Experimental Trial for the progress of PCB industry in China

[SLIDE 0]

Ladies and gentleman:
I am highly honored by and deeply grateful for this opportunity to speak on behalf of the China Print Circuit Association here, the 8th ECWC Asian supporter's session. I'll have some comments on experimental trial for the progress of PCB industry in China to share with you.

[SLIDE 1]

As you may already know, in 1998, China had to face many big challenges. First, the domestic market demand remained inactive; second, the South-East Asia Currency Crisis led to a sharp export fall; the third, there were a lot of repeated construction problems stood out, the fourth was the flood and draught disasters. All of these threw China electronic industry into an austere situation.

[SLIDE 2]

However, through the efforts of all phases. China electronic industry still maintained continuous and rapid growth in 1998.

The figure shows the data of China electronic manufacturing output value in 1998. We can see the total output value reached 547.7 billion RMB, total sales turnover is 320 billion RMB, profit tax is 24.02 billion RMB, net profit is 16 billion RMB, and the industrial added value reached 72.22 billion RMB. We can see all of the finished data were increased in a rapid rate.

[SLIDE 3]

Pushed by the rapid growth of the last quarter of 1998. China’s electronic industry continues growth in the beginning of this year.

Shows as the figure, in the first quarter of 1999, China electronic industrial output value reached a number of 135.9 billion RMB. This is an increase number of 36.9% against that of the same period in 1998. And it is 5% higher growth rate against the annual growth rate of 1998. At the same time the exporting value reached a number of 16.2 billion RMB, an 11.0% increased over that of the same period in 1998.

[SLIDE 4]

The Ministry of Information Industry (MII) published a forecast of the demand for China electronic products of 1999 at the beginning of this year. Before going into the forecast figure, I would like to introduce the electronic industry development target that MII had set for this year first.

The figure shows the target including the total industrial output value, profit tax, industrial added value, and total sales turnover and export value, and all of these target data are expected to increase in this year.

[SLIDE 5]

On the basis of detailed analysis of overall concerns, forecast for major equipment, facility and component markets set by MII are shown as the figure.

[SLIDE 6]

Now let’s have a look at the demand forecast of electronic products. The figure here shows the demand forecast from MII. We can see that communication equipment and computer are the major demand of electronics products in 1999, and they will be the major contributors to the growth of the PCB market in China. At the same time, the expansion of multimedia from home to office into mobile environment has also spurred the need from smaller and lighter electrical devices. All of these demands will of cause bring the increasing of electronics manufacturing output include components.

We have seen dramatic changes in the past 15 years for the world’s PCB market. The demand for PCB remained fairly strong last year. But pricing deteriorated significantly throughout the year due primarily to Asian financial crisis and the devaluation of currencies in Asia. Fabricators in China have suffered most because our currencies are bound to the U.S. dollar while other currencies in Asia pacific have been devalued tremendously, which provided a competitive edge for China.

[SLIDE 7]

Although a lot of challenge exist in 1999.We in the CPCA believe the electronics development environment is favorable this year based on four major reasons. First of all, the China economic environment is growing well for these years and it will be continue in the coming years.

[SLIDE 8]

The Chart shows the total electronics industrial output value from 1992 to 1998 and the forecast of 1999. I think you will have an impress about the increasing trend of China electronics industry.

Secondly, China’s GDP will maintain a high growth rate and the inflation rate will be properly controlled in this year.

Thirdly, the China central government decided to add 200 billion RMB to stimulate domestic consumption. For an example, about 175.4 billion RMB had been invested into China post and telecom in 1998, and there will be 180 billion more to continue such investing this year. Another example, the central government will invest 300 billion RMB to improve electricity network this year. These projects will directly stimulate the investment product demand and will give rise to the growth of consumer products, component products indirectly.

Fourthly, many foreign companies such as Lucent, Nokia, IBM, Dell etc. have established joint ventures to benefit from the electronics growth in China. Their extend projects will bring increasing demand of supplying and export.

[SLIDE 9]

When we look around the environment surrounding the PCB industry, we know clearly that the microeconomic environment in 1999 is still austere somewhat. But on the other hand, China’s huge market is contributing to the increased demand of electronics products, especially with its population of 1.3 billion people who are just starting to obtain the “finer” things in life, such as personal computers. mobile phones, cameras, etc. We estimate the demand of PWB will be increased in a rapid growth. Chart will give you an impress about China’s PWB industry development of the past four years.

[SLIDE 10]

AS we know, PCB industry always be driven by electronics and has a great impact on it. When we look back on the way that China PCB industry has passed by, we found that China PCB industry almost had a same growth step as the electronics.

China PCB industry started in 1960s. The economic environment surrounded it that time was planned economic. In 1980s, China economic environment began changing into market economic and PCB industry underwent a high development. Most of the PCB firms were state-owned or collective-owned. Join-venture just started. At that time, products of PCB were mainly single-sided board, occupying almost 80% of the total yield. Most of the Chinese based manufacturers were supplying to domestic market and most of the join-venture manufacturers were supplying to the oversea market. China PCB industry had a extremely fast development steps in the past three years and it has become to be one of the most active and promising industries in China.

[SLIDE 11]

According to the survey of CPCA. China PCB production output in 1998 (exclude Taiwan, Hong Kong) reached a number of 24.76 million square meters with 16.2 billion sales turnover.

In the past ten years, the production output increasing by 400% and the production output value was tripled. At present, double-sided and multilayer is over 40%of the total production. The percentage of double-sided and multilayer is growing rapidly year by year. Product complexity also develops towards high density and high precision.

[SLIDE 12]

Ten years ago, Chinese made PCBs were mainly used in domestic home application. Nowadays, Chinese made PCBs are widely used in telecommunication, computers, automatic equipment, satellite devices and some of then even for military used. PCBs exporting also has made a great growth for these years. A lot of manufacturers with mass production capacity have more that 50% of its products for export. Some join-venture manufacturers even more than 90% of its products for export. Anyway China PCB manufacturers are facing the same global market as yours now.

Along with the development of PCB manufacturing, PCB supplying include PCB equipment, raw material, chemicals also grew fast these years. With this growth, PCB manufacturers won a full-scale supporting system. All of these progresses made China become to be one of the largest PCB manufacturing countries in the world.

[SLIDE 13]

In processing of China huge market, China electronic industry also PWB industry have gained recognition internationally. A lot of prominent firms are investing in China, of course include PCB firms, which bring not only technology, but also competition to China manufacturers. With the rapid changes in global technology and constant demand for up-to-date electronic consumer products, it forces PCB suppliers to produce high quality, rapid turnover, high tech and dependable products.

[SLIDE 14]

Even though China PCB industry enjoys 15% annual growth rate and has become to be one of the largest PCB manufacturing bases. The production scale, technique and management levels of most state-owned and private firms are still lagging behind the developed countries.

Compared with the advanced countries such as Japan and US. Most of the China based PCB manufacturers have certain gaps such as structural problems, little capital, low technology and human resource, and poor management style. Especially they have little good operating experience in the market economic environment. These shortages lead China PCB industry hard to fulfil the demand of the growing market.

We know China PCB manufacturers should not only focus on production scale but also on new technology, quality, cost reducing, pollution controlling and even total supply chain management.

[SLIDE 15]

Led by the China Information Technology Administrative Dept., CPCA is the only national PWB association in China.

Established in June of 1990, it has 250 members in China now. It organizes the annual CPCA show, industry information publish and training program. In recent years, CPCA keeps close contacts with the other international association for exchange activity.

[SLIDE 16]

Facing opportunities and challenges, we CPCA will do our best in establishing a good investigating system in China PCB industry. Cooperating with the government to draw out the China PCB industry guidelines and execute it, cooperating with OEMs and PCB manufacturers to achieve a powerful supply chain especially try our best to help the Chinese based PCB manufacturers to improve their technology and the total management.

[SLIDE 17]

We should try our best in providing excellent service and training program to China PCB manufacturers. At the same time, we will try to widen international information exchange.

[SLIDE 18]

In summary, we are expecting the overall electronic products to remain healthy.

Consequently, we believe the health of the electronics industry should spread from EMS companies to the product-based sectors. We are glad that some of the Chinese PCB manufacturers have made great progress in technology review, production capability and the total management these years. They focus on the world market, provide products and services for international electronic giants and lead the development of China PWB industry.

We in China PWB industry intend to promote further information-sharing and technological exchange with other countries.

[SLIDE 19]

Looking into the next new century, China PCB industry will play a more and more important role in the world PCB industry. We believe the China PWB industry will be more and more vivifying full of energy and hope.

[SLIDE 20]

Thank you