REPORT HIGHLIGHTS

• U.S. market of polyester and polyimide flexible circuits has been estimated at $1,375 million, which should increase to $2,492 million in 2006 for an annualized average growth rate (AAGR) of 12.6%.
• Polyimide dominates the production of flexible circuits in the U.S. today. The polyimide market is forecast to grow from $925 million in 2001 to $1,450 million in 2006 with an AAGR of 9.4%.
• The smaller polyester market is forecast to grow from $175 million in 2001 to $239 million in 2006 with an AAGR of 6.4%. Over the next 5 years, the dominance of polyimide in flexible circuit production should only continue.

REPORT SCOPE

INTRODUCTION

OBJECTIVE AND PURPOSE OF THIS REPORT

The focus of this report is on the market for flexible circuits and their applications. While there has been a great deal of consternation concerning the health of the domestic printed circuit board industry, and by extension, the flexible circuit industry, this report finds few long term trouble spots in the . This report focuses on two types of flexible circuits based on substrate, polyesters and polyimides. This report evaluates the markets and applications for these materials primarily in the U.S., but also with a global outlook. In most cases, the U.S. remains the leader of technological development of these goods and the largest single market, but production of flexible circuits is certainly a global . Furthermore, markets for flexible circuits are also global, and the U.S. is not the largest consumer of flexible circuits for all applications.

Flexible circuits have been produced for some decades, and these goods have found their way into a wide range of consumer applications. This has been quite a transition for flexible circuits since much of the early development of these goods was undertaken by the U.S. defense establishment. Flexible circuits are another example of a valuable commercial product that was incubated for military purposes. While some goods have trouble transitioning from a military economy (high performance at any cost), flexible circuits have been remarkably successful at crossing over to commercial applications. Today the bulk of flexible circuits are produced for commercial applications, although military production remains an important niche market. While, historically, flexible circuits were produced in large volumes by major U.S. electronics manufacturers such as IBM, Motorola, Hewlett-Packard and Texas Instruments, there has been a shift from captive production to open source production. Today, most of the flexible circuits produced in the U.S. are manufactured for the open market by firms with facilities dedicated to the task.

Given that flexible circuits are used in electronic goods, it is not surprising that the products covered in this report are found in a wide variety of applications. Flexible circuits are used in defense and aerospace applications where lightweight, compact design, and reliability are all critical. Flexible circuits are used in automotive applications ranging from engine controls to dashboard connections. Since the modern automobile has been increasing in electronic content, there has been strong growth in the volume of flexible circuits used in this industry. One of the major growth markets for flexible circuits has been in handheld devices that range from GPS units to personal digital assistants. While growth in these markets is somewhat constrained by the telecommunications infrastructure, new products are being developed at a rapid pace. The largest single market for flexible circuits is found in computer peripherals, which include flat panel displays, inkjet printers and disk drives, the single largest market for high-density polyimide flex.

Like a number of materials used in modern applications, such as semiconductors, flexible circuits materials will not be required in very large volumes. Total production of polyimide flex globally is somewhat less than 10 million square feet. However, some new technology may make the production of low-cost, high-volume flex more popular.

This report takes a long hard look at flexible circuits and finds reasons for both excitement and caution. Years of research and development have resulted in a valued at over $4 billion globally, with growth rates that outstrip most mature industries. Products based on polyimides and polyesters have widespread commercial success in a number of applications. The industry continues to fund research and development to produce new goods to meet the coming challenges posed by the drivers in the electronics industry, and to carry data faster and to do so in an ever-restricted space.

Since there has been a great deal of secrecy in the flexible circuit , estimates of the size of this industry can vary widely. As an example, estimates of the size of the global industry range from $4 billion to $7 billion. Many of these estimates are based on extrapolations of the U.S. market to global production, an approach that can be problematic if not done with caution.

This report covers the industry that produces flexible circuits and some of the major markets for these products. This report also covers the major drivers in flexible circuits, cost reduction and improved performance, and shows that the technological approaches are very different. This report also covers some of the new technologies being developed for flexible circuits, including lower cost substrates, and trends to thinner line widths. With this information, readers with interests can then make sound judgments regarding marketing strategies, investment decisions, or strategic plans concerning the markets of flexible circuits. This report has been written to be readily accessible for those readers with a background, but accuracy concerning the technical aspects of circuits has not been sacrificed.

REASONS FOR THIS STUDY

While there has been a great deal of interest in the popular press concerning the recent plight of the printed circuit board industry, it is often difficult to get solid information on how much of these materials are being sold and where. Many popular sources have presented a very incomplete picture, especially since some estimates for the size of the flexible circuit market have been based more on wishful thinking than on careful calculations. This report presents a careful analysis of the current production and markets for flexible circuits, along with trends that indicate the size of future markets for these goods.

CONTRIBUTION OF THE STUDY

This report discusses the size of the markets for flexible circuits in the U.S. and their applications in specific industries. Most of the research and development of these materials has been done domestically, and the U.S. market remains very significant to flexible circuit producers. This report also covers some of the global trends in the industry.

Readers of this report will be able to distinguish the hype concerning the uses of flexible circuits from the reality of the market. Some applications of flexible circuits have been highly touted, although the current markets remain small. Other potential markets have not come to fruition, and this report analyzes some of the reasons for this failure. This report covers the probable markets for these products, and discusses realistic growth rates for successful applications. It must be noted that in several cases of new applications, the major stumbling block has little to do with the technology of flexible circuits, and thus predicting future growth is, by its nature, a highly speculative process. This report does not focus on vapor applications that may occur a decade away. Instead, this report focuses on market developments relevant for the next 5 years.

SCOPE AND FORMAT

In order to generate the information necessary to construct a reasonable future market for flexible circuits, it is necessary to take a hardheaded look at the potential advantages and pitfalls of the current crop of these products. Some applications of flexible circuits that are possible within 5 years are also discussed.

This report covers flexible circuits in two categories:

• Polyimide flexible circuits, used in both high-density and low-density applications. These good remain the mainstay of the flexible circuit industry and are widely used in applications ranging from defense to automobiles.
• Polyester flexible circuits that are lower performance materials than polyimide circuits, but also have a lower price structure. Since these products are used in more mature markets, growth in polyester circuit production will be lower than polyimide.

This report does not cover all types of products that have been considered flexible circuits, such as membrane switches, or new compounds that could conceivably be used in flexible circuit applications. Instead, this report is restricted to materials currently being used in products or being developed for commercial use.

The report is broken into five sections. First there is a technology overview that gives a description of flexible circuits, along with some of the developments taking place in the industry. This overview also contains general characteristics of flexible circuits and a comparison with rigid circuit boards. Next there is a thorough description of the industry of flexible circuit manufacturer, along with company profiles. Following this industry section, there is a products section that covers flexible circuits by substrate type and line width. The report concludes with the market applications of these materials. This report does not include extensive sections on the patent literature of flexible circuits. For the most part, this is mature technology, and most firms use proprietary methods rather than patents to protect production technology.

METHODOLOGY AND SOURCES OF INFORMATION

This report is the end result of 5 months of concerted effort by the author. The primary sources of information for writing this report came from interviews with several dozen people in industry and academe. Many of the people interviewed are recognized authorities in the field and provided invaluable assistance and insight, and I would like to thank all who took the time to speak with me for their help with this project.

Since this study was not commissioned by any corporation or individual, the author's brief in writing this study was to be as objective as possible.

Secondary sources include a number of publications put out by the federal government, including items on the Internet, corporate literature, publications in the peer reviewed literature, and meetings.

Dollar amounts are in constant 2001 dollars, and average annual growth rates (AAGR) are calculated using standard Tables.

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