Taiwan's Surface Treatment Ind. Output Down 6.4% QoQ in Q3
2013/02/08 | By Steve ChuangOperators remain focused on upgrading technologies to prepare for rebound
Taiwan's surface treatment industry saw output value for the third quarter of 2012 abruptly drop 6.4% compared to a quarter ago, or 15% from a year ago, to NT$36.4 billion, according to the latest report issued by the Metal Industries Research & Development Centre (MIRDC), a local industry research institute.
An MIRDC analyst said that price drops in galvanized products from China and S. Korea were the main cause, as well as weak market demand in the U.S. and Europe. During the quarter, prices of such products from the two Asian countries hit only US$708-733 per tonne to effectively attract buyers from Southeast Asia and Australia, eroding some orders to Taiwanese suppliers. The analyst said that Taiwanese galvanized steel producers have cut output strategically to minimize losses.
The industry's exports totaled NT$19.1 billion, slightly up 6% from a year ago, with China, the U.S., Thailand, Mexico and Malaysia together absorbing 60% of the total as the big five buyers. Meanwhile, imports amounted to NT$3.9 billion, 11% more than a year ago, 44% of which from Japan, 34% from China and 7% from S. Korea.
Affected by a slack economy in Taiwan, the domestic demand for surface treating services and coated products shrank 19% year on year to NT$21.2 billion in the quarter, according to MIRDC's report.
Technological Advances
Despite a sudden drop in output value in the third quarter, MIRDC's analyst said that industry insiders remain focused on upgrading technologies to prepare for a rebound.
One technological advancement has been initiated by the Industrial Technology Research Institute (ITRI), a local R&D body, which has teamed up with local semiconductor firms, including Siliconware Precision Industries Co. and United Microelectronics Corp., to form the Advanced Stacked-System and Application Consortium (Ad STAC) focusing on development of three-dimensional integrated circuits and related manufacturing processes.
MIRDC's analyst said that developing TSV (through-silicon via), a high-performance technique involving a vertical electrical connection through a silicon wafer or die, is part of the consortium's mission, and key to creating 3D packages and 3D ICs as a proactive technology.
The Multiplate, a wafer electroplating machine devised by the France-based Atotech, an electronics supplier involved in decorative and functional surface treatment, helps the consortium develop TSV-related processes, a positive outcome of the synergy. MIRDC analyst noted that the launch of this machine is a breakthrough of traditional electroplating technology to double side plating of wafers, which will enhance Taiwanese surface treatment industry's global competitiveness in the future.
Meanwhile, the Atmospheric Environment Plasma Coating, invented by ITRI and a winner of 2012 R&D 100 Awards, also injects positive momentum into Taiwan's surface treatment industry. According to MIRDC's analyst, the technology uses zinc as the coating material to replace indium, which helps Taiwanese firms to not just reduce dependence on imported indium, but also sharply cut material costs, given that zinc is 280% cheaper than indium.
Besides, this technology also enables operators to complete TCO (transparent conductive oxide) coating under normal atmospheric environment within only a few minutes, compared to conventional vacuum plating that is more time-consuming and eco-unfriendly. This provides a green solution to optoelectronic firms, who have been caught by the dilemma of eco-protection and cost efficiency when plating with metal-oxides.
Rebound in Q4
With international steel prices bottoming out, along with other positive factors, such as the launch of a third round of quantitative easing by the U.S. and increasing infrastructural constructions in China, MIRDC analyst believes that the overall market for coating services and plated products will gradually stabilize in the short term.
MIRDC analyst predicted Taiwan's surface treatment industry's output value to rebound to NT$39.2 billion in the fourth quarter of 2012, with exports of NT$21.3 billion, partly thanks to the high season in the local aftermarket auto parts sector, and partly to the upcoming year-end sales boom to stimulate demand from downstream 3C product makers.
| Taiwan's Surface Treatment Industry Output
| |||||||||
| Period
| 2010
| 2011
| Q2, 2012
| Q3, 2012
| Q4, 2012 (forecast)
| 2012 (forecast)
| |||
| Value
| Value
| Value
| Value
| YoY Growth
| Value
| YoY Growth
| Value
| YoY Growth
| |
| Output
| 144.8
| 161.5
| 38.9
| 36.4
| -15%
| 39.2
| 0.2%
| 152.0
| -6%
|
| Import
| 17.8
| 14.8
| 4.4
| 3.9
| 11%
| 2.9
| 4%
| 15.1
| 2%
|
| Export
| 75.1
| 78.6
| 20.1
| 19.1
| 6%
| 21.3
| 6%
| 79.8
| 2%
|
| Scale of Domestic Market
| 87.6
| 97.6
| 23.2
| 21.2
| -19%
| 20.8
| -5%
| 87.3
| -11%
|
Source: Metal Industries Research & Development Centre