Column: Looking to Asia - PCB investments in Southeast Asia

The author has been visiting PCB manufacturers in Southeast Asia for over 40 years, although he had to stop this activity during the Covid pandemic. He last traveled to Singapore and Vietnam in January 2020. He visited most of the major PCB manufacturers in Singapore, Malaysia, Thailand, Vietnam, the Philippines and Indonesia, some more than ten times over the years. He took numerous photos of the factories he visited to better understand the PCB industry in the region. Two of them are shown in this column.

From China

• Over the past year, PCB manufacturers have invested in new plants in Southeast Asian countries, particularly in Thailand, Vietnam and Malaysia. The investments are intended to avoid many of the risks involved in continuing business activities in China.
• Japanese PCB manufacturers followed their customers who built many plants in this region over 30 years ago.
• During a political conflict between Japan and China over control of the Senkaku Islands (referred to by China as the 'fishing islands'), numerous Japanese companies were attacked by rioting mobs, injuring people and damaging factories.
• Worried about putting all their eggs in one basket, Japanese companies considered avoiding risks in China for a while. The events on the Senkaku Islands prompted Japanese PCB manufacturers to stop investing in China, with the exception of Mektec.
• Ibiden recently sold its Beijing plant to Shenzhen Fast Print.

Others will follow

It would be wrong to say that PCB manufacturers are moving out of China. However, some manufacturers are building new plants not in China, but in Southeast Asia.

WUS, JOVE, ASKPC, Sihui, Dynamic etc. are building new plants in Thailand. Existing manufacturers CMK, Kyoden, KCE, APEX Circuit, etc. are also setting up new plants in different regions of Thailand.

Taiwan's CCL manufacturers, such as Tai Flex, ITEC, etc., are following their customers. TPCA has recently organized trips to Thailand and Vietnam for its members to explore the possibility of setting up manufacturing plants.

Few PCB manufacturers are building new plants in Vietnam, but this will change in the future.

In Malaysia, TTM Technologies, AT&S, GBM (Elna) and Simmtech have set up new plants.

A major problem for existing manufacturers is the loss of experienced staff to the new investors.

Labor costs in China, including the "usual" overtime, are almost as high as in Singapore. Labor costs account for almost 15% of production costs in China(Table 1). Table 2 shows that Singapore is not an option.

(IMF, CIA & N.T. Information Ltd, March 2923)
* The wage including overtime includes 3.5 hours of overtime per working day.
**Population figure: as at 2022 (source: JETRO)

(IMF, 2021) * PPP = purchasing power per capita ≈ purchasing power

Why Thailand, Vietnam and Malaysia?

Daeduck Electronics; Photos: NakaharaSanmina, Linktech (formerly Hitachi Chemical) and Additive Circuits deserve praise for their decision to continue doing business in Singapore. Only the high-tech industry, which does not consume tons of water, can sustain Singapore as a location, which continually suffers from labor shortages and high operating costs.

Indonesia has three PCB plants, but total production is less than $60 million per year and the PCB industry there is not growing.

The Philippines is home to Ibiden, Itabashi Seiki, Kyocera (PCB testing only) and First Sumiden (Sumitomo Electric Industry). Daeduck Electronics has closed its printed circuit board plant. Ibiden's IC substrate production accounts for most of its estimated annual revenue of $600 million.

These three countries are not attractive for new PCB manufacturers. The local market is too small. The focus is therefore on Thailand, Vietnam and Malaysia.

Thailand

Japanese PCB manufacturers currently have a production share of around 60 %. CMK and Kyoden are building new MLB plants next to the existing facilities.

Dynamic Electronics secured an area of 200,000 m² in Industrial Park 304 (Prachinburi), where CMK's expansion is taking place.

Thai company KCE is also building a new plant in Ayutthaya on a site originally owned by Sanyo Electric.

Rumor has it that relations between Vietnam and China are not very friendly, so all Chinese companies have so far built plants in Thailand. This is about to change.

PCB factories are mainly located in Ayutthaya (Rojana, Banp-In, Patthunthani, etc.). Some manufacturers are only one to two hours away from Bangkok. Table 4 shows the new investments and expansions in Thailand.

Table 3 shows major PCB manufacturers and Table 4 shows new investments and expansions in Thailand.

(N.T. Information Ltd, March 2023)

(N.T. Information Ltd, March 2023)

Vietnam

The first modern PCB plant in Vietnam was established by Fujitsu Computer Vietnam in 1998. The company was renamed FICT (Fujitsu Interconnet Technology) and was recently sold to the Taiwanese company Tripod Technology.

There are two other Japanese companies in the Ho Chi Minh City region: Nitto Denko and Fujikura, both FPC manufacturers.

There are several smaller manufacturers in the Ho Chi Minh City area: FAB-9, Vector Fabrication and Sun Ching.

In recent years, many South Korean manufacturers, especially PFC producers, have set up shop in Bac Ninh, north of Hanoi, to serve Samsung Electronics' cell phone business in Bac Ninh and Thai Ngyuen.

Mektec Vietnam (Hun Yeng Prov)Production by Japanese manufacturers in Vietnam is estimated at $1,440 million and production by South Korean manufacturers at around $1,800 million. Japanese and South Korean manufacturers will continue to dominate Vietnamese PCB production for some time to come.

Table 5 shows PCB manufacturers and Table 6 new plants in Vietnam.

(N.T. Information Ltd, March 2023)

(N.T. Information Ltd, March 2023)

Malaysia

Currently, Malaysia's PCB production ($450m) is slightly less than the Philippines (over $500m, with the majority being Ibiden's IC substrates). However, AT&S's large investment of €1.8 billion in IC substrates will soon change this situation.

TTM is in the process of setting up an MLB plant in Penang (initial investment of around $130m). Simmtech initially invested $125 million (2021) in its IC substrate plant in Penang and another $50 million to expand its operations. GBM is investing $220 million in a new plant in Penang.

Vietnam has a population of 100 million, Thailand 66 million and Malaysia 32.7 million. Recruiting staff in Malaysia is therefore a major challenge. The poaching of employees from existing manufacturers is a concern for them, as their employees are lured with higher wages. Malaysia employs many 'imported' workers from Indonesia, Nepal, Bangladesh, etc. Table 7 shows PCB manufacturers and Table 8 shows new investments in Malaysia.

(N.T. Information Ltd, March 2023)
*TTM invests $180m, AT&S invests €1.8bn, Elna invests $230m, Simmtech invests $120+50m

(N.T. Information Ltd, March 2023)

Conclusion

Taiwanese and Chinese PCB manufacturers are making significant inroads into Thailand and Vietnam. Not too many are setting up shop in Malaysia. Their suppliers will follow.

It appears that Taiwanese PCB manufacturers (with the exception of Zhen Ding) are reluctant to invest further in China until the situation calms down.

It is quite conceivable that PCB production in Thailand, Vietnam and Malaysia combined could reach $15 billion or more in four to five years if all investments are realized.

What role does India play? At present, the situation is not very positive as the infrastructure is still inadequate: frequent power and water shortages, labor disputes, etc.. Almost all materials and equipment have to be imported to India.