Flexible Printed Circuit Market in Southeast Asia

Introduction

Flexible printed circuits (FPCs) are used for weight-restricted, space-conscious, and high reliability applications. They have the benefit of fitting into smaller and more confined spaces because of their ability to bend. The lightweight polyimide material used to fabricate FPCs is much lighter than the woven glass materials used in the construction of rigid printed circuit boards (PCBs). However, not all electronics manufacturers favor FPCs. The cost of fabricating FPCs is over three times higher than rigid PCBs, depending on dimension and number of layers. In addition, FPCs are more difficult to design as they involve three-dimensional requirements and have lower life spans compared to rigid PCBs.

Production

In 2005, FPC revenues in Southeast Asia accounted for about 11.0 percent to 12.5 percent of the world FPC revenues, estimated at around $7 billion to $8 billion. Thailand is the largest producer of FPCs in Southeast Asia. It contributed over half of the revenues in 2005. It was the only country in the region to experience double-digit growth in 2005, and this trend is expected to continue in the coming years too. Malaysia and Singapore contributed about one-third of the Southeast Asian FPC revenues in the same year. However, Malaysia is expected to surpass Singapore’s production in the near future. This is due to the continuing transfer of manufacturing activities out of Singapore. The Philippines and Indonesia contributed the remaining with contribution from the latter almost negligible. In 2005, the main bulk of FPCs produced in Southeast Asia was regular single-layered FPCs.

Growth

The growth of the Southeast Asian FPC market is mainly contributed by the increasing demand for FPCs from the telecommunications (mobile handsets with clamshell or sliding mechanisms), data communications (hard disk drives and printers), consumer electronics (digital cameras and flat panel TVs), and automotive (mainly for interconnection, replacing cables) segments, made possible by the flexible nature of FPCs. In addition, the increased use of hard disk drives in game consoles, set-top boxes, and digital music players is emerging as a significant driver of growth for hard disk drives, which in turn, drives the growth for FPCs.

Challenges

The year 2005 witnessed an oversupply and imbalance of FPCs due to the entry of new participants at the global level. Some of them were rigid PCB manufacturers that began producing FPCs to complement their existing rigid PCB businesses, while others took advantage of this profitable industry that promised higher profit margins. Furthermore, FPC manufacturers become increasingly involved in assembly works in addition to fabrication, which adds value and increases overall revenues. However, this also meant that more labor was involved. The rising price of copper is also expected to reduce the profitability of FPC manufacturers more than that of rigid PCB manufacturers, as FPCs generally require more copper for fabrication for the same dimension and number of layers.

Growth Performance against Rigid PCBs

In the late 1990s and early 2000s, the demand for FPCs rose dramatically due to the entry of new electronic applications that placed emphasis on miniaturization and portability. It was once feared that FPCs will eventually drive rigid PCB manufacturers out of the market. However, the high cost of fabrication and lack of support for electronic components of FPCs have kept rigid PCB manufacturers in business. In addition, human physical attributes (the size of hands and fingers and eyesight) place limits on miniaturization, prohibiting some FPC applications.

FPCs contributed about two-fifths of the Southeast Asian PCB revenues in 2005, while the remaining was contributed by rigid PCBs. This ratio is unlikely to change significantly in the coming years. The continuing expansion of rigid PCB plants and the introduction of new rigid PCB plants, notably in Thailand, and the larger number of rigid PCB manufacturers operating in the region are expected to drive up rigid PCB revenues in Southeast Asia. This is further supported by the growing demand of multi-layered rigid PCBs and integrated circuit (IC) substrates for high wiring density and high-speed performance applications. The possible transfer of labor-intensive FPC manufacturing activities to China is also expected to further maintain the FPC-rigid PCB ratio.

This article was authored by CP Liew, Research Analyst, Industrial Automation & Electronics, Frost & Sullivan Asia Pacific, based out of the Kuala Lumpur, Malaysia office.

This article is based on the study conducted by Frost & Sullivan, titled “Strategic Analysis of the Southeast Asian Printed Circuit Board Markets”. This research service:
• Details the current position and revenues, and forecasts of Southeast Asian PCB markets,
• Discusses the drivers, restraints and challenges faced by the PCB industry,
• Segments the Southeast Asian PCB markets based on rigid PCBs and flexible printed circuits,
• And segments the Southeast Asian PCB markets based on countries and end-users.

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