We propose a template matching method for component inspection of SMD assembly system. To discriminate wrong assembled components, the input image of component is matched with its standard image by template matching algorithm. For a fast inspection system, the calculation time of matching algorithm should be reduced. Since the standard images of all components located in a PCB are stored in computer, it is desirable to reduce the memory size of standard image. We apply the discrete wavelet transformation to reduce the image size as well as the calculation time. Only 7% memory of the BMP image is used to discriminate goodness or badness of components assembly. Comparative results are presented to verify the usefulness of the proposed method.