Compiled by Matt Vincent and Steve Smith
At the eighteenth annual Fleck Connection Congress (FCC), held at the Laguna Cliffs Resort in Dana Point, CA, in early November, Fleck Research (www.fleckresearch.com) chairman and founder Ken Fleck declared that 2006 was the connector industry’s “best year, the first double-digit year” since 2000.
The annual event covers the state of the market for connectors across all applications globally, including but not limited to telecommunications and data communications.
In the event’s opening presentation, “2006, 2007 Outlook, Industry Hot Spots & Challenges,” Fleck cited year-to-year real growth of 11.3% versus 2005 for worldwide shipments of connectors, cable assemblies and backplanes. Driving forces for the industry’s rapid growth over the past year included an “explosion” in Internet connectivity, said Fleck, including immense increases in 10-Gigabit Ethernet applications, along with “explosive demand” for bandwidth access across the entire range of wireless networks, including WiFi, WLAN, WiMax, ZigBee, Bluetooth and WBA applications. A record-setting 848 million units of wireless handsets were shipped globally in 2006, according to Fleck.
Fleck also stated that “a huge portion of the industry is being pushed by semiconductors,” with yearly revenues for this segment setting a record high of $255.6 billion globally, up 12.3% from 2005. Semiconductors were seen directly driving global demand for $28 billion worth of connectors, cable assemblies and backplanes in 2006, with 213 semiconductor fabs forecasted for the next three years.
Additionally, Fleck cited “huge automotive advances,” with electronics requirements increasing at a rate of 20.5% per year, including those for smart air bags, telematics, GPS, radar, smart tires and hybrids. In fact, Fleck stated that, at present, “automotive is the highest demand sector for the connector industry, replacing computers, and followed by medical.”
Further, Fleck noted that demand for interconnect technology used in commercial aircraft designs has soared toward “the highest we’ve ever had in the industry,” with orders in 2005 and 2006 setting “all-time records.” Citing a 15% increase in backlogged orders, representing over 1,200 aircraft (in large part, A380 and 787 designs), Fleck sees the commercial aircraft industry for connectors and cable assemblies reaching over $1 billion by 2012.
Geosynchronous transfer orbit (GTO) satellite technologies and the U.S. Department of Homeland Security’s expanding need for advanced sensor technologies were also seen as significant, emerging growth drivers for the connector industry in 2006.
Fleck determined that, at a rate of 3.7% or $1.602 billion, price erosion for the connector industry overall in 2006 was “much smaller than in prior years.” The lower rate was due to numerous price increases passing through an increased cost of raw materials, such as copper resins and gold.
“There were raw material price increases across the board for all manufacturers,” he said. While China, unsurprisingly, continues to rank as “the premier location for all forms of electronics manufacturing,” with over $5 billion of global connector industry business having moved to China in 2006 alone, Fleck also noted that price erosion caused by the industry-wide move to China has accounted for an 11.6% loss since 2000.
Sounding a note of general caution, Fleck forecasted a slight slowdown in the global connector industry’s growth for 2007. Among the negative factors: overall North American electronics production is expected to increase only 2%, with overall semiconductor unit growth projected at 9%. Desktop PC, handset, and mil/aero segments are all seen slowing in growth. Average selling prices (ASPs) are seen declining and overall forecasted revenue growth is only 3% to 4%.
Not so bad
The buoyancy and general optimism of 2005-2006 notwithstanding, Fleck also pointed out that the connector industry as a whole is still struggling to recover from the economic downturn of 2001. According to Fleck, in terms of worldwide shipments, the industry is still 7.9% below where it was in 2000, down from $45.072 billion to $41.510 billion.
In the end, however, Fleck conceded, “’07 should not be too bad,” citing several positive factors. While 2007 will be “the first year in memory that handset growth will be under 10%,” Fleck conceded that most other portable electronics manufacturing will be “way up.” Increases are seen occurring in digital camera phones, MP3 phones, music-enhanced phones, and push-to-talk applications, along with increased demand for WLAN and WiMAX technologies.
Other industry “hot spots” include: high-bandwidth/high-speed PC connectors, which are expected to expand at a 4-year CGR of 20%; serial I/O connectors, expected to expand at a 4-year CGR of 14.4%; and fine pitch connectors (> .05-mm), expected to expand at a 4-year CGR of 10.4%.
Innovations, future trends
The Congress featured a diverse roster of executives and industry professionals speaking on a variety of topics germane to the connector industry. Topics ranged from present innovations and notions of “best practices” to discerning how trends in materials, manufacturing, and cultural tendencies might affect the industry’s future.
The industry’s heavyweights were well-represented at the event. Amphenol TCS (www.amphenol-tcs.com) President Rick Schneider talked about trends in high-speed, high-density system interconnect technology, touching on backplane systems as well as overall system configuration issues. Schneider highlighted the significance, “especially in Asia,” of continually rising bandwidth demands toward gigabit-speed video and HDTV applications, and how the escalating desire for global “telepresence” will inevitably shape demand for interconnect technology.
In a presentation entitled “Future of the Connector Industry: A Leading Supplier’s Perspective,” FCI’s (www.fciconnect.com) Chairman and CEO Jean-Lucien Lamy assessed what he called an industry currently dominated by automotive and data-communications markets. “I brought my crystal ball to talk about the future…and we are talking about a bright future,” he said.
Nonetheless, hearkening back to the beginning of the Internet/telecom bubble in 1999, with its “sky’s the limit” outlook for connector companies, Lamy noted that the subsequent plunge in markets after the September 11 terrorist attacks nearly bankrupted his company. “I got burned, so I speak from experience,” he said. In spite of the industry’s present optimism, Lamy sounded a note of caution, warning that connector firms must adopt a “pragmatic approach” in creating balance and diversity within their manufacturing operations.
Remarking upon FCI’s 28 global manufacturing sites, Lamy was resolute: “I refuse to move everything to China. One mustn’t put all their eggs in one basket among low-cost manufacturing countries.” Further, citing the increasing role of original equipment manufacturers (OEMs) and original design manufacturers (ODMs) in components and suppliers selection, Lamy stressed the importance of firms protecting their intellectual property as a means to defend market leadership. To allay fears of Chinese interests appropriating vital intellectual property, he noted that his company has based most of its intellectual property concerns in Singapore.
When in Asia...
Lamy summed up with a motto for global connector firms, saying that all should strive to adhere to a general principle of “design here, manufacture there, and sell anywhere.” Contrastively, in a talk entitled “India - A Land of Opportunity? The Growth of Manufacturing Using Connectors in India,” Paricon Technologies’ (www.paricon-tech.com) representative Joel Urban wryly observed that manufacturers in India and Asia often appear to hew to a different maxim, with an objective to “design in Asia, build in Asia, and sell in Asia.”
Urban’s was not the only presentation to underscore challenges, concerns, and opportunities presented by the growing Indian and Asian marketplaces. Karl Weaver, president of Newport Technologies (www.newporttechnologies.com), addressed these topics in a pair of presentations, one illuminating “the subtle art of doing business within the Chinese and Indian business protocol,” and another investigating how companies in both China and India are driving a “global smart phone revolution.” (John Powers, VP of cellular service provider metroPCS [www.metropcs.com] expanded upon this particular theme in his presentation, “Exploring Opportunities in Wireless,” which looked into the burgeoning mobile and wireless communications arenas and their significance for connector firms seeking to furnish service provider equipment.)
Copper crisis, too
To address imminent concerns of raw materials supplies facing the connector industry, the Congress welcomed Robert Farrington, principal research manager for the National Renewable Energy Laboratory’s (www.nrel.gov) advanced vehicle systems group, who delivered a presentation entitled “Addicted to Oil - Where Does the Road Lead?” (Wherever it leads, you may expect to ride there in a hybrid automobile.)
In a similar vein, John Barnes, principal consultant for the UK-based consulting firm CRU Group (www.crugroup.com), in his “Copper Market & Price Outlook,” remarked, “You’ve heard we’re running out of oil? Well, guess what, we’re running out of copper as well.”
Several of the speakers held forth on innovations in interconnect technology. Gordon Vinther, president of Ardent Concepts (www.ardentconcepts.com), discussed his company’s RC SpringProbe technology as a means of replacing traditional spring pin, “pogo”-style PCB contacts in high-frequency, high-pitch (< 1.0-mm) RF applications. Paricon Technologies President and CEO Roger Weiss covered “novel interconnect methods to increase performance and reduce cost,” including his own company’s PariPoser interconnects, which are designed for high-density I/O applications where soldering is difficult, such as LAND-grid-array, BALL-grid array, and device test interconnections.
In terms of materials innovations, Vikram Gopal, global program manager for GE Plastics (www.geplastics.com), gave a presentation entitled “Valox iQ for the Interconnect Industry” which described his company’s Valox iQ and Xenoy iQ resins. Aimed at automotive manufacturers, the resins are created with polybutylene terephthalate (PBT)-based polymers derived from 85% post-consumer plastic waste (i.e., common soda bottles) and are designed to consume less energy and yield less carbon dioxide (CO2) in their manufacturing than traditional, petroleum-based resins. “This approach reduces CO2 emissions by at least 1.7 kilograms per kilogram of resin, and saves up to 8.5 barrels of crude oil per 1,000 kilograms of resin,” claimed Gopal.
Other notable speakers included Corning Cable Systems’ (www.corningcablesystems.com) David Meis with a presentation entitled “FTTH: Re-defining the Broadband Experience in America;” Belden’s (www.belden.com) Paul Vanderlaan, whose presentation unraveled the oftentimes “Disconnect Between Cable & Connector Manufacturers;” and Elma Bustronics’ (www.bustronic.com) Justin Moll, who delivered his “VITA Market Update” on behalf of the open systems VME technology community for modular embedded computing designs.
Wrapping up the two-day Congress, Ken Fleck delivered a pair of in-depth workshops analyzing product lines and discerning technology trends within the global markets for connectors, cable assemblies and backplanes. Leavening some number-crunching with good-humored personal asides, Fleck used these sessions to expand upon the information imparted in his opening presentation, illuminating the finer points of his company’s perennial and comprehensive view into the connector industry.
TAMPA, FL-Q:Active, developed jointly by analog signal integrity device maker Quellan (www.quellan.com) and advanced interconnects developer Gore Industries (www.gore.com), is billed as an “active” cable designed to transform data center cable interconnects from passive, non-active devices to “intelligent” roadways, yielding lower operating expenses and capital expenditures. Interconnect solutions include InfiniBand SDR, DDR, and 10-Gigabit Ethernet, all with Gore’s Eye-Opener cable. “These new cable assemblies promise to fill a reach void in the market between passive copper and optics at DDR signaling speeds,” says Eric Gaver, business leader for Gore’s Advanced Digital Interconnects. Adds Tony Stelliga, chairman and CEO of Quellan: “Today’s data center cabling clusters are exceeding three tons in weight and plugging 10-foot diameter conduits, reducing reliability and blocking critical air flow. Q:Active technology reduces this weight and conduit diameter by two-thirds, and the resultant improvement in reliability and airflow is a win for next-generation data centers.”
TUKWILA, WA-Fiber-optic training company The Light Brigade (www.lightbrigade.com) celebrated its 20th anniversary in September. Founded in 1986 by Larry Johnson, who wanted to provide a growing number of fiber-optic users in the Pacific Northwest with expertise in the technology, The Light Brigade has since shifted from its roots of consulting and installation to fiber-optic training. Over the years, the company says it has trained more than 30,000 people in courses ranging from basic theory to specialized topics, via industry conferences and a variety of training DVDs, videos, and CDs. The Light Brigade continues to be active in international fiber-optic industry events, hosting and coordinating conference training workshops and educational resource centers.
DUBLIN, IRELAND-A recent report released by Research and Markets (www.researchandmarkets.com), “Cables: Global Industry Guide,” indicates that Asia-Pacific has become the world’s most lucrative cable market. Covering telecom as well as power cables, the report includes detailed data on market size and segmentation, textual analysis of key trends and the competitive landscape, and profiles of leading companies. Expert analysis is provided on a global, regional, and country basis. A five-year industry forecast is also included.
MOUNTAIN VIEW, CA-The Institute of Electrical and Electronic Engineers (IEEE; www.ieee.org) 802.3 Higher Speed Study Group (HSSG) has voted to support 100-Gbits/sec as the next speed for Ethernet, and agreed to support reaches of at least 100 meters on OM3 MMF (multimode fiber) and of at least 10 kilometers on singlemode fiber. “While 100G Ethernet has been touted in the press, the HSSG took the time to hear presentations and discuss the next speed jump,” says Lucinda Borovick, director of data center networks at market research firm IDC (www.idc.com). “Ultimately, it was perceived that the return-in-investment requirements would be balanced by the investment in the 10x in speed. The decision by the group continues to validate the industry’s belief in Ethernet’s long tradition of increasing speed in increments of 10x.” Adds Brad Booth, president of industry consortium Ethernet Alliance (www.ethernetalliance.org), “HSSG achieved a major milestone in deciding to support 100-Gigabit Ethernet as the next speed for Ethernet. This is an important first step, and the Ethernet Alliance fully supports the work of the HSSG.”