As the breakneck growth in the global smartphone market eases, the mostly Japanese companies that make the robots that build the phones are looking to automakers to take up the slack.
Robotics remains a strength in a Japanese electronics industry that has been hammered by competition from rivals in South Korea and Taiwan. Panasonic Corp, Hitachi High-Technologies, Yamaha Motor Co, Fuji Machine Manufacturing and JUKI Corp together make eight of every 10 component mounting robots.
The quickest of these can mount more than two dozen parts a second, some thinner than one-tenth of a millimeter. A line of 10 connected robots can put together 5,000 smartphones a day.
However, as smartphone sales growth slows, the chip mounters are feeling the squeeze.
Sales at Panasonic’s chip mounter business — one of its non-core, but niche market-leading divisions at the center of a revival plan — dropped by one-tenth in the year to the end of March. The business has about 30 percent of the global market share.
Katsuhiko Omoto, who heads Panasonic’s factory automation unit, sees little chance of a rebound happening this year.
“We don’t really see big growth,” he told reporters at the firm’s headquarters outside Tokyo.
About one-third of the cabinet-sized machines made there end up in Chinese foundries cranking out Apple Inc’s iPhones and other mobile devices.
The global market for chip mounters is forecast to grow to US$7 billion by 2015 from about US$4 billion to US$5 billion now, according to industry researcher Technavio.
Smartphone sales are still growing and market tracker International Data Corp (IDC) predicts annual shipments will exceed 1.5 billion by 2017 — up from 917 million this year — but the blistering growth of the past five years is slowing.
IDC sees sales increasing by about 15 percent this year in mature markets such as the US, down from 20.6 percent last year, and expects them to slow further to 4.6 percent by 2017.
In emerging markets — China accounts for approximately one-third of global demand — growth will slow to 12 percent this year from more than 35 percent.
Omoto estimates that Panasonic could boost its share of the chip-mounting market by wooing the many smaller Chinese mobile phone makers that are gaining ground on Apple.
Beyond that, Omoto, whose operating margins have slipped to 8 percent from 10 percent, is looking to reduce his smartphone-related business to 25 percent from 30 percent by selling more of his robots to the automaking industry.
Automatic parking, collision warning systems, cameras and complex engine and suspension management computers add up to an under-the-hood boom in auto electronics. Drivers are also shifting to hybrids and electric cars, which tend to have more electronics than traditional gasoline-engine models.
“The amount of electronics in a car is only going to increase,” said Naoki Kobayashi, deputy chief engineer at Toyota Motor Corp’s luxury Lexus brand, adding that the recently launched Lexus IS model has one-fifth more electronic control units than its predecessor.
Hitachi High-Technologies, a majority-owned subsidiary of conglomerate Hitachi Ltd, is also eyeing opportunities among auto manufacturers and their supply chains.
“It looks as though the smartphone and tablet markets have peaked,” Hitachi High-Technologies general-manager Masatoshi Kurosawa said, adding that he does not yet see any new consumer gadget making up for the slowing smartphone momentum.
His company and other chip mounters typically have about 10 months advance notice of new product launches when manufacturers begin shopping around for new production equipment.
Switching to supplying the auto industry requires chip mounters to focus less on speed and miniaturization and more on component traceability, JUKI managing officer Hiroshi Nakamura said.
“For the past several years, the market has focused on smartphones, and that has meant everyone focused on making fast machines,” he said. “Automakers have stricter safety concerns, which means they avoid cutting-edge components.”
Yamaha Motors, a long-time chip mounter supplier to the auto industry, is facing increased competition from rivals that have until now been more focused on smartphones.
Its response has been to seek business at Chinese smartphone foundries that are buying fewer of Panasonic’s high-speed mounters by offering to automate work, such as fitting connectors, that is still done by hand.