Contract Manufacturing, New Components Drive Surface Mount Market

Despite an early-90s slowdown in capital equipment spending, sales are increasing in the surface mount technology (SMT) market, and this growth trend is expected to continue, according to a recent Frost & Sullivan report.The report projects that revenues in the world SMT manufacturing equipment market will grow from almost $3.

03/01/1998


Despite an early-90s slowdown in capital equipment spending, sales are increasing in the surface mount technology (SMT) market, and this growth trend is expected to continue, according to a recent Frost & Sullivan report.

The report projects that revenues in the world SMT manufacturing equipment market will grow from almost $3.3 billion in 1997 to over $8.8 billion in 2004. Trends in the SMT industry include: increased complexity and miniaturization of electronic components; faster assembly process and increased manufacturing of high quality; and more reliable electronics. Technologically, printed circuit board manufacturers are relying on information generated by automated inspection equipment software for process control, and more new components in the market are leading to heavy growth in fine-pitch and ball-grid-array equipment.

"The fastest growing geographic regions are North America and the Pacific Rim, and the contract manufacturing market and new components configuration is driving this growth," says Matt Saltz, Frost & Sullivan's SMT analyst.

Frost & Sullivan's study found several industry challenges in the two main customer segments in the SMT market: contract manufacturers and OEMs. These include increasing price competition due to contract manufacturers' squeezed profits, and their tighter control on capital investments, which is forcing equipment manufacturers to make improvements in the price/performance ratio of their machines. The report adds that contract manufacturing is exploding and new companies open daily. Contract manufacturers and the OEM market are also buying more fine-pitch equipment, since the industry is using more nonstandard components.

"Although many manufacturers are beginning to outsource their products, those that choose to continue to produce their own products must keep pace with the same trends that contract manufacturers are following," says Arne Johnsen-Sollos, Frost & Sullivan's SMT Analyst.





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