High-density multilayer PCBs

	Hong Kong suppliers such as CCTECH are gearing up to produce more complex, high-density PCBs in 2009.

SAR companies believe they can compete with global brands as they step up product development efforts. Many have set their sights on becoming total solutions enterprises.

Custom design and manufacturing are the strengths of Hong Kong electronic components suppliers. Some suppliers of standard parts and components believe their competency is on par with that of major brands from the United States, Japan, Taiwan and Europe. Many suppliers also undertake trading for related parts and components in a bid to become one-stop product and service providers and capture a larger share of the market.

As of mid-2008, the components industry in Hong Kong comprised 14,600 manufacturing companies with an aggregate 152,227 employees. Less than 200 of these companies are direct manufacturers of electronic parts and components, with the rest classified as trading firms because their factories are located outside Hong Kong.

With the exception of a few companies that maintain high value-added and/or capital-intensive production in the territory, most makers carry out labor-intensive activities in mainland China. Their operations in the special administrative region are normally limited to management, accounting, marketing and logistics support. Other firms conduct supplementary QC and R&D.

Overall R&D expenditures of Hong Kong companies—both in terms of value and as percentage of GDP—have steadily increased during this decade. The number of personnel engaged in full-time R&D has almost doubled from 2002, reaching more than 24,000 in 2008. Aside from their in-house R&D teams, suppliers also have access to eight government-funded research institutions in the SAR.

Aside from building up their R&D capability, many Hong Kong companies are moving toward greater vertical integration. Suppliers are not only consolidating all production processes under one roof but have also started producing in-house accessories that were previously outsourced.

	AMCL's CEC-compliant SMPS series comes with detachable plugs.

Components represent about 75 percent of Hong Kong’s total electronics exports, of which re-exports account for the bulk. Typically, semiconductors are imported into Hong Kong then exported to mainland China companies for final assembly. Resistors, capacitors, inductors, crystals, resonators, speakers, switches, buzzers, LCDs, PCBs and transformers are the region’s major electronic component shipments but batteries, telecom and A/V components as well as plastic, metal and rubber parts are also exported.

Customs statistics show that in 2008, total exports for computer parts will reach $15.8 billion; ICs, $16.5 billion; connectors, $3.8 billion; electric cables, $1.7 billion; and coaxial cables, $75.3 million. Exports of PCBs are estimated to hit $6.2 billion; capacitors, $2 billion; diodes, $1.4 billion; LEDs, $1 billion; inductors, $1.3 billion; and buzzers, $41.9 million.

By yearend, $1.3 billion worth of LCDs will have been shipped from the region, as with $1.1 billion worth of AC and DC motors; $1 billion, transformers; $583 million, primary, NiCd and NiFe batteries; $519 million, piezoelectric crystals; and $58 million, controllers and adapters.

Consumer electronics have been and still are the main growth driver for Hong Kong’s electronic component. However, huge demand from the telecom and semiconductor sectors has been boosting production in the last two years.

	Shun Shing's SDC-5 SMPS for USB devices features interchangeable plugs.

PCBs are among the major pillars of Hong Kong’s electronic component export industry. Though total PCB exports in 2008 are projected to reach a relatively high $6.2 billion, this is only 2 percent higher year-on-year compared to the 2007-over-2006 shipment value growth of 19 percent. Shipment volume in 2008 grew by 5 percent.

Hong Kong is projected to ship 150.8 million kilograms of PCBs by the end of 2008. More than 60 percent of these are multilayer boards. Though single- and double-sided boards remain mainstream for a few suppliers, multilayer PCB shipments is on an incline as a result of the growing complexity of circuit design in electronic devices. Customers’ design requirements are rapidly evolving and makers are compelled to constantly upgrade their production capability to satisfy requirements that are becoming more intricate by the month.

A key target for many makers is to increase the number of layers in both rigid and flexible PCBs, which primarily require capital investments. Suppliers are aware that they have fewer competitors for 10-layer and higher rigid PCB projects than for single- and double-sided boards, and profit margins are much higher as well. Big companies such as Onpress Printed Circuits Ltd are already handling complex 14-layer PCBs, but they continue to upgrade to attract more complicated projects.

Suppliers are also eyeing high-density interconnect (HDI) PCBs, which are used in special applications such as mobile phones, computer motherboards and memory modules. Taiwan companies currently dominate the HDI PCB market but tier-one Hong Kong suppliers such as United Electech Ltd have begun carving their niche. United Electech is earmarking $10 million to be able to join the exclusive club of HDI PCB makers in 2009.

Other Hong Kong PCB suppliers are more focused on strengthening their core expertise than purchasing hardware in the coming months. Century Circuits Technology Ltd (CCTECH) specializes in silver through-hole (STH) double-sided PCBs. The company has set its sights on further improving STH technology in order to solidify its market position in this segment.

Forecasts indicate that about 206 million meters of coaxial cables, 127 million kilograms of cable assemblies and 67 million kilograms of electric cables will be exported from the territory in 2008. Shipments of these data and electric cables are projected to gain a combined value of $1.8 billion.

Coaxial cables continue to be an important export product among makers with a shipment value registering 28 percent annual growth. Cable assembly shipment growth, however, is less notable at less than 10 percent.

Unlike other product lines where constant product development is required, cable suppliers in Hong Kong are more focused on improving their technical capability, ramping up production capacity, upgrading quality control and lowering costs. The gush of digital appliances and portable electronic devices sustain the territory’s more than 80 suppliers, some of which have ratcheted up the development of high-value products such as HDMI cables and switches.

New models of HDMI cables, specially those in trendy external designs as well as sleek, ultramodern HDMI switches will be released by Hong Kong companies in 2009. D&S Industries (HK) Ltd is rolling out two new models every month to reflect different market trends and buying segments.

HDMI 1.3 and later versions with a single-link bandwidth of up to 10.2Gbps will be supported in many suppliers’ new offerings. Trisat Digital Ltd’s HDMI cables comply with v1.3 specifications and feature glossy, ergonomic cases, PC OCC conductor and 24K gold-plated connectors. It is also offering a wide array of complementary accessories, including a 90° HDMI adapter, HDMI wall plate
with integrated repeater and automatic HDMI switches.

Many suppliers are expected to add type C mini HDMI cables and adapters to their selection of HDMI accessories. Among the first models on the market are Hip Hing Cable & Plug Mfy Ltd’s gold-plated HDMI-to-mini HDMI adapter, mini HDMI cable with plastic connectors and mini HDMI-to-HDMI cable.

HDMI switches will be undergoing a design makeover in 2009 as suppliers endeavor to convince consumers that their models deserve to sit beside their expensive flat-panel TVs, high-definition movie players and gaming consoles. Remote control pads have also become standard accoutrements. Ocvaco Electronic Ltd’s rounded HDMI switches are offered in bright metallic colors and include a stand for vertical placement.

Value-added features will also figure in new product rollouts next year. Hip Hing has added a USB port in its 3-in, 2-out HDMI switch, making source selection as easy as pressing a button. Trisat also offers multiple out ports in its HDMI switches. Meanwhile, Venture Global Ltd’s tower-shaped HDMI switch provides four digital audio inputs and built-in equalizer.

The territory annually exports more than 700 million power supply products and components including AC/DC adapters, static converters, battery chargers, diode rectifiers, electric inverters and rectifiers. Total shipment value reaches $2.4 billion per year.

Among power adapters, unregulated AC/DC models would be leading supply in terms of quantity in 2009. However, many tier-one companies will be spearheading the promotion of regulated, switched-mode power adapters, many of which offer value-added functions such as power factor correction and pulse width modulation.

Energy efficiency is one feature that many Hong Kong suppliers will be emphasizing in their new models. Minwa Electronics Co. Ltd projects that its high energy-efficient universal switched-mode power supplies (SMPS) will be its star sales performer in the coming months. It already offers a full power range from 5W to 120W with multiple outputs and changeable plugs.

The series is California Energy Commission (CEC) Level IV-compliant and certified to conform to EuP and MEPS regulations. Other products to watch from Minwa include an SMPS with USB and detachable input plugs, models with a voltage switch, 5000mA SMPS and an SMPS series for laptops.

Airline Mechanical Co. Ltd is building up its line of CEC-compliant SMPS. Its wall-mounted SMPS series comes with fixed or detachable plugs; overcurrent, overvoltage and overheating protection; and conforms to CEC Level III/IV requirements. The company supports the Energy Star program. All its power supplies and adapters comply with the US government-backed program’s strict requirements.

Portability, compact footprint and fresh exterior designs headline Shun Shing Standard Corp. Development Ltd’s development initiatives. Its SMPS models mostly come in iPod-inspired white, including a slim 36W version that is only 20mm thick. Its travel SMPS models come in fashionable shapes, interchangeable plugs and various safety approvals. Some models are suitable for charging USB and handheld gaming devices.

Anticipating the effects of the current global economic downtrend, Hong Kong makers forecast a single-digit total export growth in 2009. After posting a 9 percent growth in H1 2008, suppliers expect exports to taper down next year. Cost control will be vital to remain competitive and production automation has become imperative.

Ongoing market fluctuations have been affecting overseas distribution of electronic component production. Shipments to the US are falling slightly, while export rates to Asia are rising. Europe, on the other hand, remains a stable market. Nonetheless, Hong Kong’s overall merchandise export industry posted a 9.4 percent annual growth in the first seven months of 2008.

Aside from the market crunch, suppliers are also burdened by the inexorable rise in production costs, appreciation of the yuan, escalating labor and social security costs. Higher safety and environmental requirements in mainland China and overseas markets are also putting a heavy strain on suppliers.

As product safety and environment regulations tighten each year, Hong Kong suppliers are under heavy pressure to keep in step with the new requirements. Greater resources are being allocated to be familiarized with the latest regulations, acquaint and train staff, purchase necessary testing equipment, and for certifications.