Application Watch - Digital transformation in China provides EMS roadmap

Still the world's hub for electronics manufacturing services (EMS), China aims to boost its value proposition as alternative locations in Asia such as Vietnam, Malaysia, Thailand and India rise. The government has set out an ambitious project to turn the country into a "manufacturing powerhouse" and "network powerhouse" by 2025. This was announced by the Ministry of Industry and Information Technology (MIIT) minister Xiao Yaqing in September as part of the 14th Five-Year Plan.

The goal goes hand in hand with 5G deployment, currently underway. China is expected to have 1.7 million base stations in place by the end of 2021, according to China Telecom. This would meet the targets of achieving 560 million individual users and 35 percent penetration rate in large industrial enterprises by end-2023, according to China Daily.

"By the end of the 14th Five-Year Plan period (2021-25), China will have built the world's largest and most extensive stand-alone 5G network and basically achieved full network coverage in urban and rural areas," says Wang Zhiqin, deputy head of government think tank China Academy of Information and Communications Technology.

According to Huawei's carrier business group president Ding Yun, the company's 5G applications are now in place in more than 20 industries, including manufacturing, and have been enabling more intelligent, efficient and safer production.

All this bodes well for the EMS industry in China, especially for homegrown companies competing for attention in a crowded market. Most key players in this field have a virtual global monopoly and operate manufacturing facilities in the country, catering to large domestic and foreign OEMs.

Still, a digital infrastructure will benefit the sector overall and might solidify China's dual advantage as a huge manufacturing base and an equally large consumer market.

While issues including the trade war and the pandemic have made OEMs wary of a single-location supply chain and encouraged them to diversify, they are also aware of the amount of investment - and time - it will take to reach the competitiveness achieved in their China operations.

In a May 2020 interview with Made-In, former Flex CEO Mike McNamara said pulling out of China cannot be done quickly. "[China's] sub-component supply chains, distribution systems, and logistics, have been built up and created an efficiency around the supply chain... you got more know-how, more capacity, more engineers, more components on the ground close to your supply base."

Solid ground

There are EMS production bases in Europe, North America and the Asia-Pacific area. Among countries in these regions, China remains the largest EMS location, responsible for more than half of total shipments worldwide despite recent onshoring and reshoring activities, and as companies continue to scout new areas.

There are thousands of EMS providers congregated in China, many in the central and coastal regions. Operating on a small or medium scale are more than 4,000 domestic enterprises, according to Derrick Zhao in an article posted on EMS Now. The large Chinese companies include Shenzhen Kaifa, 3C Tech, DBG, Norautron and RayVal.

China's EMS sector will have a total market share of $400 billion by the end of 2021, posting 10 percent CAGR from 2017, according to market research firm AskCI. It is expected to increase at this rate in the next one or two years.

Encouraged by rising domestic and overseas demand, most domestic EMS providers will continue to boost their production, according to companies interviewed by Global Sources Electronic Components. Exports account for 30 to 90 percent of their output.

Global Market Insights forecasts that the global EMS industry will reach $650 billion in 2026, or at 5 percent CAGR from 2019. Asia-Pacific stands out, with an 8 percent performance during the same period thanks to China.

More than assembly services

Chinese EMS providers have come a long way from doing assembly only and can offer a suite of options from product design to material and component sourcing, testing and delivery.

In PCB assembly, they continue to improve their SMT capability through the acquisition of advanced equipment while maintaining facilities for through-hole mounting. They can place components with 0.2mm minimum IC pitch, 01005 and 0201 sizes, 0.3mm minimum leg distance and 0.2mm u-BGA ball diameter on any board. PCBs may be rigid, flexible, rigid-flex, copper-base or HDI types, with maximum size of 680x500mm.

To check product quality, ICT, AOI, X-ray, and functional and aging tests are employed.

Most manufacturers ensure compliance with IPC-A-610E and RoHS standards.

Toward a green future, EMS companies in China are prepared to follow the trend for biodegradable PCBs and recyclable components, especially when the market starts demanding them.

Manufacturers usually purchase ICs from foreign suppliers such as Fairchild and STMicroelectronics. For passive components, connectors and PCBs, they source domestically or overseas, depending on customers' preferences.

In the past 12 months, suppliers increased their quotes by 5 to 15 percent due to higher material, component and labor costs. They may lower them in the months ahead if outlay for production inputs stabilizes.

PCB assembly on FR-4, Tg130 FR-4, Tg180 board

This PCBAssembly-94 from Amber Electronic Holding Ltd is based on an FR-4, Tg130 FR-4 or Tg180 board with 0.5 to 12oz copper, 3mil minimum line width and spacing, and HASL, lead-free or ENIG surface finish. Board thickness is 0.2 to 7mm. Solder mask used is green, black, white, blue, red or yellow with white, black or yellow silk-screening.

The minimum order quantity is two units. Delivery is within three days.

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PCB assembly with 100% functional testing

Beijing YuanDong Deli Electronic Co. Ltd has PCB assemblies such as this model YDE-4PCB 3. It offers lead-free BGA assembly with X-ray inspection and conducts nine testing procedures, including 100 percent functional testing. The 2,000-unit minimum order is negotiable. Lead time is 30 days.

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PCB assembly on up to 48-layer board

Creat Electronic Group Co. Ltd offers this CEG21072702 PCB assembly based on an FR-4, high-Tg FR-4, high-frequency or aluminum FPC board with up to 48 layers, 0.2mm minimum drilled holes, and 3.94mil minimum line width and spacing. PCB surface finish may be HASL, ENIG, immersion tin or OSP and silk-screening green, white, black, red, blue or yellow. Board thickness is 0.1 to 4mm.

Order quantity is negotiable. Delivery is within 15 days.

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PCB assembly with 1 to 6oz finished copper

Poe Precision Electronics Co. Ltd uses an FR-4, high-Tg, aluminum, CEM-1, Rogers, Argon, Taconic or Teflon PCB with up to 22 layers in this POE727 PCB assembly. The board has 1 to 6oz finished copper, as small as 0.15mm drilled and 0.1mm laser holes, 0.2 to 8mm plugged vias, ±5 percent controlled impedance and 0.2 to 7mm finished thickness. Surface finish may be HASL, lead-free HASL, immersion gold, tin or silver, hard or flash gold, or OSP. Routing, V-cut, bridge design and stamp holes are available.

Order quantity is negotiable. Lead time is five days.

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One-stop PCB assembly

A one-stop EMS provider, Shenzhen Victory Electronic Technology Co. Ltd offers Vic2020-MZ46361 PCB assembly. It can handle CAM and BOM engineering, quick-turn prototyping, materials management, function testing, final case assembly, packaging and logistics.

MOQ is negotiable. Lead time is seven days.

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