Surface mount technology (SMT) equipment finds major applications in the electronics manufacturing sector. The applications of these equipment vary and range across circuit board printing, placement of components, soldering and inspection. Thus, continual reduction of semiconductor process nodes and the proliferation of electronics components in almost all products have enhanced the market for SMT equipment in India.
Friday, August 16, 2009: The increase of indigenous manufacture of telecommunication equipment, automotive electronic components and consumer electronics, too, has led to the brisk escalation in the usage and sales of high end SMT equipment. This rise in usage has turned the Indian SMT equipment market into a $54.1-million giant. It is anticipated to grow even further, at a compound annual growth rate (CAGR) of 13.2 per cent till 2012.
The recent research by Frost & Sullivan on the SMT equipment market in India indicates that the market for these equipment has registered a significant growth in the past decade. The boost in indigenous manufacturing and the increase in foreign direct investments (FDIs) have directly impacted the sales of SMT equipment. The semiconductor policy announced in early 2007 has ushered in investments to the tune of $31 billion till date, spanning wafer fabrication and solar PV and LCD panel manufacturing.
The surging demand for timely output with quality as a major aspect, is driving electronics manufacturers to use the most sophisticated equipment in their process lines. This need, along with various dilutions in tax policies of the equipment, enables the end users to opt for cutting edge technology products for their process lines. Owing to the swell in the usage of high end products, placement and inspection equipment alone accounted for 62.7 per cent of the total SMT equipment sales in India in 2008 and is forecast to constitute nearly 63.7 per cent of the total market in 2012.
The SMT equipment market serves all end user sectors but some of the chief sectors that fuel its growth are telecommunication and consumer and automotive electronics. As the sales of products including mobile phones, communication equipment, home appliances, cars and computers continue to soar, companies are finding it increasingly favourable to produce these products domestically to address the burgeoning demand.
The strengthening presence of electronics manufacturing services (EMS) companies and the growing need for original equipment manufacturers (OEMS) to produce electronics indigenously, collectively fuel SMT equipment sales in the subcontinent. Domestic EMS companies like Hical Magnetics, PG Group, Rangsons Electronics and Kaynes Technology are also in the process of enhancing their product portfolios to match the market demand, both in the domestic and global arenas.
The SMT market, over the years, has seen buoyant changes in terms of technological development. From incorporating different functionalities to increasing the speed of the machines, the SMT equipment market has transformed, keeping in pace with the ever altering requirements of the highly dynamic electronics manufacturing industry. The no-flux and no-lead manufacturing processes, that have been made a mandate, have made many SMT equipment manufacturers adopt the process and upgrade the technologies of their existing systems.
Some of the key changes and current trends in the SMT equipment domain are:
- Dominance of medium speed placement equipment
- Minimal usage of glue dispensers in the fabrication process
- Increase in the popularity of automatic X-ray inspection equipment
- Replacement of wave soldering equipment with reflow oven soldering equipment
- Decreased usage of cleaning equipment in almost all end user sectors
Placement equipment has seen a substantial growth owing to its criticality. Medium speed (10,000-40,000 cph) placement equipment, which has diversified functionalities like minimal tool change tools and handle different components at the same time has attracted SMT manufacturers to this particular breed of placement equipment.
The market for inspection equipment has witnessed various changes, both in terms of its usage in different industries as well as in the functions it can perform. Traditionally, automatic optical inspection (AOI) equipment has wider application areas when compared to automated X-ray inspection (AXI) equipment. Nevertheless, due to the the need for higher accuracy and flawless quality of the end product, AXI equipment finds numerous applications in a process line. An interesting trend noted in the inspection equipment market is the replacement of two-dimensional AXI equipment by three-dimensional machines.
The soldering equipment market has been modified most greatly on the technology front due the incorporation of flux-free and lead-free manufacturing processes in electronics manufacturing industries. These changes have led to the shift from wave to reflow oven soldering. Reflow ovens drastically diminish the consumption of lead and enhance the flux-free manufacturing process.
Impact of slowdown
The economic slowdown had a considerable impact on the SMT equipment market in India. Reduction in capacity utilisation and the consequent closure of domestic manufacturing operations in some sectors have effected the sales of SMT equipment in the country.
The automotive industry was adversely impacted by the economic slowdown but is now gradually inching towards prosperity. The new products launched in the small car segment by auto majors have incited sales in the automotive industry. Despite the slowdown, end user sectors are keen on advancing their process line technologies, resulting in a continual flow of sales of medium and high level SMT equipment in India.
The road ahead
Adequate channeling of equipment and maintaining an upfront pricing strategy encourage end users to opt for high end SMT equipment. The financial potential of the local electronics hardware industry is anticipated to shoot up to $65 billion by 2010. FDI in India’s manufacturing sector is expected to reach $12 billion annually, if the necessary regulatory obstacles are taken care of. This, along with accelerated electronics manufacturing in the telecom and automotive segments foretells a very promising future for the SMT equipment market in India.
Contributed by K Bharath, research analyst, electronics and security practice, South Asia and Middle East, Frost & Sullivan.