Demand for surface mount technology (SMT) equipment is rising steadily in India. With the government’s thrust on electronics hardware manufacturing, the country is fast becoming a hub for original equipment manufacturers (OEMs) and electronic manufacturing services (EMS) companies. Today, many of the global majors in EMS have footprint in India. The growing manufacturing of electronic products, in turn, is increasing the sales of SMT equipment.
By Uma Bansal
Wednesday, February 2, 2011: In the manufacturing process, SMT equipment are used for such functions as placement, inspection, soldering, screen printing, glue dispensing and cleaning. These are classified based on the required volume of manufacturing—low to medium, medium to large and very large.
“The market is improving as various OEMs have taken keen interest in SMT equipment to start inhouse facility. Soon we will see big changes,” says MK Krishnakumar, country manager, Essemtec India.
“As far as the growth of SMT machines is concerned, leading players like Flextronics, Solectron Centum, Jabil and Elcoteq have already contributed to the SMT market in the high volume segment. Indian EMS providers also contribute to the growth of the Indian market,” adds Krishnakumar.
“Especially, large scale production setups for automotive, lighting, LED and solar products are boosting the demand,” adds Prasad Gurjal, managing partner, Drive Technologies.
The demand is increasing
two fold every year, but it is still below the expected level. “The SMT equipment market has started moving forward, but it has not taken off as expected. The demand drivers like cellphones, set top boxes (STBs) and other consumer electronics products are still dependant on China. There seems some revival though in the automotive sector,” says N Chandramohan, country head (SMT division), Juki India. “The ecosystem is the main cause of the demand still not picking up. While there is a huge demand in consumption, components and associated industries are still lacking.”
Demand mostly from telecom and automotive sectors
As mentioned earlier, telecom (2G and 3G telecom networks), automotive, consumer electronics (LCD TV sets and mobile phones) and lighting (CFL and LED) are some of the products for which SMT machines are widely used. Defence electronics products also need high end machines for assembly.
Telecom and automotive, the most prominent industries in India, will continue to contribute significantly to India’s GDP in the coming years. The mobile revolution and adoption of technologies such as WiMax and VoIP are necessitating indigenous manufacturing of various telecom products such as handsets, base stations, modems and VOIP phones, thus creating the demand for SMT equipment.
Automobiles are using an increasing percentage of electronic components and control units. And local manufacturing of automotive electronic products is further driving the demand for SMT equipment to improve production efficiency.
SMT equipment suppliers need to provide the most advanced equipment at competitive prices. They need to upgrade their products in sync with the evolution of the electronics manufacturing processes. Increasing use of miniature printed circuit boards (PCBs) in various application segments is forcing them to develop and offer cost effective and high technology solutions to their OEM and EMS customers.
“SMT equipment vendors need to strike the right balance between technology and price in order to gain a competitive edge,” explains Bharath K, research analyst, Frost & Sullivan. “The best strategy in pricing lies in being cost effective while ensuring provision of value added services for customers,” he adds.
“Faster, more accurate and higher density assembly with a great flexibility is what the market demands,” informs Chandramohan.
“Trend is towards more and more fine pitch and chip capacity. Also, the speed expectations of the customers are rising steadily,” says Gurjal.
“SMT machines are designed for low noise level, and the smoke coming out of the reflow oven is against the ecosystem. But in new machines, this is controlled using filters,” adds Krishnakumar.
“In SMT printers, inline machines are being preferred to standalone printers. In pick-and-place, all purpose mounters (multi-function mounters) and speeds as usual are the deciding criteria. Of course, high end EMS companies look for very high speed chip shooters. In conveyorised reflow ovens, demand is for seven to ten zone depending on the volume of manufacturing,” informs L Sampath, CEO, EMST Marketing.
There are ample indicators for strong growth in the SMT placement, screen printers, soldering and inspection equipment product markets.
“Equipment that are in demand include component placement systems, auto insertion machines, printers, ovens, wave soldering machines and AOI. Barring entry level ovens and wave soldering machines, all equipment are imported,” says Suresh Nair, director, sales and marketing, Leaptech Corporation.
Specifically, pick-and-place machines are in large demand today. “These equipment are imported from Switzerland, Japan and USA as we do not have indigenous technology to manufacture them,” says Krishnakumar.
“The same is the case for high end stencil printers. However, reflow machines made in India are sold in good quantities,” adds Gurjal.
Why do we depend on imports?
“There is no major equipment manufacturing happening in India. Except for some peripheral equipment, all machines continue to be imported,” informs Chandramohan.
“We manufacture SMT machines for low to mid volume only, but when it comes to precision and accuracy, we are dependent on imports. We, the SMT equipment manufacturers, give the patented technology or cross licence the high tech manufacturing equipment. As a buyer, we could have good price advantages clubbed with best services,” says Krishnakumar.
“SMT equipment are not manufactured locally because the domestic volume does not justify it. Once the volume of equipment for domestic consumption comes to a reasonable level, surely the local manufacturing would start. Until then, we need to depend on imports only,” reasons Nair.
Chandramohan suggests the government to impose anti-dumping duties on finished products like mobile phones, STBs and LCD TVs in order to ensure their local manufacture, which would boost the sale of SMT equipment.
“There are various challenges that suppliers face. For instance, components are becoming smaller and smaller, making the design complicated. The products turn obsolete in a short time. Low margins on contract sales make people go for second hand machines,” says Krishnakumar.
“Quick changes in technology and, therefore, a fear of return on heavy investments, and longer lead time of components are affecting everything including machine and product delivery,” says Rajendra Singh, general manager, American Tec.
SMT machines, which could cost US$ 50,000 to US$ 300,000, are too big an investment for a company in its initial stages while the ROI is uncertain. That’s the reason why many EMS companies are starting to buy second hand (used) SMT equipment. Used equipment account for 30 to 40 per cent of the overall SMT equipment sales. Generally, used equipment are available for half the cost of new equipment.
Where to look
Juki claims to be one of the top manufacturers of pick-and-place equipment in the world with over 23,000 machines installed worldwide.
Essemtec is a worldwide leader in manufacturing of highly flexible SMT production equipment.
American Tec offers Fuji pick-n-place, KIC profiler, Nutek PCB handling, Minami paste printer, Getech PCB router and VIT AOI equipment.
Leaptech offers such equipment as chip shooters, multi-mounters, glue dispensers, hybrid inspection systems, automatic screen printers and solar cell printing and drying lines, assembly automation systems and wave soldering equipment.
EMST caters to different volumes, from entry level to high end lines. For printing, it has both fully automatic inline and offline equipment. In pick-and-place, its machines range from 3600 cph to 25,000 cph.
Drive Technologies’ three and five zone SMT reflow ovens are indigenously manufactured in India. The company claims to have the longest duration of seven years in the Indian market with more than 300 installed machines.
Prosem Technology India is the exclusive representative of Assembleon (formerly Philips EMT) range of SMT equipment in India. Assembleon, still a fully owned Philips company, is one of the market leaders in the SMT placement equipment industry.
A report by Frost & Sullivan, titled ‘Indian Surface Mount Technologies Market’, says that the SMT equipment market earned revenues of US$ 54.1 million in 2008 and estimates this to reach US$ 88.8 million in 2012, growing at a CAGR of 13.2 per cent.
“Our electronics manufacturing is 7-10 per cent of Chinese manufacturing and we can expect it to double next year,” says Singh.
“Availability of cost effective and skilled labour is positioning India as a preferred destination for EMS and OEM companies,” explains Bharath. “With an increase in the perks awarded to foreign direct investments (FDI) by the government of India, many of the global companies are anticipated to set up their manufacturing facilities in the country, thereby augmenting the demand for SMT equipment.”
“From a few number of SMT lines sold a few years ago, now the numbers are in a few dozens. Soon we can expect a few hundreds of setups being sold in India,” adds Gurjal.
Electronics Bazaar, South Asia’s No. 1 electronics B2B sourcing magazine