The global market for crystal components is forecast to reach US$3.8 billion in 2005, according to the China Electronic Components Association (CECA).
Mainland China's market, which accounts for 20 percent of the world's total, is estimated at US$760 million. Mainland China's output for crystal components was 5.5 billion units in 2004. Sales revenue reached US$900 million. Output will further increase by 9 percent to 6 billon units in 2005, with sales revenue amounting to US$1 billion.
In Taiwan, the Industrial Technology Intelligence Services (ITIS) reports that the island accounts for 7 percent of the world's crystal components supply.
In 2004, Taiwan's output was 552.6 million units, worth US$395.4 million, an increase of nearly 37 percent over the US$289.4 million in 2003. Its output will further increase to 609.4 million units in 2005, with sales reaching US$434.7 million.
Other main findings in this report are:
On Industry Composition:
There are about 200 crystal components manufacturers in mainland China. Taiwan's supplier base, on the other hand, is composed of 30 makers.
Several makers from other countries and regions, including Taiwan, Hong Kong, Japan and the US, have moved their production bases to mainland China. Of the 30 Taiwan makers, 26 have facilities in mainland China. More manufacturers are expected to shift production to mainland China.
Of the 68 companies in this report, the majority, or 83 percent, are from mainland China; 10 percent, Hong Kong; and 7 percent, Taiwan.
On Manufacturing Capability:
The individual output of the surveyed suppliers for crystal components ranges from as little as 12,500 units to as many as 200 million units per month.
Seventy-one percent of the companies utilize 70 percent to 80 percent of their capacity, while 9 percent utilize 91 percent to 100 percent of their capacity. Most of them have plans to expand their production by 10 percent to 50 percent in 2005.
Almost all of the companies have ISO 9001 certifications. Several have ISO 14001 certifications.
On Export Capability:
About 60 percent of crystal components output from mainland China and Taiwan are exported. In 2004, mainland China and Taiwan shipped a total of more than 3.84 billion units of crystal components. Mainland China exported 3.5 billion units of mostly low-end to midrange crystal components, worth US$624 million. Taiwan, on the other hand, exported 336.2 million units valued at US$434.4 million, the majority of which are high-end products.
In 2005, export from mainland China will increase by 20 percent to 4.2 billion units. Taiwan's export, meanwhile, will increase by 10 percent to 370.8 million units.
Overseas markets are primarily the Asia-Pacific, Europe and the US.
On Crystal Oscillators and Resonators:
• Production of crystal oscillators and resonators accounts for 80 percent of the entire crystal components manufacturing in mainland China.
• Unit shipment in 2005 is projected at 3.5 billion units, with export revenues reaching US$600 million.
• R&D focus is toward surface mount models in 3.2-by-2.5mm case size.
On Crystal Filters:
• Mainland China supplies 20 percent of the crystal filter output in the world. The country's output is expected to reach 1 billion in 2005.
• In Taiwan, production value for crystal filters increased by 88 percent from US$10 million in 2003 to US$18.8 million in 2004.
• Forty percent of the surveyed companies are crystal filter makers with a monthly output ranging from 200,000 units to 11 million units.
• The growth of the crystal filter industry is expected to slow down with the growing popularity of SAW filters.
Industry Overview
The worldwide crystal components market is estimated to reach US$3.8 billion in 2005. Demand primarily comes from the communication and PC sectors. According to the China Electronic Components Association (CECA), mainland China's production capacity for crystal components is about 5 billion to 6 billion units per year, accounting for 50 percent of the world total. The country's market accounts for 20 percent of the world total, while production value represents 10 percent.
There are about 200 crystal components manufacturers in mainland China. The major production centers are Shenzhen, Yantai, Jinhua, Tangshan, Langfan and the Greater Beijing Area. About 70 percent of all makers are either privately owned or state-owned, and the remaining 30 percent are joint ventures or foreign-owned.
The top four crystal component makers in Japan have also set up their production bases in the country. They are Nihon Dempa Kogyo, Toyocom, KDS and TEW. In addition, other makers from the US, Japan, South Korea, Taiwan and Hong Kong have also transferred their factories to mainland China. More overseas suppliers are expected to move to the mainland in the coming years.
Mounting demand from communication devices, PCs and peripherals, precision instruments and household appliances is expected to drive up production expansions of manufacturers in mainland China. In particular, demand for crystal components rose in April, May and June in 2005 compared with the same period over the previous years. Makers expect that demand for general types, such as 49U, 49S and UM, will increase slightly in the coming months, while demand for OCXOs, TCXOs and VCXOs is expected to rise by as much as 30 percent. For the overall industry, makers are optimistic of a 10 percent to 15 percent growth in 2005 and 2006.
Crystal Components Industry in Taiwan
It is estimated that 7 percent of the world's crystal components supply come from Taiwan manufacturers, according to the Industrial Technology Intelligence Services (ITIS). Japan dominates the world market with a 65 percent share, while the US and Europe each account for 7 percent.
In 2004, Taiwan produced US$395.4 million worth of crystal components, figures from ITIS show. The figure shows a 36.6 percent growth compared to the previous year's production value of $289.4 million. For 2005, Taiwan's production value is expected to reach US$434.7 million, up 10 percent.
The significant growth between 2003 and 2004 is mainly attributed to strong demand from WLAN and Bluetooth devices.
However, demand is projected to slow down in the second half of 2005. Hence, overall annual growth of crystal components in Taiwan is expected to decline as well. About 45 percent of crystal components produced by Taiwan makers are used in communication devices. The IT applications account for 30 percent and consumer electronics along with others account for 25 percent. However, the automotive sector is emerging as a demand driver for crystal components. Taiwan makers are upgrading production techniques and developing high-quality products to cater to this market. Moreover, Taiwan suppliers are applying for QS 9000 and TS 19649 certifications to gain product approvals from automobile makers.
For instance, TXC, one of the leading crystal components makers in Taiwan, has sent products to Ford Motors. The company expects to gain authorization in mid-2006. It plans to enter the automotive after-market sector in 2005.
Also, in early 2005, Taiwan automobile maker Yulon Motor Co. and the Ministry of Economic Affairs launched a research project on technology integration between the IT sector and the automotive sector. The joint project is another opportunity for makers to penetrate the automotive sector because crystal components, such as filters and oscillators, can be applied in communication devices used in automobiles.
Supplier Profile
Abundance Ent. Co.
Abundance Ent. Co. (AEC) is a Hong Kong-owned private company founded in 1988. The company has two production facilities in mainland China, where it produces crystal resonators, crystal filters, crystal oscillators, surface-mount crystals, SAW resonators and SAW filters.
The company exports about 50 percent of its total output. Its main export destinations include Europe, which absorbs 40 percent of its exports; North America, 20 percent; Southeast Asia, 15 percent; the Middle East, 10 percent; and the rest of the world, 15 percent. AEC expects its export prices to increase because of the rise in the cost of raw materials. The company forecasts its export volume to grow by at least 10 percent by the end of 2005.
The company offers OEM services, mostly to overseas customers. AEC participates in exhibitions such as Hong Kong's Electronic Asia to promote its products to the international market.
Manufacturing Capability
AEC's two manufacturing facilities collectively measure an estimated 29,300 square meters. The company operates five main production lines and has 930 employees.
AEC has a monthly capacity of 10 million units of crystal components. The company is gradually expanding its production capacity to keep up with the growing market demand.
In 2004 alone, AEC invested over US$300,000 in production equipment. AEC estimates its production to increase by as much as 15 percent by the end of 2005.
At its production facilities, AEC has one IR reflow furnace; 12 SBC-6SA base plating machines; 41 SC-6SA patial plating machines; 37 SA350B testing machines; and 12 TC-534 resistance welding machines. Most of AEC's production and testing equipment are imported from the US, Germany and Japan.
The company performs all its manufacturing processes in-house, including cutting, lapping, dimensioning the blank, etching, mounting and gluing, plating, sealing, initial crystal testing, aging, and final crystal testing.
Although the increase in copper cost did not affect the company to a large extent, AEC expects its quotes for crystal components to increase by 15 percent in 2005 due to higher costs of other raw materials.
Quality Standards
AEC has a total of 80 QC workers in its two production facilities. The company's testing machines include 23 autoscan bidirectional vibration beds; an insulation resistance tester; 140 network analyzers; vibration assaulting machine; and two high-low temperature testing chambers.
AEC's production facilities are certified to ISO 9001 and ISO 9002. The company has applied for QS 9000 certification as it plans to penetrate the automotive market in the near future.
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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