The growth of the cable and assembly industry has been spurred by demand for faster Internet connections and improved networking capabilities. Shipments of fiber-optic cables are forecast to grow from US$1.2 billion in2005 to US$4 billion by 2010, with the highest growth application coming from data centers, according to research on the high performance structured cabling system market. Shipments of coaxial cables also grew by approximately 15 percent in 2005 despite intense competition from other data transmission cables.
Due to the low technological threshold, the cable and assembly industry is now a mature industry where the majority of the makers have been around for at least a decade.
In mainland China, the cable and assembly industry expects significant growth as the country's multi-channel TV sector is projected to reach US$7.3 billion by 2015, representing a compound annual growth rate of 12.5 percent for cable, satellite and IP video on aggregate.
Output of cables and assemblies by mainland China makers is projected to register 16.8 percent growth in 2006.
Mainland China has more than 400 manufacturers of cables and assemblies including fiber-optic cables, coaxial cables and flat-ribbon cables. Most of these makers are located in Guangdong, Hubei, Jiangsu and Zhejiang provinces.
Taiwan also remains as a manufacturing hub for high-end cables and assemblies. It has a supplier base of about 700 manufacturers, of which many have transferred or expanded manufacturing facilities in mainland China.
The main export markets for makers are North America, Western Europe and East Asia. This report covers key trends, developments and issues affecting the production and export of cables and assemblies in Greater China. It is based on supervised factory visits and personal interviews with manufacturers.
The report includes coverage of 84 manufacturers — 46 from mainland China, 29 from Taiwan, and nine from Hong Kong. The following sections highlight some of the key findings:
Manufacturing Capability
• None of the makers reported an unused capacity of more than 50 percent. In fact, about 18 percent of the companies utilize more than 90 percent of their capacities. Most of the makers will maintain high production volumes in 2006
• About half of the companies have facilities that contain more than 10 production lines. In some cases, there are as many as 30 production lines.
• Coaxial cables are produced by the majority of makers, particularly those in mainland China. About 17 percent of the makers produce fiber-optic cables.
• Seventy-three percent of the makers offer OEM services.
Industry Overview
Mainland China and Taiwan are home to about 1,150 manufacturers of cables and assemblies, including coaxial cables, fiber-optic cables, flat-ribbon cables and spiral cables. Mainland China has about 450 cables and assembly manufacturers, of which 300focus on coaxial cables, 50 are engaged in manufacturing fiber-optic cables, and about 100 produce flat ribbon cables. Alongside domestic manufacturers are leading global cable suppliers, such as Nexans, Pirelli Cables & Systems, Sumitomo Electric, Furukawa Electric and Siemens, that have set up production bases or joint ventures in mainland China.
Sixty-seven percent of mainland China cables and assembly makers are in the exporting business. Thirty-three percent of them are either foreign owned or foreign-invested.
Sixty-one percent of the profiled companies are OEM-based, most of which are Taiwan and Hong Kong makers. The majority of the profiled mainland China makers specialize in OBM.
Most of the manufacturers have setup facilities in the Yangtze River Delta and the Pearl River Delta areas, particularly in Guangdong, Hubei, Jiangsu and Zhejiang provinces.
Taiwan has about 700 manufacturers of cables and assemblies. Most of these companies have set up production facilities in mainland China due to lower labor costs and access to raw materials, but their head offices and R&D centers remain in Taiwan.
Manufacturers have been riding high with the industry's exponential growth during the past years arising from the growth in computers, telecommunications, CATV systems, consumer electronics and automotive segments.
In 2006, output of cables and assemblies by mainland China makers is projected to register 16.8 percent growth to 31.85 million km. Total output in 2005 reached about 27.25 million km, up by 12.1 percent over 2004. Mainland China makers produced 24.3 million km of cables and assemblies in 2004, with fiber-optic cables accounting for 82 percent of the output, and coaxial and flat-ribbon cables accounting for 16 percent and 2 percent, respectively.
Profiled manufacturers believe that NGN and 3G systems, CATV systems and computer network systems will drive the growth of the cables and assemblies industry.
With the granting of 3G license, the telecommunications sector in mainland China will also become a growth driver for fiber-optic cables used in automatically switched optical network (ASON), multi-service transport platform (MSTP) and fiber-to-the-home(FTTH) systems.
The emergence of 3G electronic devices is also seen to push demand for coaxial cables used in mobile base stations, as well as flat-ribbon cables used in cars, LCD monitors and home appliances.
Taiwan's total output of cables and assemblies in 2004 reached more than 371,348 tons, with 297,078 tons exported overseas, according to the Industrial Economics and Knowledge (IEK) Center.
Production value amounted to US$1.42billion in the same year, and export value totaled US$1.14 billion, accounting for an annual increase of 31 percent.
Taiwan remains a major exporter and manufacturing hub of several cable and assembly suppliers for leading global OEMs such as Sony and Dell.
Fiber-Optic, Coaxial Cables Lead Output
With the demand for cables and assemblies largely coming from the telecom sector, fiber-optic cables segued into the global market in lieu of copper wires starting mid-1990s.
Fiber-optic cables represent the largest segment for cables and assemblies in mainland China. At present, there are about 50 manufacturers of fiber-optic cables in the mainland, of which most are located in the cities of Wuhan, Wujiang and Fuyang.
Mainland China's total output of fiber-optic cables is forecast to increase by 15 percent to 25.3 million km in 2006. Production in 2005 was approximately 22 million km, representing a 10-percent year-on-year growth.
Supplier Profile
Cable Maestro Int. Inc.
Cable Maestro Int. Inc. (CMI) started as a subcontractor for cables and assemblies in 1995. The company was formally established in 1997. Its main product lines cover coaxial cables and multicore cables for telecom, computer products, medical and automotive applications. It also manufactures A/V,DVI, flat-ribbon, RF, USB, FireWire, SATA, PCMCIA, car electronics and medical-grade cables.
CMI's exports reached US$38 million in 2004 and then climbed to US$42million in 2005. It projects its exports in 2006 to total US$54.6 million.
CMI is an export and OEM oriented company. About 95 percent of its output is exported. OEM customers account for 85 percent of the company's output. Non-OEM business and OBM account for the rest.
The company's major OEM customers include Sony, Siemens and Dell.
Manufacturing Capability
CMI has three factories in Dongguan, Guangdong province with a total production space of 60,000sqm. The factories have a daily production capacity of 300,000 units. The facilities employ about 2,100 production workers.
CMI's export value of cables and assemblies reached US$39.9 million in 2005. The company expects export prices to be affected by the soaring costs of raw materials such as copper and plastic. Its output is mainly distributed in the United States and Western Europe, which account for 45 percent and 20 percent of export shipments, respectively. Australia accounts for 6percent of exports while the remainder is distributed in Asia.
Quality Standards
The company maintains quality control facilities for bending and frequency tests, and lead-free processes.
To ensure product quality, the company acquired several major certifications including ISO 9001, Six Sigma, 5S and QS-9000 systems. The company also conforms to international environmental requirements such as ISO 14001, RoHS and WEEE. Its products have met safety approvals including UL, CE, SGS and USB-IF. The company is also Sony's Green Partner.
CMI employs 100 QC technicians to conduct tests and inspections from IQC to FQC.
The company sources PVC compounds domestically. It has its own compound plastic injection and molding machines to produce shielding and jacket materials in-house. About 80 percent of its production lines are automated, from twisting and shielding to jacket extruding, as well as plastic injection for connectors.
Product Development
CMI invests about 10 percent of its revenue in R&D, and employs 50 R&D workers to develop new products. The company puts emphasis on developing lead-free materials and has internal structural design capability. It can also provide design services to its customers withenhanced product functions through structural improvement and development at lower costs. Material design and internal design structure are conducted in-house.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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