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Weekly Global Update for November 13, 2013

11.13.2013 // Walt D. Custer // Industry Conditions

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U.S. Electronics Update

After a pause in data releases caused by the U.S. government shutdown the Commerce Department has finally released August and September data on shipments, orders and inventories.

Here are some results from the recent "Factory Orders" report.

  • U.S. electronic equipment book/bill ratio dropped sharply (Chart 1) although both orders and shipments had small sequential gains from August to September (Chart 2).
  • Very modest sequential order growth occurred in all electronic equipment sectors (Chart 3)
  • Vehicle shipments rose slightly (Chart 4).
  • Military aircraft sales dipped but commercial aircraft sales increased (Chart 5).
  • Military electronics demand has been generally declining since early 2011 despite a slight increase in September of this year (Chart 6).
  • Instrument & control orders and shipments have been improving since early 2012 (Chart 7).
  • Communication (Chart 8) and computer (Chart 9) sales have been flat.
  • Electronic component demand has remained level (Chart 10).

Chart 11 summarizes the growth of the U.S. electronic supply chain. A value of 100 indicates no growth versus the same period a year earlier.

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

Taiwan/China Update

October sales figures have just been released for Taiwan-listed companies, many of which manufacture in China.

  • Electronic equipment (ODM) sales increased from September to October (Chart 12) but this was just a seasonal upturn. There was only up a modest 2.4% increase compared to October 2012. ODM sales will likely drop significantly in early 2014 due to normal seasonality.
  • ODM (Original Design Manufactures') sales increased in October (Chart 13) but their 3Q'13 growth rate indicated a virtually zero year-on-year improvement (Chart 14).
  • Wafer foundry sales weakened (Chart 15) based upon composite revenues of 14 companies. This growth decline suggests the global semiconductor shipments may soon plateau.
  • Memory (Chart 16) and Package and Test (Chart 17) sales improved but passive component revenues dipped (Chart 18) and a composite of solar/photovoltaic producers' sales (Chart 19) were sequentially flat from September to October 2013.
  • PCB sales increased (Chart 20) but CCL (PCB laminate) demand was flat (Chart 21).

Source: Taiwan Stock Exchange

2013 Top Semiconductor Companies Ranked by Sales

Chart 22 lists IC Insights recent estimate of the Top 20 semiconductor companies ranked by sales.

Source: www.icinsights.com

North American PCB Shipments Down 0.7% in September 2013 from September 2012 (Charts 23 & 24)

Slower-than-Expected Growth Reduces PCB Book-to-Bill Ratio

Total North American PCB shipments decreased 0.7 percent in September 2013 from September 2012. Year-to-date shipment growth is still negative compared to the same period in 2012, but is improving and reached -3.5 percent in September.

North American PCB bookings increased 3.1 percent year over year, an improvement that brought year-to-date growth to -0.6 percent. Year-to-date PCB bookings have been generally flat during the second and third quarters of 2013.

Month-to-month growth in PCB shipments and bookings was positive in September, reflecting normal seasonal patterns. Compared to the previous month, PCB shipments in September were up 9.7 percent and bookings were up 6.5 percent.

North American PCB book-to-bill ratios had a strong run of positive results in the first seven months of 2013, driven by solid order growth. Orders weakened during the summer months, which put downward pressure on the book-to-bill ratio.

"A combination of slower order growth and shipments that exceeded bookings in August and September brought the book-to-bill ratio below parity to 0.98," said IPC's director of market research Sharon Starr. "Although year-on-year shipment growth in the North American PCB industry is still negative, it has been moving in the right direction. The recovery we expected to see in late 2013 has been dampened by the industry's expectation of slower economic growth in the fourth quarter due to the government shutdown."

Source: www.ipc.org

DSLR Camera Shipments Down 9.1% to 17.4 million units from 19.1 million units in 2012 (Chart 25)

Sales of compact digital cameras are falling rapidly and interchangeable lens camera sales are stagnant as camera phones have significantly impacted this market.

In addition to competition from camera phones, the replacement switch from film to digital cameras is now almost complete.

Source: www.idc.com

U.S. 3Q'13 GDP Growth (Chart 26)

U.S. Gross domestic product expanded at a 2.8% annual rate, its best growth since 3Q'12

Excluding inventory increases, the domestic economy grew at 2.0% last quarter.

Source: www.bea.gov/national/

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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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