Electronics Asia discusses with Franklin So, General Manager and Asia Marketing Director, Agilent Technologies Inc.; Jimmy Tan, Vice President of Sales, Asia-Pacific, Aeroflex; Dr. Erich Freund, Managing Director, Marketing and Sales, Asia-Pacific, Rohde & Schwarz GmbH & Co. KG; and Victor Mieres, Vice President of Sales, Asia-Pacific, National Instruments, the trends, development, and market issues in Asia’s T&M equipment industry. Excerpts:
What can you say about Asia’s T&M equipment market performance this year and how do you see it shaping up?Mieres: 2007 has been an eventful year. The reduction of capital expenditures from major electronics manufacturer due to uncertainties in the credit market worldwide has hurt the results of larger T&M players. The market will be tough for companies that are unable to deliver low-cost test equipment.
Freund: The wireless market continues to flourish and grow. Growth in the T&M industry will be mainly driven by the production of mobile phones and devices for the existing standards. We also see business for emerging technologies such as 3.5G, 4G, and WiMAX, as well as mobile services.
Tan: Going by our own performance, I would say it is a robust one, especially in the avionics area due to the aviation boom in the Asia-Pacific region. The huge growth in mobile phone subscribers was also another major contributing factor to this overall good performance. I am confident this healthy trend will continue.
So: There are some bumps due to the delay in 3G license issuance in China. But the market fundamentals for the T&M equipment industry are solid due to the expansion of 3G services in China, more outsourcing by NEMs Asia, and new technologies maturing for large-scale deployment.
What challenges do companies face in T&M equipment manufacturing in Asia?Tan: Time-to-market and differential pricing are the major challenges for companies operating in the Asia-Pacific. Many companies are either moving or outsourcing their manufacturing to Asia to achieve that cost advantage that is crucial in penetrating the price-sensitive markets here. Apart from that, companies would need to set up R&D facilities as well to design products that meet local needs.
Mieres: In the next few years, manufacturers in Asia will continue to be required to test more, even as they are challenged to build ultra low-cost products. The challenge for the industry is to lower the cost of test at the same rate companies are lowering the price of products.
So: The biggest challenge is availability of expertise, especially in fast growing countries like China. Technology is the key for T&M equipment because these are high precision products demanding high reliability and repeatability.
What are the major market segments for the T&M equipment market?Freund: The markets for wireless and mobile communications, including the digitalization of broadcast transmission and mobile TV, are extremely important. The component industry is likewise very significant.
Mieres: In recent years it has become clear that consumer electronics, mobile communications, and automotive electronics have taken the lead. Recently, mechatronics has become quite important as well.
Tan: Electronics manufacturing is probably the largest segment. Development of cellular devices has also created a large market for R&D and conformance test tools. Defense and avionics test also remain important markets.
Please comment regarding the telecom segment driving the T&M market.Tan: With 1 billion wireless subscribers so far and still relatively low penetration rates in some of the larger markets, there is a lot of potential for growth in the market. Much of the wireless world is still focused on GSM but that is already changing. The change is likely to be felt fastest in China, which will continue to manufacture a substantial proportion of the world’s handsets for export markets.
So: It will continue to be one of the major segments driving the T&M equipment market worldwide. There will be more new technologies developed to further improve the quality of services and end-user experiences.
Mieres: The pressure faced by telecom manufacturers mirrors that of the general consumer electronics segment. There are two major trends gaining momentum: ultra low-cost handset, targeted to emerging markets, and ultra-integrated, high-complexity, software-based handset for the highend market. In addition, the growth of wireless communication standards adds to the cost of manufacturing in both ends of the spectrum.
How will the multiplicity of wireless standards affect the T&M equipment market?Freund: In general, customers expect us to be able to implement new trends in our products very quickly in order to provide the flexibility they demand. Moreover, customers expect us to offer T&M equipment that allows fast, reliable, and complex measurements.
Tan: On the positive side, each new standard creates a new market segment for T&M companies to sell into. For many Asian customers, investing in separate equipment for each standard is far too big a cost, so a multiplicity of standards drives the need for both technology-neutral and multi-standard test equipment. The downside is that with so many standards to choose from, many of the tier 2 and 3 players will delay their investment decisions until market directions become clearer so that they don’t invest in a losing technology.
Mieres: Manufacturers are forced to replace their original instrumentation investment with something that can match the new standards. T&M companies are challenged to give customers a solution that allows them to reconfigure their instrumentation system while maximizing the reuse of their existing instrumentation components to ensure maximum reuse of their customer’s hardware investment.
