Walt Custer is the founder and president of Custer Consulting Group. In 2000, he was voted "one of the 10 most influential persons in the PCB industry." He is also on the board of directors for Coretec, Inc. and holds an M.S. degree in Physical Chemistry. ( More... )
Custer's firm, Custer Consulting Group, provides market research, business analysis, and forecasts focused on printed circuit board fabrication and assembly, passive components and semiconductors, and the electronic equipment end markets.
In addition to supplying MarketEye with weekly, in-depth market analyses, Custer also writes CircuiTree magazine's monthly "Market Outlook" column.
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.
The U.S. Department of Census announced revised historical data for Manufacturers’ Shipments, Inventories and Orders on May 18, 2012.
“These revisions reflect: the following: benchmarking the shipment and inventorydata to the 2010 Annual Survey of Manufactures (ASM) data, as well as revised ASM benchmarks for prior years; incorporating the unfilled orders to shipments ratios obtained from the 2009/2010 Manufacturers’ Unfilled Orders Survey by applying these ratios to the respective ASM shipments data, as well as incorporating revised, unfilled orders to shipments ratios for prior years; adjusting the new orders data to be consistent with the benchmarked shipments and unfilled orders data; correcting monthly data for late receipts, reclassifications of reported data, and revisions to previously reported data; incorporating the monthly data corrections when producing estimates for industry groups for which we identified companies to be tabbed separately from the link-relative estimation procedure; implementing a new SAS benchmarking program, which is based on the same benchmarking methodology as the previous ASCII Fortran program; and updating the seasonally adjusted data, based on the results of benchmarking and the recent annual review of the seasonal adjustment models.”
In a number of cases the electronic industry revisions were quite significant.
• Electronic equipment shipments were revised down approximately 10% from mid-2009 to present. (Chart 1)
• The electronic equipment product mix changed significantly showing a large decrease in the computer sector per “before and after.” (Charts 2-5).
• Revised orders by equipment type are shown in (Chart 6).
• Annualized (12/12) and 3-month (3/12) growth by sector for the domestic electrons supply chain is summarized in (Chart 7).
Japanese electronic equipment production rose 9% in March 2012 versus March 2011 (Chart 8) with a large increase in communication equipment. (Chart 9)
Printed circuit board shipments continued to increase (Chart 11) with a 3/12 growth rate moving toward positive territory. (Chart 12)
Electronic component growth is now positive and device growth is improving. (Chart 12)
First quarter declined by 15%, sequentially the market grew by 14%. Eastern Europe reported record revenues.
As expected, the European Semiconductor Market could not recover completely to the record levels of Q1’11. Although DMASS (Distributors’ and Manufacturers’ Association of Semiconductor Specialists), reported the fourth highest quarter sales in its history, the decline against Q1/’11 amounted to 15%. The quarter ended at 1.54 billion Euro. The positive news is that the recovery is on the way, with a sequential growth (over Q4/’11) of 14%.
Georg Steinberger, chairman of DMASS, commented on the results. “We could not imagine going back to Q1/’11 record levels. The market conditions were quite different then. Throughout the beginning of 2012, inventory correction and careful ordering by customers still played a major role and kept the booking levels relatively moderate. With a start of -15% into the year, it is almost clear that 2012 will at best be flat against 2011.”
The regional difference again was made by Eastern Europe and Russia. While all Western European markets on an annual basis declined between 9.1% (Iberia) and 27.8% (Austria), Eastern Europe grew by 6.6% (Russia not included anymore) and Russia by 4.4%. The major regions behaved quite different, Germany declined by 18.6% to 522 Million Euro, Italy by 24.9% to 150 Million Euro, UK by 15.9% to 122 Million Euro and finally France by 12.1% to 115 million Euro. The Nordic region (including the Baltic States) dropped by 21.5% to 150 million Euro.
Georg Steinberger, “The well-known tendency of production transfers to Eastern Europe continues. Most of the reported sales come from the transfer; the local design-driven markets develop at a slower pace, but nevertheless promisingly. Russia is competing with Benelux for the number five rank of countries/regions.”
Product-wise, the only products showing year-over-year growth were high-brightness LEDs, other opto and DRAMs, all others declined with the usual bandwidth between -2.2% (MPUs) and 27.8% (couplers). The major product groups declined by 16.5% (analog to 436 million Euro), 17.8% (MOS Micro to 319 Million Euro), 10.9% (programmable logic to 145 Million Euro) and 19.5% (power to 152 million Euro). Memories total, opto total and other logic went down under-proportionally.
Georg Steinberger concluded, “There is not a clear against-the-trend picture among the products, except the high-brightness LEDs which finally take up speed. MCUs were suffering over-proportionally and are seeing a slower comeback than other products. No surprise are legacy technologies like EPROMs and bipolar power slowly dwindling away, as they are replaced by Flash respective MOSFETs and IGBTs.”
IPC — Association Connecting Electronics Industries® announced the April findings from its monthly North America Printed Circuit Board (PCB) Statistical Program.
Rigid PCB shipments were down 3.6% in April 2012 from April 2011, and bookings decreased 8.6% year-over-year. Year-to-date, rigid PCB shipments decreased 5.8% and bookings increased 1.2%. Compared to the previous month, rigid PCB shipments decreased 10.5% and rigid bookings decreased 13.0%. The book-to-bill ratio for the North America rigid PCB industry in April 2012 remained above parity at 1.03.
Flexible circuit shipments in April 2012 were down 13.8%, and bookings were down 5.2% compared to April 2011. Year-to-date, flexible circuit shipments decreased 8.9% and bookings decreased 2.4%. Compared to the previous month, flexible circuit shipments decreased 10.9% and flex bookings were down 18.8%. The North America flexible circuit book-to-bill ratio remained high at 1.16.
For rigid PCBs and flexible circuits combined, industry shipments in April 2012 decreased 4.5% from April 2011 and orders booked decreased 8.3% from April 2011. Year-to-date, combined industry shipments were down 6.0% and bookings were up 0.8%. Compared to the previous month, combined industry shipments for April 2012 decreased 10.6% and bookings decreased 13.5%. The combined (rigid and flex) industry book-to-bill ratio in April 2012 decreased slightly but continued in positive territory at 1.04.
“April PCB sales and orders in North America continued slightly below last year’s levels and reflected normal seasonal patterns,” said Sharon Starr, IPC director of market research. “The good news is that the book-to-bill ratio continued to be positive for the fifth consecutive month. When orders exceed sales, there is potential for sales growth over the next three to six months.”
Terry Gou, chairman of Hon Hai Group, the world’s largest electronics manufacturing service provider, has offered a pessimistic forecast of the global economic outlook, advising people around the world to brace for economic austerity.
In an interview with the Taipei-based Chinese-language Business Weekly, Gou said he sees few bright spots on the economic landscape of the world’s three trade powerhouses: -- Europe, the United States and China, in the coming years.
Gou has been lauded as one of the best market analysts because Hong Hai Group, which owns China-based Foxconn Technology Group, assembles consumer electronics for many renowned brands, including Apple Inc.
Meanwhile, Eisuke Sakakibara, a former Japanese Vice Finance Minister nicknamed Mr. Yen due to his ability to influence the Japanese yen rate through his outspokenness and government intervention in currency markets, also predicted in Taipei on Wednesday that the world economy could sink into the worst recession since World War II.
The following are excerpts from a special report in the United Evening News on Gou and Sakakibara’s forecasts on the global economic development in the coming two years:
Gou said in the interview with Business Weekly that the European economy is truly in bad shape, citing information from Metro AG, Germany’s largest and Europe’s second largest retail and wholesale group.
“We in the electronics industry tend to be very sensitive to market trends and we maintain close cooperation with Metro,” Gou said, adding that both Hon Hai and Metro are bracing for the worst.
On the U.S. economic prospects, Gou said its economy may not be too bad in the short term as 2012 is an election year in the United States.
“But 2013 could be a gloomy year for the U.S. economy,” Gou predicted, adding that the U.S. government would definitely launch QE3 easy money policy sooner or later.
As to China’s economic outlook, Gou said its exports will further shrink or slowdown in the foreseeable future.
Foxconn Group alone accounted for 6.7% of China’s overall exports in the January-March quarter of this year, compared to 5.8% a year ago.
Noting that his group’s trading volume could serve as a gauge of China’s trading tendency; Gou said the increase in Foxconn’s ratio indicates that his group performs better than China’s overall trading sector.
Asked about how long China’s competitiveness in the manufacturing industry can last, Gou said China excels in its “low environmental cost,” but he did not elaborate.
Sakakibara said at a seminar in Taipei that Taiwan should accelerate negotiations of free trade agreements with countries other than China to enhance its competitive edge.
Sofia Wu, Focus Taiwan News Channel
Demand Driven by Smartphones; Samsung Mobile Display Increases Market Share, but Japan Display Emerges as Rival in 2012
Active matrix small/medium displays, key components for a range of devices such as mobile phones, digital still cameras, portable and automotive navigation devices, e-book readers and tablet PCs, recorded worldwide shipments of two billion units in 2011, representing a 6% increase over 2010. However, according to the NPD DisplaySearch Quarterly Small/Medium Shipment and Forecast Report, revenue from small/medium displays reached $28 billion, a 29% year-over-year increase. The strong revenue growth reflects a shift to higher performance displays with higher prices.
The leading growth area for active matrix small/medium displays was in mobile phones, driven largely by the growing demand for smart phones. Shipments of active matrix displays for mobile phones grew from 1.4 billion units in 2010 to 1.5 billion in 2011. However, the growing popularity of smart phone devices cannibalized shipments for Digital Still Cameras (DSCs) and Portable Media Players (PMPs) in 2011, as consumers used them to take pictures and play music and videos. As a result, the growth of total active matrix small/medium display shipments was 6% year-over-year.
All three technologies used for active matrix small/medium displays showed double-digit revenue growth in 2011, in particular AMOLED had 182% year-over-year growth. Driven by e-book reader demand, AMEPD (electrophoretic) revenues grew 43% Y/Y, and TFT LCD revenues grew 19%, with the low-temperature polysilicon (LTPS) form of TFT LCD used in smart phones growing at 36% year-over-year.
The growth of smart phones impacted the display industry in other ways, leading to higher shipments of larger and wider screens, with higher resolutions and wider viewing angles, as well as other features such as touch panels. Consequently, the average price of mobile phone displays increased significantly, serving as a major reason for the year-over-year revenue increase for small/medium displays.
“Other applications for small/medium displays, such as automotive monitors, tablet PCs and e-book readers, contributed to the total average price rebound among small/medium displays in 2011,” noted Hiroshi Hayase, NPD DisplaySearch Vice President of Small/Medium Display Research. “This is representative of a larger trend, a consumer shift to a preference for higher performing devices, even when they cost a bit more.”
Samsung Continues to Lead in Active Matrix Small/Medium Market
As expected, Samsung Mobile Display (SMD) retained the top position for the second year in a row, claiming 17.2% of the market share in 2011, primarily due to increased AMOLED in smartphone devices. Following SMD, Sharp and Chimei Innolux kept the second and third positions in 2011, securing 13.5% and 9.5% of the market share, respectively.
Concurrently, Toshiba, Sony and Hitachi have entered the small/medium AMFPD market, joining forces as one company named Japan Display, Inc. (JDI). Although the company started operations in April 2012, a review of 2011 figures indicates that a combination of Toshiba, Sony and Hitachi market shares total 17.2%, the exact same percentage as the 2011 share held by marketplace leader SMD. As such, NPD DisplaySearch forecasts that JDI will emerge as a new leading company in the small/medium FPD marketplace in 2012.
Enterprise WLAN Market Grows 27.2% Year-over-Year in First Quarter of 2012
The combined consumer and enterprise worldwide wireless local area network (WLAN) market segments experienced year-over-year revenue growth of 13.9%, while declining 2.9% quarter over quarter in the seasonally weak first quarter of 2012 (1Q12). According to the preliminary 1Q’12 results published in the International Data Corporation (IDC) Worldwide Quarterly WLAN Tracker, the enterprise segment continued on its path of torrid growth with an impressive 27.2% increase over the first quarter of 2011.
“The momentum behind bring your own device (BYOD) in the enterprise continues unabated, and is the single largest factor driving enterprise mobility and WLAN market growth,” said Rohit Mehra, director of, enterprise communications infrastructure, at IDC. “Along with the increasing use of Wi-Fi by service providers to offload cellular data traffic, current market drivers in key verticals will ensure the market for enterprise-class WLAN devices and solutions will see continued traction, and that the market is expected to stay vibrant for the foreseeable future.”
From a regional perspective, the enterprise WLAN market grew fastest in the Latin America region with an impressive 73.8% year-over-year increase.
Combined with the 34.5% growth seen in North America, the Americas as a whole were a picture of relative and continued market strength. On the other hand, the 19.7% year-over-year growth in Europe, Middle East and Africa (EMEA) and the 16.4% increase in Asia/Pacific were below the overall market this quarter.
“The positive results in the enterprise WLAN market over the last several quarters, which includes several established and emerging vendors, indicates that WLAN investments remain high on the priority list of many CIOs,” cited Petr Jirovsky, senior research analyst, Worldwide Networking Trackers Group.