The European electronics manufacturing market, particularly the surface mount technology (SMT) vendors, is facing difficulties in the form of low-cost competition from China and East Asia, uncertain business conditions since the 2001 economic downturn and high equipment costs, according to research from Frost & Sullivan.
“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,” said Frost & Sullivan Research Analyst Santosh Kumar. “Market fragmentation is also compelling vendors to rethink their sales and product strategies.”
According to Frost & Sullivan, the market saw 2005 revenues of $83.2 million and expects it to reach $138.9 million in 2012.
The research suggests that SMT inspection and test equipment vendors should focus on end-user sectors like the automotive, aerospace and defense and medical sectors, since those areas have strict quality requirements which need automated test and inspection equipment.
Currently, 30 to 35 percent of European SMT lines have automated inspection equipment such as automated optical inspection (AOI) and automated x-ray (AXI) equipment, leaving room for expansion. Improvements in production quality and reduced costs will help boost demand, the research showed.
However, the study cautions that high costs for AXI equipment will affect sales, though educating consumers about long-term equipment benefits may help alleviate the problem.
“Nevertheless, some relief is likely in the form of growing regional manufacturing clusters in Europe, as well as modest recovery in certain western European economies such as Germany,” said 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.”
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