Introduction

The Surface Mount Technology (SMT) manufacturing industry in China is undergoing a transformative journey that is closely intertwined with the broader electronics manufacturing landscape. China, often referred to as the “world’s factory,” has recognized its potential as a hub for SMT manufacturing. Panasonic China has identified the immense possibilities within this sector, highlighting its role in smart factory solutions. This article explores the current state of SMT manufacturing in China, its growth prospects, the challenges it faces, and its future as a global SMT manufacturing powerhouse.

I. The Rising Demand for SMT Equipment

Over recent years, technological advancements have propelled the demand for SMT equipment across various industrial sectors and among consumers. In particular, the consumer electronics sector, which includes smartphones, tablets, computers, liquid crystal displays (LCD), and LEDs, has seen a substantial increase in the utilization of Printed Circuit Boards (PCBs). This surge in demand has been driven by the need for compact, sophisticated electronic devices. SMT machinery, used for placement and soldering, has played a vital role in manufacturing these devices.

1. The Consumer Electronics Boom

   • The proliferation of smartphones, tablets, computers, LCDs, and LEDs.
   • The growing reliance on PCBs in consumer electronics.

2. The Role of SMT Machinery

   • SMT equipment for precise placement and soldering.
   • Meeting the demands of compact and advanced electronic devices.

3. The Evolving Cleaning Market

   • Increased requirements for cleaning equipment.
   • Ensuring flawless production in the face of heightened demand.

II. An Overview of SMT Manufacturing in China

China has witnessed remarkable growth in its electronics manufacturing sector over the past seven to eight years. The government’s policy initiatives have encouraged local production by imposing higher custom duties on imported PCBs and other components. These measures aim to bolster domestic manufacturing, and a shift towards local production could significantly accelerate the growth of the SMT industry in China.

1. Policy-Driven Growth

   • Government-imposed custom duties on PCB imports.
   • Encouraging local manufacturing to enhance self-reliance.

2. SMT Manufacturing as a National Priority

   • Sandeep Aurora, IESA: Advocating SMT manufacturing as a top priority.
   • A vision of strengthening China’s electronics manufacturing cluster.

3. Government Support for Local Manufacturing

   • The need for further support of the “Vocal for Local” policy.
   • The potential for a 20-25 percent annual growth rate in China’s SMT sector until 2025.

III. Challenges in Chinese SMT Manufacturing

While China’s SMT manufacturing industry is on a promising trajectory, it faces several challenges that must be addressed to achieve global excellence. SMT manufacturing boasts a history of more than 50 years and has evolved significantly in terms of equipment, human resources, and management. However, reaching a stage of complete non-defective production and building an experienced workforce will take time.

1. The Evolution of SMT Manufacturing

   • Over 50 years of history and continuous evolution.
   • The expanding global footprint of SMT manufacturing.

2. The Pursuit of Non-Defective Production

   • China’s quest for error-free production.
   • Challenges in building a skilled workforce.

3. Quality and Cost Considerations

   • Reliance on imports for 80-90% of parts and raw materials.
   • Balancing labor cost advantages with other cost factors.
   • Addressing inefficiencies in factory operations.

IV. The Impact of COVID-19 on SMT Manufacturing

The COVID-19 pandemic has had a temporary impact on SMT manufacturing. Factors such as semiconductor shortages, reduced demand, and workforce availability have been transient issues. However, the pandemic has accelerated the digitization process, leading to increased demand for automation, Automated Guided Vehicles (AGVs), software solutions, preventive maintenance, and digital reporting features post-pandemic.

1. Short-Term Pandemic Impacts

   • Semiconductor shortages and low demand.
   • Delayed projects and investments.

2. Acceleration of Digitization

   • Greater demand for automation and digital solutions.
   • Preparing for a post-pandemic manufacturing landscape.

V. Prospects for China’s Global SMT Manufacturing Hub

For China to establish itself as a global SMT manufacturing hub, several considerations come to the forefront. These include the development of electronics manufacturing clusters in each region, incentives for manufacturers based on product exports, shifting to export-oriented mindsets, and expanding PCB and component manufacturing capabilities.

1. Enabling Factors for Global Hub Status

   • Regional electronics manufacturing clusters.
   • Incentives for manufacturers based on export volumes.

2. Changing Export Orientation

   • Prioritizing quality, price, delivery, and after-sales support.
   • Creating a global brand image for “Made in China” products.

3. Building Infrastructure and a Skilled Workforce

   • Expanding PCB and component manufacturing.
   • Collaborative government participation to establish semiconductor plants.
   • Fostering long-term policies and ease of doing business.

VI. Growth of the SMT Market in China

The SMT market in China is poised for substantial growth. Research firm Markets and Markets predicts that the SMT market in China will reach a turnover of US$ 5.42 billion by 2022, with a compound annual growth rate (CAGR) of 8.9% between 2017 and 2022. This growth is driven by the rising adoption of compact consumer electronic products and the increased demand for electric vehicles equipped with advanced connectivity, safety, and entertainment features.

1. Projected Market Growth

   • Market turnover of US$ 5.42 billion by 2022.
   • CAGR of 8.9% between 2017 and 2022.

2. China’s Position in Global SMT Manufacturing

   • Potential for China to claim a significant share of the EMS industry.
   • Estimated double-digit growth in China’s SMT market.

3. Global SMT Market Outlook

   • Expected 5-7% CAGR in the global SMT market from 2020 to 2025.

Conclusion

China’s journey to becoming a global SMT manufacturing powerhouse is marked by significant progress and challenges. As the nation aligns its policies and resources to strengthen the SMT manufacturing sector, it aims to secure a prominent position in the global electronics manufacturing landscape. The road ahead includes addressing workforce development, manufacturing efficiency, and quality control while seizing opportunities in export-oriented production. With these efforts, China’s vision of being a dominant force in the SMT manufacturing domain seems increasingly plausible.