SMT equipment market marches ahead

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.

Market dynamics

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.

Growth node

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.

Technology revamp

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:

1. Dominance of medium speed placement equipment
2. Minimal usage of glue dispensers in the fabrication process
3. Increase in the popularity of au­tomatic X-ray inspection equip­ment
4. Replacement of wave soldering equipment with reflow oven sol­dering equipment
5. 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.