manufacturers represented more than 70% of their business. Korean flexible circuit manufacturers also increase their business significantly, and invested a lot to expand their capacities.
On the other hand, Korean circuit board manufacturers had to reduce production once Korean cellular phone manufacturers experienced a slow season. Korean material suppliers are very dependent on the cellular phone industry. These manufacturers do not have the capabilities to export their products directly to other countries.
During my trip, I observed two different management philosophies from Korean circuit board companies. The companies in the first group are looking for exact forecast and design trends for the cellular phone market. The frequently asked question was how the Korean cellular phone manufacturers gain market share in the global cellular phone business. The companies in the second group look for an alternative business opportunity instead of cellular phones. They were asking me what kinds of technologies and products they should focus their attention.
I could not provide qualified information for the people of the first group, probably no one could. But I can provide a lot of ideas and business opportunities for the companies in the second group.
Headlines of the week
Du Pont (Major chemical company)
Will expand the R&D facility in Kanagawa, Japan for the electronics materials of the flat panel display, especially for the plasma display.
Toray (Major chemical company in Japan)
Will invest 3 billion yens for the new manufacturing line of the adhesiveless flexible laminates in Korea. The total capacity will be 1.9 million square meters per year.
Osaki Engineering (Equipment supplier in Japan)
Will be public at JASDAQ Market in Tokyo. The company increased the equipment business of FPD and packaging in the last few years.
Tokki (Equipment manufacturer in Japan)
Has commercialized a new resin encapsulation machine for the flexible organic EL displays.
Hitachi Cable (Major cable manufacturer in Japan)
Will invest 400 million yens for the new lead frame manufacturing company PHCP in the Philippines to increase the revenue 70% to 3.9 billion yens per year.
Hioki Denki (Test equipment supplier in Japan)
Has agreed to acquire the test equipment company of printed circuit boards Cabin Industry from Uchida Shoko.
Toppan Printing (Major printing company in Japan)
Has started the volume production of the color filters in the Second Mie Plant for the 8th generation LCD manufacturing lines.
Casio Hitachi Mobile Communications (Cellular phone maker in Japan)
Will start the production and supply of the waterproof type cellular phones to Verizon Wireless in the U.S. The new products satisfy the requirement of MIL-STD-810F.
Daisel Chemical (Chemical company in Japan)
Will invest 40 billion yens to double the manufacturing capacity of the cellulose acetate films for the LCD devices.
Toray (Major chemical company in Japan)
Will double the production capacity of the photo-sensitive paste materials for PDP manufacturing process to 5,160 tons per year.
Kuraray (Major polymer manufacturer in Japan)
Will invest 10 billion yens to increase the manufacturing capacity of polyamide resin "Genesta" 2.8 times larger to 12,500 tons per year for the booming demands of heat resistant connectors.
Asahi Glass (Major glass product supplier in Japan)
Will double the production capacity of the glass tubes to 600 tons per month for the light source of the LCD devices.
Mitsubishi Rayon (Plastic supplier in Japan)
Will increase the selling prices of the acrylic resin base light guide of the LCD devices about 10% from November.
Nikko Metals (Major metallic material supplier in Japan)
Will invest 10 billion yens to increase the manufacturing capacity of the metal targets for the manufacturing process of semiconductors, magnetic devices and flat panel displays.
Harima Kasei (Material supplier in Japan)
Will expand the business of nano-paste materials for the ink jet process to make printed circuit boards.