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Cost Versus Quality - the Big Challenge for the European Electronics Manufacturing Industry - Ever since the economic downturn of 2001, the European electronics manufacturing industry has been facing a series of challenges, not least of which is the growing competition from low-cost economies such as China and other East Asian countries
Cost Versus Quality - the Big Challenge for the European Electronics Manufacturing Industry

 

PRZOOM - /newswire/ - London, United Kingdom, 2007/02/21 - Ever since the economic downturn of 2001, the European electronics manufacturing industry has been facing a series of challenges, not least of which is the growing competition from low-cost economies such as China and other East Asian countries.

   
 
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Uncertain business conditions and high equipment costs have combined to create a highly challenging situation for vendors of surface mount technology (SMT) equipment, who are finding it difficult to stay profitable in the European markets.

"These factors have resulted in unhealthy growth rates in the industry, with equipment vendors attempting to differentiate their product offerings from those of competitors by reducing cost and adding new functionality to the equipment," notes Frost & Sullivan Research Analyst Santosh Kumar P. "Market fragmentation is also compelling vendors to rethink their sales and product strategies."

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the latest analysis of the European SMT Inspection and Test Equipment Market, then send an e-mail to Michael Banks, Corporate Communications, at michael.banks[.]frost.com with your full name, company name, title, telephone number, fax number, and e-mail address. Upon receipt of the above information, an overview will be sent to you by e-mail.

Frost & Sullivan (surfacemounttechnologies.frost.com) European SMT Inspection and Test Equipment Market finds that the market earned revenues of $83.2 million in 2005 and estimates this to reach $138.9 million in 2012.

In addition to offering value-added features, SMT inspection and test equipment vendors will need to actively target specific end-user sectors such as automotive, aerospace and defence, and medical, as they have to comply with stringent quality requirements, and so require automated test and inspection equipment.

The demand for in-line automated inspection is in fact rising, given the need to maximise yields on today's surface mount assembly lines. Frost & Sullivan estimates that currently only 30 to 35 percent of SMT lines in Europe are fitted with automated inspection equipment. This includes automated optical inspection (AOI) and automated x-ray inspection (AXI) equipment.

Although AOI and AXI equipment experienced only modest growth following the economic downturn in 2001, higher production quality and an overall reduction in costs could generate greater demand for these equipment types in the future. However, high costs of AXI equipment will remain a significant concern and affect sales opportunities for electronics assemblers, creating a strong need to educate customers about the long-term benefits of adopting AXI.

With cost and quality constantly at odds with each other in the European SMT equipment market, the real challenge for vendors and users alike is to maintain a fine balance between the two. While equipment vendors are actively lobbying to justify the costs of automated inspection equipment, the fact remains that equipment manufacturers, particularly Tier 1 companies, find it extremely difficult to reduce costs and still achieve reasonable profit margins.

Competition from low-cost equipment vendors has further compounded these difficulties. This makes the high cost of AOI and AXI equipment a critical issue and one that is bound to affect investments from small and medium-sized electronics manufacturing services (EMS) providers in Europe.

"Nevertheless, some relief is likely in the form of growing regional manufacturing clusters in eastern Europe, as well as modest recovery in certain western European economies such as Germany," says Mr Kumar. "The increase in high-mix, low-volume manufacturing floors and the accession of new member countries into the European Union are factors that are likely to lead to increased demand in the European market for SMT inspection and test equipment."

European SMT Inspection and Test Equipment Market, part of the Surface Mount Technologies Subscription, also includes research in the following markets: European SMT Placement Equipment Markets, Chinese SMT Equipment Markets, EMS Supply Chain Markets, Opportunities for EMS Providers in the North American Automotive Industry, SMT Screen Printers and Glue Dispenser Markets, and North American Reflow Soldering Markets. All research included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Interviews with the press are available.

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies and the investment community by providing comprehensive industry coverage that reflects a unique global perspective, and combines ongoing analysis of markets, technologies, econometrics and demographics.

Keywords: European electronics manufacturing industry, surface mount technology, SMT equipment, electronics manufacturing China

 
 
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Cost Versus Quality - the Big Challenge for the European Electronics Manufacturing Industry

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Surface Mount Technology | Frost & Sullivan
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