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U.S. GDP Grows, Consumer Confidence Plunges

11.03.2011 // Walt D. Custer // Industry Conditions

World IC Wafer Fab Capacity Utilization drops from 94.2% in 1Q’11 to 92.2% in 2Q’11

(Chart 1)

Global Wafer Fab % Utilization:
 
4Q’10
1Q’11
2Q’11
IC
93.1
94.2
92.2
Discrete
90.3
89.4
92.0
Total Semiconductor
92.9
93.7
92.2

Source: www.eeca.eu

IPC Releases N American PCB Industry Results for September 2011

(Chart 2) (Chart 3) (Chart 4) (Chart 5) (Chart 6) (Chart 7)

N American Rigid PCB shipments were down 13.1% and bookings were down 19.9% in September 2011 from September 2010. Year to date, rigid PCB shipments decreased 0.4% and bookings declined 10.8%. Compared to the previous month, rigid PCB shipments increased 3.5% and rigid bookings decreased 8.9%. The book-to-bill ratio for the North American rigid PCB industry in September 2011 dipped just below parity at 0.99.

Flexible circuit shipments in September 2011 were down 0.7% and bookings declined 1.8% compared to September 2010. Year to date, flexible circuit shipments increased 1.6% and bookings increased 3.0%. Compared to the previous month, flexible circuit shipments increased 20.1% and flex bookings were up 9.9%. The North American flexible circuit book-to-bill ratio in September 2011 fell to 0.97.

For rigid PCBs and flexible circuits combined, industry shipments in September 2011 decreased 12.0% from September 2010, as orders booked decreased 18.4% from September 2010. Year to date, combined industry shipments were down 0.2% and bookings were down 9.6%. Compared to the previous month, combined industry shipments for September 2011 increased 4.9% and bookings decreased 7.3%. The combined (rigid and flex) industry book-to-bill ratio in September 2011 declined to 0.99.

“Sales and orders were both under last year’s levels in September,” said IPC President & CEO Denny McGuirk. “Bookings have been especially sluggish and that has caused a drop in the book-to-bill ratio … although it is still very near parity, which suggests that flat sales are the likely near-term scenario.”

Source: www.ipc.org

Japanese Electronics Results for August

  • Japanese electronic equipment shipments declined 14% in August 2011 vs. August 2010 (Chart 8)
    (Chart 9)
  • Japanese PCB shipments continued their decline (Chart 10) although their 3/12 rate of change appears to be approaching its low turning point (Chart 11).
  • YTD Japanese PCB shipments by type are given in Chart 12.
  • Japanese electronic and component 3/12 growth rates have passed their low turning points although actual growth will not occur until the 3/12 exceeds 1.0 (Chart 13).
  • YTD Japanese component and device shipments by type are given in Chart 14.

Sources:
www.jeita.or.jp/
www.jpca.net/

U.S. Electronics Results for September

Based upon the just-released September U.S. Durable Goods report:

  • Electronic equipment book/bill ratio dropped to 0.99 on a 3-month average basis (Chart 15).
  • 3/12 equipment order growth dropped to 0.93 while 3/12 shipment growth was 0.98 (Chart 16).
  • Actual electronic equipment orders and shipments were flat (Chart 17). The cause of the large 3/12 order decline was because it was measured relative to a spike in orders in the prior year.
  • The ratio of electronic equipment inventories/orders declined slightly in September (Chart 18).
  • Defense capital goods orders improved (Chart 19) as their book/bill rose to 1.11 on a 3-month average basis (Chart 20).
  • U.S. aircraft and parts shipments increased for the third straight month (Chart 21).
  • Communication equipment orders were flat (Chart 22) while computer equipment orders rose (Chart 23).

Source: http://www.census.gov/manufacturing/m3/

DRAM Market Expected to reach US$31.5 billion in 2011

Databeans cut its forecast for the 2011 DRAM market to US$31.5 billion, as weakness in the consumption of consumer and computing devices across all regions left suppliers with considerable inventory overstock. This has pulled down the overall semiconductor industry projection which is now US$303.5 billion, a 2% increase from 2010, the firm said.

Another issue is that DRAM seems to have reached its limits in the PC space, Databeans indicated. Simply stated, further price reductions do not benefit OEMs as the average PC already includes more DRAM than consumers demand.

This freeze in consumption means that current stock is not moving and prices of DRAM, especially the industry bellwether DDR3 2GB, have tumbled in recent months, Databeans said.

Overall DRAM ASPs have dropped 17% from May to August, and are now hovering around US$1.73, according to Database. At this cost, many suppliers are selling the chips at a loss just to move product off their shelves.

Source: www.databeans.net

U.S. GDP Grew 2.5% in 3Q’11

(Chart 24)

U.S. economic growth accelerated this summer as consumers and businesses boosted spending, allaying at least for now concerns of a slide back toward recession.

Source: www.bea.gov/national

U.S. Consumer Confidence Plunged to 39.8 in October

(Chart 25)

The Conference Board said its index of consumer confidence plunged to 39.8 in October from a revised 46.4 in September, first reported as 45.4.

"Consumer confidence is now back to levels last seen during the 2008-2009 recession," said Lynn Franco, director of the Conference Board Consumer Research Center.

Source: www.conference-board.org/data/bcicountry.cfm?cid=1

World Mobile Phone Shipments grew 12.8% y/y to 393.7 million units in 3Q’11

The worldwide mobile phone market grew 12.8% year over year in 3Q’11, as smartphone growth declined in key mature markets. According to IDC vendors shipped 393.7 million units in 3Q’11 compared to 348.9 million units in 3Q’10. However, the 12.8% growth was higher than IDC's forecast of 9.3% for the quarter and stronger than the 9.8% growth in 2Q’11.

It was also the second-lowest growth rate for the overall mobile phone market over the past two years; a reflection of delayed smartphone purchases and conservative consumer spending last quarter. Economically mature regions, such as the United States and Western Europe, were hardest hit as shipment volume to both regions declined on a year-over-year basis.

"The combination of economic uncertainty and anticipation over fourth quarter or late third quarter product releases caused some consumers to delay their smartphone purchases," said Kevin Restivo, senior research analyst with IDC's Worldwide Mobile Phone Tracker. "Many waited for products such as the iPhone 4S, which was announced after the quarter closed, or Research In Motion's BlackBerry 7 phone series, which were released in the final weeks of the quarter."

However, smartphones drive the overall mobile phone market and will continue to do so in the quarters and years to come.

Source: www.idc.com

Global Media Tablet Shipments Surpassed Netbooks in 3Q’11

Global shipments of media tablets surpassed netbook (mini-note PC) shipments in the second quarter of 2011, reaching 13.6 million units, compared to just 7.3 million netbooks, according to ABI Research.

Jeff Orr, group director, mobile devices of ABI Research, said: "This is a trend that we do not expect will reverse. As they are different segments, this is not a direct replacement behavior, but a changing of leadership for the most interesting device type."

Source: www.abiresearch.com

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Statements of fact and or opinions expressed in MarketEYE by its contributors are the responsibility of the authors alone and do not imply an opinion of the officers or the representatives of TTI, Inc.

Featured Contributor:
Walt D. Custer

Walt Custer

Walt Custer is an industry analyst focused on the global electronics industry. Prior to forming Custer Consulting Group he was Vice President of Marketing and Sales for Morton Electronic Materials, a global supplier of specialty chemicals and process equipment for the PCB industry.

Custer has been a member of the IPC trade organization since 1975 where he received both the President's and the Raymond E. Pritchard Hall of Fame Awards. He is currently a member of the IPC Executive Market & Technology Steering Committee. Custer is also a Director of the EIPC European PCB trade organization.

He authors regular “Market Outlook” columns for Global SMT & Packaging magazine, the Journal of the HKPCA and the TTI MarketEYE website.

Custer Consulting Group

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