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Weekly Global Update for October 23, 2013

10.23.2013 // Walt D. Custer // Industry Conditions

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European Update

Thanks to a weaker US currency the Euro effectively became stronger vs. the dollar, reaching its most expensive level since mid-2011 (Chart 1).

Europe’s recent performance has been mixed. Chart 2 summarizes Europe’s 3-month growth rates for its electronic supply chain.

For August alone:

  • Supply chain growth appears to have bottomed in this current business cycle (Chart 3) but has not yet moved into positive territory (3/12 >1).
  • August industrial production was slightly positive vs. July for the EU27 as a whole as Germany improved while Italy and the UK declined and France was flat (Chart 4).
  • Total electronic equipment production dropped sharply (Chart 5).
  • Automotive (Chart 6) and aerospace (Chart 7) production surged.
  • Instruments (Chart 8) and medical electronics (Chart 9) production declined.
  • Electronic assembly (Chart 10) weakened while components (Chart 11) and wiring devices (Chart 12) grew modestly.
  • The European PMI leading indicator predicts further growth in PCB production (Chart 13).

Chart 14 summarizes the growth of the European electronic supply chain on an annualized (12/12) and 3-month (3/12) basis. A value of 100 indicates zero growth vs. the same period a year earlier. The 3/12 "leads" the 12/12.

Source: Eurostat and Custer Consulting Group

U.S. Update

As this article is written on October 20 the U.S. Department of Census has still not released its August "Factory Orders" report on shipments, orders and inventories. Now that the government shutdown has ended, hopefully needed domestic data will begin flowing again.

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

Viasystems Opens New State-of-Art Printed Circuit Plant in Anaheim, CA

Last week I was able to tour Viasystems’ new PCB factory in Anaheim, CA. Notably this is the first new major printed circuit manufacturing plant built in the USA in many years.

Key features include:

  • wholly owned 97,000 sq. ft. location under one roof, replacing 13 leased buildings.
  • major detailed renovation to building, including retrofitting roof to protect against seismic activity and major power grid upgrades with the City of Anaheim.
  • room for expansion in key process areas (i.e. laser drill, press area, etc.).
  • almost 100% laser direct imaging imaging of PCB innerlayers, outerlayers and solder mask.
  • probably largest microvia capacity in USA.
  • completely new and automated waste treatment and water recycling system, with the ability recycle up 30 million gallons of water annually.
  • increased security measures with controlled access points.
  • new equipment upgrades and efficiencies allowing engineering teams to better develop and experiment with new technology and customer designs for manufacturability.
  • "Hub of Technology" for the Viasystems organization.

New equipment includes:

  • Chemcut Pre clean line.
  • Schmid Development, Outer Layer Etch and Outer Layer Resist stripper.
  • Hollmuller DES line.
  • IS deburring machines.
  • IPS Electrolytic hard and soft gold equipment.
  • IPS Vertical Solder Mask Developer.
  • fully automated PAL Electroless line.
  • fully automated water recycling and chemistry distribution systems.
  • innovative and highly efficient air quality and fume scrubber systems for employee safety and regulatory compliance.
  • new plating tanks throughout the facility.
  • all presses completely dismantled and rebuilt.
  • "Temperature Controlled" rooms, remote chillers for heat dispersion and external irrigation holding tanks are several elements of the Anaheim "Smart Building" design.

Source: Viasystems & Custer Consulting Group

Global 4Q’13 DRAM Capacity to Reduce 5.7% on SK Hynix China Plant Fire (Charts 15-18)

Global DRAM production has been hit due to a fire at SK Hynix' China fab. Combined production capacity at DRAM producers worldwide during the fourth quarter of 2013 is set to be about 5.7% lower than the level in the prior quarter, according to an estimate by Digitimes Research.

SK Hynix' memory fab in Wuxi, Jiangsu Province, suffered a fire on September 4, 2013 prompting the company to temporarily suspend operations at the facility. On September 7, SK Hynix resumed partial operations of a production line damaged by the fire. The company's most recent updates are that the fire-damaged cleanroom and air ventilation systems have been substantially restored.

SK Hynix is expected to resume normal operations with full production capacity between November and early January 2014.

With the upcoming restoration of SK Hynix' fire damaged plant, along with no further capacity expansions at other chipmakers, combined monthly production capacity at DRAM fabs worldwide will reduce by 60,000 12-inch equivalent wafers, or 5.7%, sequentially in the fourth quarter of 2013, Digitimes Research predicted.

Despite the supply contraction, DRAM prices are unlikely to register relative gains in the fourth quarter, Digitimes Research noted. System OEMs are expected to decelerate their pace of chip procurement prior to the slow season in the first quarter, while the world's supply of DRAM chips will return to normal levels sometime during the fourth quarter. Identifying these factors, Digitimes Research anticipates that DRAM prices for the fourth quarter will stay flat or rise only slightly on quarter.

In addition, Digitimes Research forecasts that the global supply of DRAM will come to about 4.44 billion 1Gb-equivalent chips in 2013, up 22.8% from 3.61 billion units in 2012. The supply bit growth already decelerated to 31.4% in 2012, compared to 38.7% in 2011 and 56.5% in 2010.

Source: www.digitimes.com

India’s Top EMS Companies

Electronics b2b reported:

Last month, when we began the survey to electronics manufacturing services (EMS) companies operating in India, we had optimistically expected an encouraging scenario as the government’s efforts to enhance domestic manufacturing were in full swing, and three manufacturers had already announced their investments in new facilities, one among them being an EMS company (Sahasra Electronics Pvt Ltd). Also, there was news that the US and European markets had become saturated, leading global OEMs to look for EMS in India.

However, we were a little disappointed, as the reality did not match up to our expectations. While Jabil Circuit India, SFO Technologies and Dixon Technologies grew by significant numbers in 2012-13, the growth of NTL Electronics, Flextronics Technologies, Elin Electronics, Kaynes Technology, SGS Tekniks and Amara Raja has not been too impressive.

While SFO, Dixon, NTL and Flextronics retained the same ranks when compared with last year’s rankings based on turnover (2011-12), we observed two significant changes —Jabil rose to the first position (from second) and Sanmina-SCI India slipped from first to second position, registering a lower turnover in 2012-13.

We also want to mention that some companies like Avalon Technologies, Syrma Technology, Rangsons Electronics, Benchmark Circuits, Donex Industries, Hical Technologies, etc., did not want to share their current turnovers. Some MNCs like Jabil Circuit India, Sanmina-SCI India and Flextronics have also stayed away from sharing their India revenues for FY 2012-13, hence they were ranked as per their revenues of 2011-12.

Top 15 EMS Companies in India

1 Jabil Circuit India Pvt Ltd 20,487 2011-12
2 Sanmina-SCI India Pvt Ltd 14,843 2011-12
3 SFO Technologies Pvt Ltd 9557 2012-13
4 Dixon Technologies (India) Pvt Ltd 7753 2012-13
5 NTL Electronics India Ltd 5713 2012-13
6 Flextronics Technologies (India) Pvt Ltd 4163 2011-12
7 PG Electroplast Ltd 3800 2012-13
8 Elin Electronics Ltd 3363 2012-13
9 Centum Electronics Ltd 2835 2012-13
10 Amara Raja Electronics Ltd 2440 2012-13
11 Kaynes Technology India Pvt Ltd 2080 2012-13
12 Tekniks Manufacturing Pvt Ltd 1486 2012-13
13 Quad Electronics Solutions Pvt Ltd 1050 2012-13
14 Digital Circuits Pvt Ltd 1026 2012-13
15 Smile Electronics Ltd 700 2012-13

Source: http://electronicsb2b.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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