Contract Electronics Manufacture Moves Ahead as Growth in European Assembled Surface Area Declines

This paper addresses the increasing market and technological changes coming to bear on West European electronics assembly. The twin pincer forces of increasing low‐cost base competition on the one hand and greatly increased interconnect densities on the other are causing opportunities or threats dependent on one's positioning. Increasing interconnect density will reduce growth in assembled PCB surface area, over the next trade cycle, to zero. As the continuing miniaturisation of electronics gathers pace, there is an increased need for fine pitch placement lines which only certain highly utilised assembly companies can afford. Simultaneously, there are moves to the one‐stop‐shop Contract Electronics Manufacture service where the contract electronics manufacturer will provide services from chip design to full build of the electronics assembly including casing. This integrated approach to subcontract electronics manufacture will be increasingly necessary. Viewing the major market drivers, it becomes evident that the recent market contraction in Western Europe is related just as much to the maturation of electronics production as it is to the more transitory effects of the trade cycle. The results of the long‐term slow‐down in West European electronics production value can be viewed by the number of OEMs reducing their involvement in electronics assembly. Here one sees many OEMs shedding plants or/and entering contract electronics manufacture. On the other hand, many contract electronics manufacturers are recognising opportunity in buying the previously captive OEM assembly plant. The paper goes on to say that the major focus for future rationalisation will be high‐cost Germany, under attack from South East Asia, Eastern Europe, Mexico and low‐cost parts of Western Europe. Within this context it is stated that West European electronics assembly sites should be careful to avoid high volume standard technology work more easily processed in the aforementioned lower cost bases. The reasons behind these changes are the increasing proportion of circuitry going on to silicon coupled with the increased number and strength of the newly industrialising economies.