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KYODEN: Making the future a reality

Interview - February 2, 2022

Established in 1983, KYODEN is a one-stop shop for PCBs (printed circuit boards), providing services from design and development, to assembly, mounting and manufacturing. The company is a key player in the supply of automotive PCBs, with a range of products for driving assistance systems and information displays. However, KYODEN president Kiyotaka Mori explains the company is looking to the emerging 5G market as well.

KIYOTAKA MORI, PRESIDENT OF KYODEN CO., LTD.
KIYOTAKA MORI | PRESIDENT OF KYODEN CO., LTD.

In the 1980s, Japan was the leader in the semiconductor industry, with companies like Toshiba and NEC dominating the D-RAM and NAND memory markets. Today, Japanese companies have lost that market share, but they continue to lead in functional materials, chemicals, and machinery, with companies like Tokyo Electron and Screen Holdings holding significant market shares. What do you think are the strengths and weaknesses of the current Japanese semiconductor industry?

As you mentioned, in the 1980s, Japanese companies such as Toshiba and NEC were leading in the field of D-RAM in terms of technology and development capabilities. However, with the rise of emerging semiconductor countries, the semiconductor business as a manufacturing business became unprofitable due to price competition and high labor costs in Japan, and they were forced to withdraw.

On the other hand, the strength of Japanese companies is that they have accumulated experience, research capabilities, and technologies to build new technologies in the semiconductor field. On the other hand, the self-contained manufacturing of electronic devices, in which companies do everything themselves, is costly and prevents them from developing and selling products that take advantage of their brand power. For example, Sony is currently working with Taiwan's TSMC to develop new products. In the past, Japanese companies have aimed to be independent and self-reliant, but I believe that they will shift to developing new products in cooperation with overseas semiconductor companies to meet new needs.

Against this backdrop, Japanese companies in the semiconductor field, including major players such as Toshiba, Hitachi and Panasonic, are moving away from semiconductors as well as CPUs (central processing units) and GPUs (graphics processing units). Semiconductor production technology can now be covered by machinery and equipment, and there is no advantage to producing semiconductors in Japan. However, Japanese companies that continue to be leaders in the field of electronic components, such as Rohm, Murata Manufacturing, Kyocera, and Sony, excel at manufacturing tiny, high-performance components that are essential for manufacturing electronic devices, such as chip capacitors, chip resistors, and image sensors. Their development and product capabilities are pushing electronic components into a new Japanese industry. Nowadays, Iphones cannot be made without Japanese electronic components.

 

It was mentioned that many Japanese companies are moving their production bases overseas due to the high cost of labor in Japan. In addition, Japan is one of the oldest societies in the world, causing a labor crisis as well as a decline in domestic demand. What measures are you taking to ensure the longevity of Kyoden?

To make up for the shortage of manpower, we are actively recruiting foreigners to work at our production sites in Japan. We have a variety of foreign nationals working for us, including Chinese, Vietnamese, and Brazilians. We also have a plant in Thailand, and 33% of the 3,180 employees in the Kyoden Group are non-Japanese. There is a huge demand for machinery, equipment, and parts in Japan. In particular, machinery needs to be produced in Japan, supplied to Japanese companies, and then taken overseas. Right now, we are trying to focus and strengthen our machinery sales in Japan.

Our business can be divided into two areas: PCBs (printed circuit boards) and industrial materials such as admixtures used to make concrete and fiberglass.

The PCB business, which accounts for 80% of our sales, provides one-stop services from design, development, assembly, mounting to manufacturing. Loowards sensors, including millimeter wave sensors, and multi-information displays. We make most of these products in Japan.

Following the automotive sector is industrial equipment, which accounts for 24% of the total. This includes robots, AGVs, and machinery for semiconductor manufacturing. We are particularly interested in the growth of the industrial equipment sector and the applications of printed circuit boards in electronic components, including power semiconductors. While automotive PCB business accounts for 80% of CMK's business and 50% of Meiko's, we at Kyoden have 70% of our customers in B to B equipment such as industrial equipment, communication equipment, office equipment, and medical equipment. We will also increase the volume of automotive PCBs in the context of overall growth, but we will continue to maintain a balance between industrial and automotive applications. In the future, cars will need to be connected with 5G technology, and that is our new target now. We want to concentrate on the application of 5G to cars using power semiconductors.

On the other hand, it is also important to anticipate domestic needs. Until 2025, we will focus on domestic technological requirements and developments, especially high frequency, high density, and high heat dissipation technologies. We are working with our partners to develop new prototypes for these technologies. We will continue to search for the next mainstay technology by making the most of our strengths: short lead-time development support services and small-lot, high-mix production for industrial equipment.

We have a factory in Thailand, which is currently producing mainly body control system substrates for automobiles, but as the demand for EVs + 5G increases in the future, we will need more production capacity. To avoid losing opportunities, we need to build factories and invest in equipment ahead of time while forecasting demand, and expand the scale of our business to meet the needs of our customers.

 

5G networks continue to grow and will be used by more than a third of the world's population by 2025. You have developed high frequency and high heat dissipation technologies that can be used in 5G and 6G base stations. What is your strategy for success in this field and why are your products so well regarded in this industry?

We are constantly accumulating high-frequency and high heat dissipation technologies that are mainly used in power semiconductors. We have developed a high-speed thick copper plating technology that replaces copper inlay and is suitable for power semiconductors.

Our development in this area is aimed at meeting the demands of our Japanese customers. As I mentioned earlier, for technologies such as the Internet of things (IoT), 5G, and edge computing, we have a roadmap to catch up with the deployment of 5G.

We also provide optical transceiver PCBs for 5G base stations and data centers; we have already completed the development of heat dissipation substrates for GAN power semiconductors and will start mass production next year. This is a small and limited market, but we regard it as a very important business that supports the Japanese electronic components industry.



Are you looking for co-creation partners in materials and devices to further solidify your foothold in the industry?

One of the unique things about Kyoden is that we collaborate with many different companies. In copper coating technology, we work not only with chemical manufacturers, but also with material and semiconductor manufacturers. We share information, debug it, and come up with the best combination of materials, chemicals, and machines to make improvements. This is a different approach from that of conventional substrate manufacturers who simply take orders and produce. By working with customers on prototyping and development, we are able to find the best combination of materials, machines, and methods.

We are located in the middle of manufacturers and semiconductor manufacturers. Therefore, we are able to offer and propose good alternatives to ceramics. For example, we are investigating, researching, and proposing new CCLs (Copper Clad Laminates) that are more functional.

 

You have developed the first copper heat dissipation system, for example, and in order to meet new demands, you have achieved transactions with a total of 5,500 companies and created more than 10,000 new prototypes per year. What are some of the new technologies that you are currently working on?

Currently, our R&D is focused on copper high heat dissipation technology for semiconductors, and since we have prototypes, we are aiming for mass production in 2022. At the same time, we are considering diversifying product applications and reaching out to potential customers. 6G will be our research target after 2025, and we need to conduct prototyping and vector analysis.

The 6G requires physical smoothness of wiring patterns and plating, and requires processing technology that is different from the conventional ones. Through the many 6G development requests that will come our way, we are confident that we will be able to create the processing technology necessary to be known as "Kyoden for 6G" sooner than any other substrate manufacturer. In order to produce the incredibly high quality 6G substrates that are required, it is necessary to collaborate with customers, material manufacturers, and chemical manufacturers, and we are proud that only Kyoden can be in that position.

 

We know that the semiconductor market will continue to grow, with some estimating that it will reach up to one trillion dollars by 2030. In addition, the market for cell phone handsets, which already has 1.5 billion units worldwide, will continue to grow, and it is said that half of them will be connected to 5G by 2023. What is your strategy for realizing this kind of global growth with semiconductors and 5G technology?

Last year, we completed 10,000 prototypes and developments, and this number continues to grow every year. Almost 60% of the market is made up of industrial, machinery, communication, IoT, and infrastructure. We are concentrating on these areas, not only on end products like automobiles.


You have an office in Dusseldorf, Germany, and are also expanding into China and Thailand. Please tell us about your future international strategy.

Production for automobiles and air conditioning equipment is done only at our plant in Thailand, which is very small in the global market. We are not thinking of building new factories overseas, and we rely on our Japanese factories to keep up with new developments by Toyota, Honda, etc. Prototypes for EVs (electric vehicles) and communication boards can also be made in Japan. We do prototyping here, while other companies do mass production overseas. It means a lot to us to be able to contribute to the development of this market. The next step would be to move the prototyping and mass production overseas and build a mass production plant overseas.

Currently, we are focusing on industrial, telecom and 5G development, and we can even make components for 5G in Japan. I believe that focusing on domestic customers, especially semiconductors used in industrial machinery, is our primary mission. We have a factory in Thailand, but due to limited resources, we are currently concentrating our R&D efforts on prototyping new products in Japan. Once we are able to produce everything with our own technology, we would like to move to mass production. However, we are more than willing to cooperate and collaborate with partners or even competitors to manufacture the products we develop. We would like to focus our efforts on developing new technologies and prototyping.

 

I spoke with Mr. Toshiki Kawai, President of Tokyo Electron, and he told me that while it is important for Japanese companies to continue to create core technologies in Japan, which is their core market, and to meet the needs of domestic customers, Japanese companies are shifting their focus overseas in areas such as semiconductors, automobiles, and infrastructure. Are you trying to find new customers overseas?

We are currently focusing on the domestic market because there have been significant changes in the manufacturing of substrates and the provision of materials. The major substrate manufacturers that have been manufacturing substrates for a long time have downsized or identified their business areas, and there are fewer companies that provide substrates in Japan, so there is a huge opportunity for us to grow. Every month, 80 to 100 potential new customers contact us.

In Japan, the frequency of development and the volume of production are increasing against the backdrop of Industry 4.0, and in fact, there is more demand than can be met by Japan alone. In fact, there is more demand than we can meet domestically. As I mentioned earlier, our current mission is to conduct prototype development and small-lot, high-mix production of products for the domestic market. Our current focus is on high frequency and high heat dissipation technology, and finding new applications and potential customers that can use our technology. In Japan, we are planning to invest 20 billion yen over the next three years. In the longer term, we are also considering building another plant in Thailand to accommodate the new automotive technology products we are developing.

 

This year, Kyoden celebrated its 38th anniversary, and I would like to interview you again in two years when you celebrate your 40th anniversary. What is the goal you would like to achieve by then?

My hope is to establish a plan to manufacture the new technology boards developed in Japan at our production base in Thailand. Of course, our current focus is on high-frequency and high heat dissipation technology for semiconductors using copper plating, so I would like to strengthen this technology and do a good job of marketing and sales. Our goal is to become a major player in the industry, including power semiconductor substrates. By that time, we should be able to see our plan for 100 billion in sales.

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