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RF/Microwave??

Making things matter in 'rest of Asia'

Posted: 01 Jan 2006 ?? ?Print Version ?Bookmark and Share

Keywords:consumer electronics? asia? asia-pacific electronics industry? electronics industry? DVD?

It's a story being told over and over throughout the electronics industryforeign manufacturing investors are sinking their teeth deeper into mainland China. What is not being told, however, is that neighboring Asian countries are also making their mark in the high-tech arena by concentrating on several key areas.

The main driving force behind designs being done in Asia-Pacific countries other than China, such as Singapore, Malaysia and Indonesia, is consumer electronics. Technology hotspots are primarily DVD, DVR players, cellphones and smart phones with region-specific features. The boom in consumer electronics will be driven not just by product replacement cycles, but also by new demand, especially from underserved populations in certain regions of Asia that lag further behind in the technology consumption cycle. Meanwhile, the second wave will be white goods/household appliances.

Three to five years ago, telecoms and networking devices had the spotlight. However, market declines in 2000 and 2001 have led to consumer electronics being at the forefront of new design starts, and telecoms has now slipped to the second position, followed by industrial controls. As overall IT infrastructures are strengthened, expect more demand for telecom and networking products this year.

Major challenges for design engineers linger the obvious:
1. Feature convergenceMultiple applications on the same platform necessitate a system-level design approach;
2. Dealing with embedded software issuesThis can be a deal breaker if the OEM does not provide the right kind of user interface/application software. There is a great lesson from the story about sub-$500 DVDs that bombed in the China market due to lack of attention to software issues;
3. The need to support multiple and sometimes competing protocol standards;
4. Commoditization of technology, which in turn pressures margins.

Still crucial
By now, most manufacturers have relocated their labor-intensive production processes to mainland China.

As a result, Hong Kong SAR has become a back-end office, mainly responsible for quality control, management, marketing and logistic support. Most Hong Kong companies are now re-classified as non-manufacturing establishments, despite the significant presence of production activities such as IC packaging, multilayer PCB production, flexible substrates manufacturing for IC assembly and lead-frame bonding.

According to the Hong Kong Trade Development Council, the island's biggest electronics exports are A/V equipment and parts, IT equipment and parts, and ICs, which grew by 10 percent, 35 percent and 11 percent in 2005, respectively. Hong Kong's electronics industry is still characterized by the heavy dependence on imported parts of key components, especially ICs and dices from foreign manufacturers or local Chinese enterprises in the mainland.

In Singapore, reports from the Economic Development Board indicated that the city-state is aiming at a two-fold increase in manufacturing output to $177.65 billion by 2018, with the electronics sector as a key growth driver.

Total electronics output may grow as much as 4.1 percent to $69.28 billion by 2018, while value-added output from the electronics sector is seen to experience a cumulative annual growth of 5.3 percent to $14.92 billion over the next 13 years. Maximizing its 14 wafer fabrication facilities, including two 300mm plants, Singapore has a significant edge in value-added manufacturing. Meanwhile, it is losing low-end manufacturing to places like China, Vietnam and the Philippines.

Playing catch-up with Singapore, neighboring rivals Indonesia and Malaysia have launched campaigns to draw in electronics manufacturers and investors. They will also focus on manufacturing, ranging from foundry work to packaging and test, while presenting themselves as low-cost, hassle-free industrial destinations.

India, on the other hand, is quickly emerging as a strong design services and R&D destination for ASIC, FPGA, board and embedded systems design. Design services majors like Wipro Technologies and Tata Consultancy Services, as well as multinational companies like Cisco Systems Inc., Texas Instruments Inc. and Qualcomm Inc., are all doing more design work in India. They tend to use foundries in both the Asia-Pacific region and other parts of the world, depending on customer demand. In 2006, India is well on its way to becoming a leading player in design, although not in manufacturing, assembly or test.

- Denice Cabel
EE TimesAsia
- Additional report from Daya Nadamuni of Gartner Dataquest.




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