Topscom has more than 42 SMT lines consisting of Fuji, Siemens, Yamaha and Panasonic machines.

Makers are adding more assembly lines in anticipation of demand rise. Emphasis stays on SMT.

China EMS companies maintain manufacturing capacity buildup to match the climbing global outsourcing requirement, especially in the strong computer, communications and consumer electronics sectors. They are acquiring more equipment, particularly for SMT.

Eolane Technology (Suzhou) Co. Ltd added one fully automatic Fuji SMT line recently. With three such lines now, the supplier can handle up to 350 million points each month. Cirket Electronics Co. is operating 13 lines with Yamaha machines. It plans to boost this with two or three more and one for DIP by year-end to raise capacity by 20 percent. At Topscom Precision Industry Co. Ltd, the SMT lines surpass 42 and include Fuji, Siemens, Yamaha and Panasonic equipment.

The steady purchase, together with the continuous transfer of production facilities to China, has made the country the largest SMT market. China currently has about 50,000 lines and 100,000 machines, representing about 40 percent of the global total.

Driving this expansion is stable industry growth worldwide. From 2013 to 2018, this service sector will hit $636 billion from $440 billion, posting nearly 8 percent CAGR, according to New Venture Research.

Besides the 3C segment, the development catalysts are the industrial, automotive, medical, aerospace and defense fields.

Among China manufacturers, this translates to an annual sales increase exceeding 10 percent in the years ahead.

Eolane is looking to realize $32 million by end-2014 from $25 million in the previous year. Cirket and Tecoo Electronics Co. Ltd are aiming for 30 percent.

Despite the rosy outlook, there remain cost challenges as minimum wages in China continue to rise. The projected average annual uptick in 2011- 15 is at least 13 percent.

Shenzhen in Guangdong province raised its rate by 13 percent and Zhejiang province 12.5 percent.

As of August this year, 18 provinces and cities have implemented a mean adjustment surpassing 14 percent.

Compounding the problem is the appreciation of the yuan, which will persist until 2015.

As a result of higher production outlay, alternative hubs in Asia such as India and Vietnam are emerging. These areas, however, do not have the first’s advantage of comprehensive supply chain at present.

About 2,000 companies make up the EMS sector in China. Most are small and midsize operations, and the rest foreign-invested suppliers. The latter group includes Foxconn, Flextronics, Jabil, New Kinpo, Celestica, Sanmina, Benchmark, Plexus and USI.

The Pearl River and Yangtze River Delta regions, and the Bohai Bay Rim Economic Region are the key production centers, responsible for more than 80 percent of the country’s yield.

The US and Europe are still the major overseas markets for local enterprises despite the economic conditions there. To boost the business, manufacturers are exploring opportunities in South America, Asia and Africa.

Manufacturing capability

China EMS companies offer one-stop services, including product development and design, procurement of raw materials, manufacturing, assembly and aftersales.

They can handle 0201 to 01005 SMD components, and DIP, SDIP, SOP, SSOP, TSOP, PLCC, QFP, QFN, SON and BGA ICs.

Suppliers emphasize conformity to ISO guidelines, mainly ISO 9001.

Topscom’s operations are compliant with ISO 9001:2000, 14000:2004, 13488, TL 9000 and TS 16949. The supplier serves the automotive, industrial and telecom industries. In 2015, it will continue to focus on the first segment while boosting capability for medical products.

Eolane has ISO 9001:2008, 14001, 13485, TS 16949, OHSAS 18001 and IRIS certification. The company caters to the automotive, industrial, new energy, medical and instrumentation sectors. It expects to generate 7 percent greater sales from the medical field by year-end from 3 percent in 2013.

To differentiate themselves from international players, makers accommodate high-mix and low-volume orders. Some steer clear of the former’s consumer electronics market and concentrate on better-value products in the industrial, medical, automotive and security segments.

Companies will strive to keep prices unchanged despite labor cost challenges to remain competitive.

Related reports:
PCB assemblies: Manufacturers strengthen SMT capability
Electronics industry mold-making services: Companies sustain facility, product upgrades