This excerpt taken from the MRAE 20-F filed Jul 16, 2007.
Coverage of Our Models with Respect to Percentage of Total Sales by Machine Category
Source: PROTEC Market Data Convention.
All of our SMD placement systems use linear motors to drive the X-Y gantries containing the heads that are used to pick-and-place the electronic components. We believe that the use of linear motors allows higher speed and reliability, as well as lower maintenance than the belt or screw driven systems used by most of our competitors. Additionally, all of our SMD placement systems use linear scales to position the gantries. The use of linear motors and linear scales allows our placement systems to achieve speeds (or tact times) of up to 0.09 seconds per chip and accuracy of 0.065 mm for chip type devices and 0.025 mm for fine-pitch IC type devices. The use of X-Y gantries versus table turret-type drive allows our placement systems to achieve a smaller system size (footprint) while maintaining similar performance, which is an important factor for many customers. Our Mx310S and Mx310T systems contain two X-Y gantries while the remaining systems contain a single X-Y gantry.
The type of component placement head located on the X-Y gantry determines the type of component capable of being placed by the system. Our chip mounters use multiple spindle modular heads containing four, six or eight chip type spindles, while our multi-functional placement systems have one or more precision heads that are used to place fine pitch ICs. Each of our SMD placement
systems also includes a Mirae-designed and manufactured vision system that permits inspection of components at high speeds. All of our placement systems also use a common Microsoft Windows 2000 and XP based graphical user interface that allows customers to mix multiple types of placement systems in the same facility without having to retrain operators. Mx240, which is the most advanced placement system among our SMD placement systems, has been equipped with a Closed- Loop Force Control System, which monitors and controls placement pressure of mounted parts to improve placement accuracy and prevent parts damage. In 2007, we developed Mx120 series, which is a simple and user-friendly placement system with high speed and competitive price. Mx120 series perform 16,000 chip per hour in the various component range. Many of the technologies used in our component placement systems have been adopted from the technologies that we developed from our core competencies and in the manufacturing of our semiconductor test handler products. We believe these technologies enable us to produce and sell SMD placement systems that are among the most advanced in the industry. We also design and manufacture a full line of accessories to support component feeding on our placement systems. These accessories include intelligent tape feeders that can reduce the mis-picking (loss) of parts and enhance placement reliability and automated tray feeders for IC components. In addition, we have commercially introduced the so called unlimited vinyl ejecting device in tape feeder so that our customers may derive greater convenience and productivity when working.
Market Description. The market for SMD placement equipment is presently undergoing many changes. SMD placement systems are largely used by two types of electronics manufacturers: OEMs, who use the equipment to assemble PCBs for use in their own systems, and EMSs, who use the equipment to assemble PCBs for customers on a contract basis. During the past few years, there has been a major shift from in-house assembly of PCBs to the use of contract manufacturers to perform PCB assembly. When we entered the market in 1999, EMS-produced PCBs accounted for about 10% of the total electronics market according to data published by PROTEC Market Data Convention. The growth rate of the revenues of EMSs was roughly 30% in 2000 but the deterioration in the economic conditions in 2001 and 2002 in the United States and in most economically developed countries negatively impacted the EMS Market. However, with the industry upturns in 2004, EMS-produced PCBs experienced 19.9% growth in 2005 compared to 2004 and 50.7% growth in 2004 compared to 2003. The growth figures for 2006 are currently not available. In addition, worldwide OEM Market for electronic products experienced 10.4% growth in 2006 compared to 2005 and 2.9% growth in 2005 compared to 2004, whereas the worldwide EMS Market experienced 15.4% growth in 2006 compared to 2005 and 14.0% growth in 2005 compared to 2004. According to the Worldwide Electronics Manufacturing Services Markets, Second Edition, the worldwide EMS Market is expected to increase by approximately 14.4% in 2007 compared to 2006.
The major factors driving this growth are that EMSs offer lower production costs through a number of advantages, including lower labor costs, superior competency, utilization improvement, economies of scale and business risk mitigation. The placement equipment purchasing criteria used by OEMs and EMSs often differs, with OEMs selecting the lowest cost component technology and equipment capable of assembling their PCB board, whereas EMSs are interested in equipment that has the widest flexibility and minimizes costs. These factors contributed to the increase in popularity of non-turret type chip shooters, such as our products, with their reduced floor space and set-up time requirements, over turret-type, as well as the rapid growth in multi-functional placement systems, both in the high-end (large EMSs) and low-end (small EMSs and OEMs). Both OEMs and EMSs place a great deal of importance on equipment reliability and local customer service support.
Unlike semiconductor test handlers, which are primarily purchased by major semiconductor manufacturers who make up a market of a relatively small number of potential customers, SMD placement systems are bought by both large and small electronic manufacturers in a market of thousands of potential customers. Large and small electronic manufacturers differ widely in the manner in which they buy component placement systems. Large manufacturers have enormous buying power. A recent study on the EMS market segment concluded that although there are thousands of EMSs worldwide, the top 50 EMSs such as Foxconn, Flextronics and Solectron account for approximately 50% of the total worldwide EMS revenues. Although they produce products from regional facilities located throughout the world, these large electronics manufacturers use centralized purchasing functions usually located at the headquarters to qualify vendors and negotiate supply contracts. These large manufacturers desire to work directly with a dedicated sales team from the placement system manufacturer and require on-site service support for each manufacturing facility. Small manufacturers tend to buy placement systems once they have secured new business that requires additional capacity or capabilities not present in their existing systems. In order to service the thousands of small manufacturers around the world, we rely on a network of distributors and sales representatives. We are currently expanding our geographic distribution network to increase our sales and service coverage.
There has been a geographical shift in sales of new SMT component placement systems. When we entered the market in 1999, the Americas and Europe accounted for 45.8% of new machine placements in the world. In 2004, these two regions together accounted for only 19.4% of new machine placements worldwide. Asia not including Japan accounted for 32.5% and 68.2% of new machine placements in 1999 and 2004, respectively. In 2004, new machine placements in China alone exceeded machine placements in the Americas, Europe and Japan combined. This change has been gradually accelerating since 2002 and indicates the trend of relocation of PCB assembly, especially for low margin consumer products, such as PCs and cellular phones, to Asia due to lower
labor costs. A significant number of these procurements are made by large OEMs and EMSs whose purchasing contracts are entered into in the Americas and Europe. The demand for new SMT component placement systems has been affected by the general electronics industry which includes mobile phone, computer and other electronic products sectors. In 2006, the worldwide market share of SMT placement system experienced a 14.4% slowdown compared to 2005, whereas a 19.9% growth compared to 2004. In 2006, the European market share of SMT placement system increased by 9.9% only compared to 2005. In 2005, the Chinese market share which is categorized by shipped units of SMT placement system increased by 21% compared to 2004, while the European market share of SMT placement system increased by 13.7% as compared to the same period according to industry data provided by PROTEC Market Data Convention. The Worldwide Electronics Manufacturing Services Market, Second Edition, forecasts that the worldwide OEM Market for PCB assembly will increase 10.7% in 2007 as compared to 2006.