OTHER ELECTRONICS
UPDATE
January 2007
McIlvaine Company
NANOTECHNOLOGY
Hon Hai Locates R&D Center in Tingpu Industrial Park, Taipei County
Hon Hai Precision Industry Co., Taiwan's largest private-sector manufacturer, will complete the establishment of a nanotechnology and precision optical machinery research and development center in Tingpu Industrial Park in Tucheng City of Taipei County, northern Taiwan, by the end of this 2006.
While stepping up investments in mainland China, Hon Hai has also touted its resolution to keep roots in Taiwan by promoting the idea of "developing the manufacturing Hon Hai to the technological Hon Hai." Hon Hai will invest NT$12 billion (US$369.23 million at US$1:NT$32.5) in the R&D center in Tingpu with the number of R&D personnel reaching over 3,000. The center is expected to be inaugurated in the beginning of 2007.
Over the past few years, Hon Hai has expanded its business scopes to include such high-tech products as optoelectronics, nanotechnology products and industrial robots. An institutional investor anticipated Hon Hai would see combined annual sales amount to NT$120 billion (US$3.69 billion) this year.
Hon Hai said the establishment of the R&D center in the Tingpu Industrial Park will help it attract first-notch R&D talents from around the world. With the establishment of the center, Hon Hai will cooperate with some well-renowned R&D centers the world over to develop the application technologies for next-generation products.
Hong Kong S&T Park Exec Tackles China RoHS
Less than a year after the European Union's RoHS directive took effect, the industry is again bracing itself for another, reportedly tougher, environmental regulation to be implemented March 1 — China's Administration on the Control of Pollution Caused by Electronic Information Products.
Known in the industry simply as "China RoHS," the law essentially has the same intent as the EU version: to reduce the use of substances deemed harmful to the environment, or those that make recycling of electrical and electronic wastes difficult and costly.
To help manufacturers comply with RoHS, the Hong Kong Science & Technology Parks Corp. (HKSTP) announced its partnership with CMA Testing and Certification Laboratories (CMA Testing) to provide a complete suite of RoHS substance-analysis services, which will be operated under HKSTP's Material Analysis Laboratory. This service offering will enable manufacturers to determine in detail the hazardous substances present in their products, and know if these fall within the levels prescribed by RoHS.
S.W. Cheung, HKSTP VP for business development and technology support division, said he expects the demand for product-testing services to soar as the industry shifts to more environment-friendly designs. In a talk with EE Times - Asia, Cheung discussed how RoHS is changing the electronics design and manufacturing landscape, and how HKSTP's services help manufacturers address the new demands of the RoHS era.
EE Times - Asia:
How has the EU RoHS affected China manufacturers since July 1, 2006?
S.W. Cheung: A lot of manufacturers had to change their production lines. The big ones had to invest in new production techniques to avoid the use of banned materials. It's very complicated because not all end markets changed at the same time. Europe has changed, but not the United States. To cater to these mixed markets, some companies maintain two production lines—the old one that uses lead and a new one that does not — further adding to production costs.
How Different is China RoHS from the EU Version?
For one, the China version is tougher. Its scope is wider, covering manufacturers, importers, retailers, distributors — the whole supply chain. The EU RoHS covers only producers and doesn't deal with the whole supply chain.
The EU version also covers imports and exports, while China RoHS doesn't include exports, as end markets have different requirements.
China's version also has a unique provision where products under its scope should be labeled with the mandatory safe period or the time frame during which the product remains environmentally safe. Product markings should also specify the hazardous contents used in the product and the packaging material. The time frame for this provision is likewise tight, as only a year has been allotted between the promulgation of the law and its scheduled implementation.
The EU RoHS has specified certain product categories as exempted, while China's version has no provision for exemptions, although we'll have to see in March whether that will remain so. Also, China RoHS has a peculiar provision that only China labs certified by the government could carry out product testing. When the test is done by European, Japanese or U.S. labs, the results won't be accepted. At present, only 18 labs have been certified by the China government.
Since there are two different versions of RoHS, what implementation difficulties are expected?
If manufacturers have already configured their production lines to meet the EU requirements, it's already the first step to clearing China RoHS. But as the latter is more complicated, meeting the EU RoHS is no guarantee of approval in China.
What's the most difficult requirement in China RoHS?
I believe the most difficult would be getting into the 18 certified labs.
I think the China government is making the law very strict to show that China is serious in its environment agenda. But a lot of issues are expected to arise when the law is finally implemented in March. The government might find loopholes that need to be addressed. Rules are easy to set, but the problem is implementation. If people break the law, how do you find out and how do you stop them? Many in the industry are concerned. It's the same problem China is facing with the intellectual property issue.
Tell us about HKSTP's testing facilities for China RoHS.
HKSTP does not do certification, but assists the certified labs. We are a public-funded body, so we don't compete with profit-oriented organizations. Six labs in Hong Kong offer pre-screening testing to help companies guarantee that they meet the RoHS standards. CMA Testing, in particular, is our partner.
If these companies pass the pre-screening in the labs, they don't have a problem. But if they don't pass, that's when they come to HKSTP. We have much more sophisticated equipment that can identify in detail the problem areas where they failed. We help manufacturers determine why they didn't pass. Labs, on the other hand, simply say whether they passed or not. It doesn't matter to us if it's the EU or China RoHS they're targeting—our equipment is able to pinpoint the specific area they should work on.
Do you see a rise in the number of testing labs offering similar services?
I expect more labs will be certified to offer general testing services in the future. But I don't see many offering the same detailed testing services as HKSTP because the equipment is very expensive, and companies don't really need it unless they fail the tests. Companies won't want to invest $5 million in equipment they would rarely need.
How does RoHS relate to the electronics design value chain? What do electronics engineers need to know about RoHS for them to be able to come up with better designs?
RoHS has significant implications in design — not just in technology or functional design, although this is very important, but in the materials used. Right from the earliest stage, designers must determine what raw materials to use for a particular product. Their choice must meet environmental standards and the demands of the application it is intended for. This is creating new challenges in the field of materials development because new materials are needed to replace the old ones that do not satisfy these requirements.
Moreover, because of the Waste Electrical and Electronics Equipment (WEEE) directive, designers can no longer make products that are difficult to recycle. Electronic products generally have a short lifetime. Designers in the past only knew how to make good products, but they didn't know how these products could be disposed of. They didn't consider in their designs the recycling or handling of these products once they have lived out their shelf lives. Because of WEEE, they have to design products that can be recycled or easily disposed of. Recycling or disposing of old products is often more expensive than designing and manufacturing them, so this poses a new challenge to designers today.
Design is no longer just for function. Material and packaging are important as well. HKSTP has anticipated the importance of this field and has opened its InnoCentre facility to specialize on industrial designs, with particular focus on packaging and environment-friendly materials. The goal is to be able to create products that could easily be recycled at the least cost.
On the whole, how prepared are China manufacturers to comply with China RoHS?
The big companies are ready, but the small ones may disappear. Complying with China RoHS calls for changes in the production line, and this could mean redesigning the whole factory layout, and adding new equipment and facilities like waste treatment. The big ones have capital for this, but the small ones don't.
How confident are you that full compliance will be achieved once China RoHS takes effect?
I am very confident. Anybody who wants to be in this business has to be fully compliant. But of course, there may be some who would try to cheat or find loopholes they could get through. But if China, the EU and the U.S. are serious about reducing environmental hazards—indeed, if everybody is serious—those who try to circumvent the rules will be penalized.
Environment-friendly design is becoming important, and HKSTP's role is to support companies by helping them solve problems in material development and packaging design, as well as in energy-efficiency and waste management research. Even in the EU, RoHS had caused some initial difficulties. This is to be expected in China as well. We hope that China will execute the law faithfully, even if it's tougher. After March, I think they may have to relax some of the law's provisions. But on the whole, I believe this is the right track, although companies will have to bear the pain initially or go out of the picture.
Plan for Economic Innovation in Hawaii Unveiled
Hoping to provide the creative spark for a new generation of Island scientists, engineers and entrepreneurs, Gov. Linda Lingle announced a series of initiatives recently to promote innovation and help move the state's economy away from land development.
The two-year, $30 million plan includes new school academies that would specialize in science and technology, a state-backed college scholarship program for science-based graduates, state investments in the life sciences, digital media and music, and incentives for workers to save money that can be used to upgrade their job skills and remain competitive as technology evolves.
Taken individually, none of the governor's ideas match the provocative rhetoric last month in her second inauguration speech, in which she vowed to shift the focus of the state's economy from land development. But collectively, her plan stitches together several promising initiatives that could help diversify an economy overly dependent on tourism, land development and the military.
Lingle, at an afternoon news conference at the state Capitol, said the administration would set measurable goals. The administration believes the plan, if approved by the state legislature and fully implemented, would raise average household income, increase the number of jobs that pay more than $50,000 a year, and substantially reduce the number of students who enter college needing remedial help in math and other basic subjects.
Initiating Dialogue
Lingle said she wanted to start a dialogue on innovation with lawmakers, educators and the business community. While some of her advisers and partners described the plan as bold and even breathtaking, the governor called it a modest investment with the potential to yield big results.
"Innovation is so important because it's the only way, in our opinion, to preserve the quality of life while raising the standard of living," she said. "It's a clear pathway to sustainability."
The plan has been in the works for months, but Lingle was inspired by a visit this month to New Hampshire, where she met with Dean Kamen, the inventor of the Segway scooter, and attended the opening of his annual school robotics competition. She acknowledged that many of her initiatives have already been tried in some form or have been suggested by state lawmakers in the past, but never in such a comprehensive package.
David Heenan, a Campbell Estate trustee and educator who has written extensively about the need to develop human capital to stay competitive, called the plan "wine out of a new bottle," but still a bold step.
"Let's hope we have the next Bill Gates right here in Hawai'i," Heenan said.
Henk Rogers, who attended the University of Hawai'i-Manoa and was involved with the popular computer game Tetris, said he was lured back to the Islands to start a business because of the state's technology tax credits. He has since sold the company, Blue Lava Wireless, which developed Tetris games for wireless phones, for a reported $137 million and is at work with his staff on other digital products.
"What that tells me is we can do it here in Hawai'i. We don't need to go someplace else," Rogers said.
Lingle's plan has components for education, the economy, workforce development, linking the state to the global economy, and innovation in state government.
Over the next two years, the plan would create academies related to science, technology, engineering and math at 14 public schools statewide. Elementary and middle-school academies would have a problem-solving and project-based curriculum, while high-school academies would have a standards-based science and technology curriculum and would be modeled on existing construction academies. UH would administer the program.
Students who complete the academy programs and plan to study science, technology, engineering or math in college would get tuition scholarships at any public or private school in the state. Parents who save for their children's college tuition would also get a tax deduction — $10,000 for singles; $20,000 for couples filing jointly.
Student Benefits
Jonathan Kobayashi, a senior at McKinley High School who is involved in robotics, said it would be valuable to have science and technology programs at more schools. McKinley is one of four high schools — with Waialua, Waiakea and Punahou — who will participate this year in Kamen's robotics competition.
Lingle said yesterday that the state will receive $1 million from NASA to hold a regional event of the competition in Honolulu starting next spring.
"Students learn how engineers think. And that's a very valuable experience," Kobayashi said.
The state, under Lingle's plan, would lease space in a new life sciences and biotechnology research center being privately developed in Kaka'ako. The state's investment would help finance the center, which is near UH's John A. Burns School of Medicine and could serve as a technology incubator. This, she said, is an example of how the state can encourage economic options other than direct land development.
The state also would lease space for a new Digital Media Center that might attract television and film projects that are now being lost to the Mainland. The state also would help finance a new music program being developed at Honolulu Community College in collaboration with Belmont University in Nashville, Tenn. The program could be an outlet for local artists or people who want to learn business or production skills.
Lingle also proposed channeling $100 million from the state's retirement system into an innovation fund that would invest in new technology companies, a variation on an idea proposed last session by state House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo Valley, Wilhelmina Rise). Say, who did not plan to offer the bill again this session, had wanted to use general fund money.
Reworking Ideas
Lingle also would encourage workers to put aside money in lifetime learning accounts that would be matched by their employers. The money could be used for training and education to help workers keep pace with technological changes. A rapid-response training program would help workers quickly prepare if a new type of industry emerges in the Islands or transition to new jobs if they are laid off when companies leave or shut down, such as the closing of the Del Monte plantation in Kunia.
"All these things tie back to the ability of those of us in Hawai'i to stay here," Lingle said.
State lawmakers also are looking at sustainability as a theme for the session and were open yesterday to hearing more about Lingle's plan.
"What I really like about it is we're talking about ideas that have been out there before," said state Rep. Kyle Yamashita, D-12th (Pukalani, Makawao, Olinda), chairman of the House Economic Development and Business Concerns Committee, who said lawmakers could evaluate whether similar initiatives are working.
State House Vice Speaker Jon Riki Karamatsu, D-41st (Waipahu, Village Park, Waikele), has been wanting to establish an academy as a magnet for gifted and talented students for the past few sessions.
"When you look at innovation, it is highly tied to creativity," he said of the importance of giving students freedom to experiment.
State Sen. Jill Tokuda, D-24th (Kailua, Kane'ohe), has several ideas to integrate workforce development at public schools so students can see different career paths, not only in science and technology but in agriculture and the building trades. "It could be the hook that keeps them in school," she said.
PRINTED CIRCUIT BOARDS
Taiwan's PCB Makers Expanding Capacity in Eastern China
Taiwan's manufacturers of printed circuit board (PCB) are speeding up expanding their production capacities in mainland China, especially in Suzhou, Kunshan and Changshu of Jiangsu Province.
At present, the Taiwanese PCB firms operating in the mainland include Ya Hsin Industrial Co., Gold Circuit Electronics Ltd., and Chin-Poon Industrial Co. Because of the move to expand output, the above-mentioned firms will see monthly production capacity of PCB increase by five million square feet by the end of 2007 from a current level.
According to a projection conducted by TKK Technology Co., one of Taiwan's leading distributors of PCB manufacturing equipment, said Taiwanese PCB firms currently can meet 30% of mainland demand and the ratio will rise to 40% by the end of 2007.
Of them, Ya Hsin will increase capacity the most. The company will soon begin production of a new plant in Suzhou, which has monthly production capacity of 1.5 million square feet of PCBs.
At present, Ya Hsin focuses on the production of PCBs, surface-mount-technology products, digital versatile disk players, and liquid crystal display (LCD) TVs. The company said it has high demand for PCBs to facilitate the production of the above-mentioned electronic devices.
To struggle for orders for PCBs used in notebook personal computers, Gold Circuit Electronics noted it has just inaugurated a new plant in Changshu with monthly production capacity of 1.5 million square feet. In the foreseeable future, the plant will double its current capacity if needed.
Already having a plant in Suzhou, Chin-Poon is now building a new plant in Changshu. With monthly production capacity reaching 500,000 square feet, the new plant will begin mass production sometime in the third quarter of 2007. If there is a need, the plant will be able to double capacity.
Victory Circuit Co. said it has decided to set up its first mainland plant in Changshu, which will begin mass production in the second quarter of 2007. In the early stage of its operation, the plant will have a monthly capacity of 300,000 square feet of PCBs.
Yang An Electronics Co. is now building a plant in Wuxi of Jiangsu province. The plant will be the first of the company's production site in the mainland. The plant is capable of rolling out 400,000 square feet of PCBs per month in the fourth quarter of 2007.
HannStar Board Corp. noted it is building a fourth plant in the mainland which will begin mass production in the second quarter of 2007. The new plant will have a monthly capacity of 600,000 square feet.
United Printed Circuit Board Corp. said its 100%-owned subsidiary-Shanghai Unitech Electronics Co. is increasingly installing production equipment to expand output at its second plant in Shanghai. The plant will double production capacity to 500,000 square feet of PCBs from currently 250,000 square feet in the second quarter of 2007. In the second half of 2007, the plant will launch a new round of production expansion project.
Others like Plotech Co., Dynamic PCB Co. and APCB Inc. are also expanding their production capacities in the mainland.
MEW Opens Subsidiary in
China
To further expand its production capabilities, Matsushita Electric Works Ltd
(MEW) opened another subsidiary in Suzhou, China—Panasonic Electric Works
Electronic Materials (Suzhou) Co. Ltd. The facility will manufacture multilayer
PCB materials and is expected to increase MEW's output of laminates by 24 lakh
m² per year.
The new company is the second laminate facility of MEW—next to the one in Guangzhou—and its 18th manufacturing subsidiary on mainland China. MEW's Electronic and Plastic Materials Division has been running three facilities in the country which include the paper phenol CCL plant and PCB plant in Suzhou, as well as the encapsulation materials facility in Shanghai.
MEW forecasts a huge market potential for its halogen-free materials and also plans to expand the segment's production. The company targets annual sales jumps in its Electronic and Plastic Materials business from the present Rs.656.49 crore ($144.22 million) to Rs.926.83 crore ($203.61 million) by 2010.
OTHER ELECTRONICS
China BAK to Build R&D Center in Shenzhen
Li-ion cell supplier China BAK Battery Inc. will establish an R&D center in Shenzhen. According to the company, its subsidiary Shenzhen BAK Battery Co. Ltd has secured rights from the government of China to use 6,038m² of land in Shenzhen High-tech Industrial Park.
China BAK will begin construction of the facility in the second half. It expects the plant will be operational in 2008.
Fabrinet Continues Expansion in South East Asia
Fabrinet, a global manufacturing services provider of complex optical components, announced that its latest factory, completed in Nov 2005, is near capacity and that a foundation-stone laying ceremony for a new factory in its Pinehurst campus manufacturing complex near Bangkok, Thailand, will occur today.
The new facility of approximately 300,000 square feet will accommodate fast-growing demand for the company's optical components, module manufacturing and system assembly services as well as anticipated growth in capital equipment, automotive and medical markets. Scheduled for completion in late 2007, the new building will raise Fabrinet's global manufacturing capacity to over one million square feet.
The new factory's numerous assembly lines can be customized to support Class 100,000 to Class 100 Clean Rooms for high precision opto-electronic manufacturing and sophisticated "Dry-Rooms" to meet the ultra-low humidity requirements of medical devices. Additionally, the factory will accommodate Fabrinet's unique, customer-specific "factory within a factory" operations, ensuring complete IP security and exact adherence to each customer's desired manufacturing processes.
Hon Hai to Build up 4th Large-Sized Overseas Base in Vietnam
In line with its strategy of nearby supply for its clients, Hon Hai Group, the world's largest EMS (electronic manufacturing service) provider, is going to invest US$1 billion to build a comprehensive manufacturing complex in Vietnam, which will become the group's fourth large-sized overseas production base, following China, Eastern Europe and India.
Tarry Guo, Hon Hai chairman, has dispatched a 20-member task force to Hanoi, location of the project site for the manufacturing complex, to carry out further study of the project early this month. With projected investment of US$1 billion, the projected site spans over 5,000 hectares and if every thing proceeds smoothly, the complex still inaugurate in late this year or early next year, mainly for the production of 3Cs (computer, communications, and consumer electronics) products.
Tarry Guo made a field-study trip to Vietnam late last year and was quite satisfied with its investment climate, including low land costs, at only around US$0.01 one square meter, on tops of tax incentives and hard-working laborers.
One major motive for the group's investment is Vietnam craze among the world's major electronics firms, including its major client Sony, for investments in that country, following its accession to the World Trade Organization (WTO) last year. As a result, Vietnam is cutting tariffs for some raw materials and gradually opening up its domestic market, policies which are expected to boost its economic growth to 8% in the next 10 years. The rosy economic outlook, plus low labor and land costs, have solicited investments from many major electronics firms, notably Intel which is investing U$1 billion to build a fab in that country. Others which have jumped on the bandwagon include Samsung, Sony, NEC, Canon, and Sanyo.
For years, Hon Hai has been adhering to the policy of following the steps of its major clients to set up overseas factories in order to supply their needs nearby. For instance, many years ago it took over a computer assembly plant in Czech to meet the need of Compaq. In 2003 it spent NT$2.4 billion to acquire Eimo Oyi of Finland in compliance with the requirement of Nokia. In October 2003, in order to secure orders from Motorola, it acquired Motorola's Mexico plant at US$18 million.
Moreover, in March 2006, following the steps of Nokia and other clients, Foxconn International Holding, an affiliate of the group, signed a letter of intent with India's Tamil Nadu state government for investing US$110 million in a five-year period for building up an industrial park for the production of PCB (printed circuit board), connector, computer case, PC, handset and its components.
McIlvaine Company,
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