3M Co, whose electronics unit supplies components to Apple Inc, is raising a four-year-old bet on rapid smartphone growth by expanding in touch-screen films, which are also used in tablet computers and e-book readers.
“The market is just exploding and we are ahead of it,” Tony -DeRose, business manager for 3M’s electronics markets materials unit, said in an interview.
3M values the global market for touch-screen materials at US$2 billion and is boosting production capacity for optically clear adhesives, as the films are known, in Taiwan South Korea, China, and Singapore.
Originally developed by 3M’s industrial division for welding visors, the films are used to join panels between the LCD on smartphones and tablets and the surface that users swipe to control the devices. The electronics unit posted US$1 billion in sales last year, about 3.8 percent of the company’s total.
“We’ve had assets since 2007 for electronics and we built those up to really grab the smartphone market,” DeRose said.
3M has rivals for the touch-screen film market in Japan, China and South Korea.
“It’s not a landscape that is void of competitors,” he said. “That’s why our investments are important.”
3M declined to say how much was spent on the expansions.
Vendors last year shipped about 17.9 million tablet computers that feature mobile operating systems such as Apple’s iOS and an estimated 50.4 million will be sent this year, Framingham, Massachusetts-based research company IDC said. Smartphone shipments may rise 49 percent to 452.5 million this year, IDC said.
The electronics markets materials unit has experienced compound annual growth of 24 percent since it was created in 2002 and 3M said this month that sales may triple in four years, to US$3 billion. 3M does not break out sales figures specifically for the adhesives. In addition to Apple, the division’s customers include Intel Corp, Nokia Oyj and Samsung Electronics Co.
3M does not disclose whether its parts are in specific devices including the iPad or iPhone because of confidentiality agreements with customers, DeRose said. The components are used with many manufacturers’ leading brands, he said.
While 3M manufacturing customers are based in the US, their suppliers who handle touch-screen components and assembly are based in Asia, DeRose said. About 78 percent of the electronics markets materials unit’s sales last year were in the region, the company said in a March 17 presentation.
3M’s proximity to those manufacturers is important as they boost production to meet demand for tablet computers that may nearly triple this year from last year.
“There are a lot of tablet manufacturers that are coming on stream, but not all those tablet manufacturers will actually win, if you will, in the marketplace,” DeRose said. “We probably see six to 10 of those tablet manufacturers actually taking some share.”
3M doesn’t have to worry about the outcome of that competition, said Steve Winoker, an analyst at Sanford C Bernstein and Co.
“No matter whose smart phone wins, 3M is most likely going to be on that phone and I say the same on the tablet side,” Winoker said. “This is not just a cyclical rebound in this area. You are attaching yourself to a fast-growing trend.”
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