Francis Tsoi on the Future: What's in Store for Technology, Automation in China's PCB Industry?
I caught up with Francis Tsoi, CEO of World Wide Group whilst at CPCA in Shanghai recently, where we enjoyed a lively discussion on a number of critical topics surrounding China’s PCB industry: namely, what is on the horizon with regard to technology and automation?
Pete Starkey: Francis, thank you for sparing your time. Could I begin by asking you what is your opinion of the state of the economy in China this year?
Francis Tsoi: In China this year it is quite tough because I think you understand since last year, 2015, the GDP growth in China dropped back to 6.5 and everyone is expecting that 2016 will be another very tough year. The economy is slowing, with over-production in our factories. In the China market, people need to consider how to change in order to manage the coming year.
Starkey: Do you believe that the market condition in China relates simply to China or is it characteristic of the whole world market?
Tsoi: I think the whole world market also affects China, because China now is no more a low-priced market and resources are also becoming more expensive: land, food, and labor cost. Manufacturers need to consider how to lower their costs and how to be more competitive compared with South East Asian countries. They need to consider how to make their operations more efficient, more effective and more competitive, in terms of their products and also their service.
Starkey: If we look at the PCB industry, is it suffering from the same downward trend as industry in general, or better, or worse?
Tsoi: In general, I think that China’s PCB shops need to move away from the low-end, single-sided and double-sided PCB market and go to multilayer, higher-end multilayer or FPC , flex-rigid or HDI, or even into the substrate or package market. They need to fine tune their product into a higher-end range instead of competing with the low-end, high-volume market, which is no longer profitable in China.
Starkey: So if the PCB industry in China is to have a future it must move ahead in technology, even though there is already some very high technology in China? And the people who are working in lower technologies will not prosper unless they move upwards in the technology.
Tsoi: Yes, and for China PCB shops to go to high-end, fine, dense products or into substrates and packaging, they need to change their investment; that is very important to their survival.
Starkey: Is the PCB industry in China still making investments, even though the business may be in decline in the short term? Is the industry looking towards the future and preparing for the future?
Tsoi: This year we still have confidence that the PCB industry will make investments, not in low-end equipment, but in high-end equipment—laser drilling, direct imaging, X-ray drilling machines, and also 4-wire flying-probe testers—all because they want to make very high-value-added PCBs instead of low-end products. This kind of change pushes them to make more of an investment, and now in China the stock market is rising, and a lot of PCB shops are making public offerings in order to get the funding to make investments—not for higher volume but for higher-end product.
Starkey: It's good to know that the industry is looking to the future and has sufficient confidence in the longer term to be making capital investment in preparation for it. What is the longer-term trend?
Tsoi: There is a lot of talk about the “Made in China 2025” plan, which is the Chinese version of what is called “Industry 4.0” in Germany. The trend is towards the smart factory and smart production, and there is a lot of interest in automation. For example, we have brought the Mitsubishi robot into the PCB market to help reduce headcount in production and make it more automatic, more efficient and more quality-stable. More people are thinking about the smart factory and also considering how to collect and analyse big data, and how to use this data in their systems to support the concept of smart production.
Starkey: So Francis, this is your vision of the future of the PCB industry in China?
Tsoi: Yes, I think that for the next five to ten years, this is the direction for the smart factory and also the smart machine. How to link all the machines in the factory together and make them more intelligent—that is the trend and the challenge for the coming years.
Starkey: PCB manufacturing is a very complicated process with many different operations. It won't be an easy job to automate it.
Tsoi: We'll analyze what kind of processes can be replaced by the mechanical robot and how to design an integrated process, making it simpler, with handling by machine robot. That is possible; in different steps we can change from the human to the robot, and also make the production become more effective and more efficient.
Starkey: You are in a very interesting position because you are supplying a whole range of different capital equipment to this marketplace.
Tsoi: Yes, that's why we have a very strong engineering team, sales team and after-sales service team in the China market in order to meet our customers’ needs—to work hand-in-hand in upgrading their factories to increase automation and become more systematic, as well.
Starkey: Do you see that a day will come when we have fully automated PCB production? Do you see that as a reality in the future?
Tsoi: Yes, I think so. People are already doing it step by step and going in this direction. And I know that some other industries, for example electrical appliances like air conditioners, are close to having fully automated factories. So I think it is possible. It's not a problem.
Starkey: The forecast for the world PCB industry is that it will continue to decline slightly until the middle of 2016 and then perhaps it will start to turn and probably become positive at the beginning of 2017.
Tsoi: I think that for single-sided and double-sided there will be no more margin, or even a loss, if they continue to produce it. But for the higher-end products, I understand from what my customers tell me that the prices will continue to go down every quarter. The point is, if they want to survive they must not consider just the selling price, but their production cost, their running cost, their material cost—everything, in order to maintain a margin. Then they can still earn money.
Starkey: If PCB manufacturers look into the longer term future and start investing for the long term future do they have the financial resource to support that investment?
Tsoi: From the financial point of view, as I have already said, some companies are going to public lease. But taking the example of the robot, the government offers support, and can sponsor the company to reduce its labor costs. And regarding funding, the government encourages the banks to release funds to manufacturers to help them overcome the hard times. That is the trend in China. We see the market as being tough, but we still can see the way the industry needs to go.
Starkey: Francis, I very much appreciate you sharing your knowledge and your future vision with us. Thank you very much indeed for your time.
Tsoi: Thank you. You’re welcome.