Hybrid circuit and MCM suppliers fight for a share of a e1.1 billion European market

Hybrid circuit and MCM suppliers fight for a share of a e1.1 billion European market

Keywords: Hybrid circuits, Market trends, Europe

European hybrid circuit and MCM manufacturers are fighting for a share of a e1.1 billion European market, with OEMs driving a trend towards in-house board assembly and ASICs to reduce cost, according to a new 360-page IMS report. Published in September 2000, the report focuses on opportunities for suppliers to the "merchant" hybrid circuit and MCM market in Europe, which IMS estimates continues to represent a smaller share of the European market compared to the "captive" portion (i.e. MCMs produced by OEMs for internal consumption). IMS based its findings on interviews with over 50 European hybrid circuit and MCM suppliers and a technical end-user telephone survey of purchasers and specifiers of hybrid circuits and MCMs.

Overall growth of the European hybrid circuit and MCM market has remained well below 10 percent per annum over the last five years, and IMS forecasts merchant market growth will remain subdued at an average of 5.8 percent per year to 2004. There has been a marked shift in market composition from traditional markets, such as military, towards communications applications which IMS estimates now account for over 30 percent of the total merchant market, a trend which it also forecasts will continue over the next four years. "Optical and RF based communications, automotive and industrial markets will drive future growth for hybrid circuit and MCM suppliers in Europe ..." reported IMS analyst Jon E. Gamble, "... but suppliers should not discount the large traditional markets such as military and aerospace for continuing revenue opportunities".

Of the products covered by the report (including thick film chip and wire,thick film SMD, LTCC, thin film hybrid circuits, MCM-L and MCM-D) thick film SMD and chip and wire ceramic hybrid circuits accounted for the largest segment of the market in 1999. IMS forecasts that thick film SMD and thick film chip and wire will continue to dominate to 2004. "Whilst LTCC has been about since the 1980s it has never really taken off, partly due to cost and partly due to a simple lack of suitable applications", said Gamble. "However, we're currently seeing rapid penetration in some major automotive and mobile applications where the requirement for high density multi-layer interconnect or good RF characteristics is forecast to drive double digit growth for LTCC over the next four years". The results from IMS's end-user survey support the view that LTCC continues to be perceived by users as too costly. Of non-LTCC users, 61.5 percent indicated that price was the main reason for not using LTCC. In comparison, only 30.8 percent indicated that the reason for not using LTCC was because it is not technically suited to their applications.

IMS projections for the MCM-D market are less optimistic, with a market decline forecast between 1999 and 2004. With military spending in a state of decline, there are very few projects currently available, which either require the integration capability of MCM-Ds or can support the NREs associated with developing the silicon. "High volume applications which could amortise MCM-D NREs over many units tend to go straight to ASIC," added Gamble.

IMS suggests that time-to-market and economies of scale will increasingly dictate the success of hybrid circuit and MCM suppliers. Whereas the hybrid circuit and MCM market in Europe was historically strongly fragmented by region and language, suppliers such as C-MAC and Welwyn have gained substantial market shares in most European countries, largely due to their ability to offer high volume and economies of scale. Another factor for hybrid circuit and MCM manufacturers in the future is how to combat OEMs utilising internal design and assembly capabilities to manufacture their own circuits at lower cost, with hybrid circuit suppliers being increasingly used to provide the bare unassembled substrates.

IMS predicts that, in the future, the most successful suppliers to the hybrid circuit and MCM market will be those which not only produce the hybrid circuit part of a design, but also utilise PCB technology and mechanical assembly capabilities to supply fully designed, tested and qualified systems, or plug and play modules.

Further details: IMS. Tel: +44 (0) 1933 402255.