Revenue Forecasts for Top Passive Component Vendors; Dennis Zogbi - 09/19/2012
09.19.2012 // Dennis M. Zogbi // Passives
Although the global passive electronic components market remains depressed on a year-over-year basis, the 2012 June quarter showed positive improvement in revenue flow over the prior March 2012 quarter of approximately 6%. Certain vendors outperformed others during the June quarter and this was the result of weighted exposure to specific product lines, customers and regions the outperformed the market. At the same time visibility remains limited, primarily due to continued global concern over the Eurozone economy; however, certain passive component vendors have made forecasts regarding the September 2012 quarter. The general consensus among vendors who have made September quarterly forecasts is that market conditions will improve slightly, by an estimated 1%. The longer term forecast for the full fiscal year ending March 2013 is less certain, although those vendors who have made such estimates expect a stronger second half-buoyed by demand from the smartphone and tablet businesses, recovery in the consume AV segment and continued demand from the automotive sector (See Figure 1.0).
Revenue Forecasts for Top Passive Component Vendors: September 2012 Quarter and Year Ending March 2013
Source: Vendor Data, Compiled By Paumanok Publications, Inc.
Murata Manufacturing Company Limited
Total sales for Murata increased by 2% in the quarter ending June 2012 on a quarter-to-quarter basis, and capacitor sales (MLCC) increased by 8% to 52,400 million yen. Murata noted an increase in MLCC sales for all applications on a quarter-to-quarter basis, but especially for tablet computers and notebook PCs heading into the September quarter of 2012. Murata noted a 14.2% increase in sales to the computer and peripherals market segment (with Murata noting that demand is primarily for MLCCs for consumption in tablet computers and notebook PCs), but a 6.8% quarter-to-quarter decline in the audio-visual electronics markets (with emphasis upon a decline in sales of MLCCs for flat screen TV sets- as a result of “production decreases in these devices”); a 10% decline in sales to communications markets (with Murata noting that inductive device demand grew for mobile phones, but there were lower component sales for wireless base stations and for data cards); a 3.4% decline in shipments to the automotive segment (although automotive electronics segment remains up by more than 20% year-over-year, especially for MLCC and LTCC modules). Murata expects sales of MLCC to increase 3% in value for the September 2012 quarter. Murata expects slow growth in the audio-visual segment and the computer segment and flat demand from the automotive segment, but as much as 42% growth in the communications segment in the September quarter as demand is expected to increase due to rollouts of new Smartphones.
Like Murata, TDK reported that sales to the automotive market for MLCC were strong on a year-over-year basis; however, sales of TDK-EPCOS aluminum capacitors and film capacitors consumed in industrial and lighting end markets were lower year-over-year. A similar trend was noted for TDK’s massive inductor products sales, which were up for consumption in automobiles, but down for sales into the computer and audio-visual markets. TDK reported that on a year-over-year basis that demand in the Americas had increased by 6.9% for the June quarter of 2012 compared with the June quarter of 2011. Europe however, declined by 20.3% during the same time period, while China and the Rest of Asia increased by 2.3% on a year-over-year basis. Sales on the home island of Japan increased 20.9% on a year over year basis as the market recovered from the Tohoku earthquake. TDK also noted that the yen to US dollar exchange rate was almost unchanged on a year-over-year basis 80.73 Yen to 1.00 USD in June 2011 and 79.32 yen to 1.0 USD. The Yen to Euro exchange rate shifted dramatically, with 116.84 yen to 1.00 Euro in June 2011 declining to 98.74 yen per 1.00 Euro in the June quarter of 2012. Interestingly enough is that TDK is still bullish on their FY 2013 annualized revenues, and expects them to increase 10.5% year-over-yean to about 900,000 million yen for the company, up from 814,497 million yen in FY 2012.
Taiyo Yuden Company Limited
Taiyo Yuden had a similar performance as its main competitors on a year-over-year basis but on a quarter-to-quarter basis the company outperformed much of the competition (growing by 9.8% in revenues from the March 2012 quarter to the June 2012 quarter). Part of the reason may be related to Taiyo Yuden’s recent announcement that they have strengthened their production system for the ultra-small EIA010005 and EIA0201 MLCC for the smartphone market. The company also boosted production capacity for metal power inductors used for newly developed metallic magnet materials and SAW/FBAR devices. Quarter-to-quarter growth in the ceramic capacitor business averaged 7.7% while quarter-to-quarter growth in the inductor business grew by 11.7%. The company sites increased quarter-to-quarter component sales for smartphones and for tablet computers as the primary reason for market growth for the company. However, the company notes that component sales to the television set market and the desktop personal computer market remain sluggish. For the full year (ending March 2013) Taiyo Yuden predicts the company’s revenues will increase 14.3% to 210,000 million yen. In order to accomplish this, revenues will have to increase to 54,500 million yen for each of the next three quarters.
Kemet also reported higher than expected revenues for the June 2012 quarter, growing by 6.15% on a quarter-to-quarter basis; and buoyed by strong demand for tantalum capacitors. Tantalum capacitor sales at Kemet saw an increase in the June quarter because of a replenishment of components at major distributors during the quarter. The company noted that sales of conductive polymer type tantalum capacitors were particularly strong in the quarter, growing by more than 20% on a quarter-to-quarter basis. The company also reported an increase in demand from the smartphone market and from the telecom infrastructure market segments; and noted that the majority of increased consumption occurred in the Asia-Pacific region, which was up by more than 15% on a quarter-to-quarter basis. The ceramic capacitor group at the company grew slightly- by less than 2%; while the film and electrolytic capacitors business group at Kemet declined by 10%. The company is continuing to move forward with its raw material vertical integration model in an effort to increase operating margins by the end of the year. The company has been aggressively attempting to control its tantalum powder costs and its aluminum foil costs through focused acquisitions in the raw material supply chain. The company is also on schedule to complete its acquisition of NEC-Tokin, which will add significant revenues to its tantalum capacitor line, and expand the company’s reach into new component markets. Kemet’s quarterly outlook for September 2012 is more muted than its competitors. The company expects no growth on a quarter-to-quarter basis, due primarily to the holiday season in Europe impacting August sales. However, the company did note that their July sales were stronger than expected and that they believed their September sales would also be strong.
KOA Corporation, one of the world’s largest manufacturers of thick film chip resistors and related passive components forecasted that their September quarter would be flat to up slightly. In fact the company reported revenues of 9,812 million yen in the June 2012 quarter and has forecasted revenues of 9,888 million yen in the September quarter of 2012, a 0.77% increase.
TOKO, Inc., the major Japanese manufacturer of inductors, reported excellent quarter-to-quarter growth in June 2012 of 14%, with revenues increasing from 6,137 million yen to 7,002 million yen. The company reported a 15% increase in shipments to Japan; a 10% increase in shipments to China, a 16% increase in shipments to Asia; a 34% increase in shipments to North and South America, and a 3% increase in shipments to Europe on a quarter-to-quarter basis. The company reported improvements in all end-use market segments between the March 2012 and June 2012 quarters; with sales to the TV set market up by 19%; sales to the automotive market up by 17%; sales to the handset market up by 16%, and sales to the computer market up by 9%. Overall the company expects stagnant year-over-year revenues for the FY ending March 2013; however, sales of inductors are expected to grow by 8.7% for the year.
Vishay Intertechnology, Inc.
According to Vishay, Revenues for the fiscal quarter ended June 30, 2012 were $588.2 million, compared to $709.8 million for the fiscal quarter ended July 2, 2011. Revenues for the six fiscal months ended June 30, 2012 were $1,126.7 million, compared to $1,405.0 million for the six fiscal months ended July 2, 2011. However, on a quarter-to-quarter basis, revenues increased from $538.5 million USD in the March 2012 quarter to $588.2 million in revenues in the June quarter, an increase of 9.2% on a quarter-to-quarter basis, which exceeded many of the other key passive component vendors in the passive component index. Vishay forecasts that revenues will be from $570 million to $610 million for the September 2012 quarter, which represents a quarter-to quarter growth rate of either -3% to +4%, or an average growth rate of less than 1%.
Sumida Corporation, one of the world’s largest manufacturers of inductor components, reported a 7.8% increase in quarter-to-quarter revenues for June 2012. The company reported 10.2% quarter-to-quarter growth in the Asia-Pacific region and 3.6% growth in the European and “Other” regions during the June quarter. Quarter-to-Quarter growth by segment was 5.7% increase in sales to automotive (54% of total sales); 8% increase in sales to consumer segment 28% of total sales) and 10% increase in sales to the industrial segment. Year-over-year however, sales declined by 3.8%. For the second half of CY 2012, Sumida is forecasting a 3% overall growth rate, and expects revenues for the year to be down about 1%. As has historically been the case, Sumida views the market more in-depth when compared to other passive component vendors. The company has noted that it believed that the developed economies in Europe, The USA and Japan will continue to face growth challenges because low cist manufacturers are continually improving upon their product quality and service, making it more difficult for established economies to compete. Also, countries that had been traditionally considered “emerging” economies, with emphasis upon China, must soon be considered established economies and will have GDP growth that will begin to reflect this reality. Other emerging economies however, Brazil, Russia and India will continue to show high growth potential in the coming years. To capitalize on this vision of the future, Sumida will attempt to strengthen its position in automotive and industrial market segments between 2012 and 2014 and limit its exposure to the consumer audio and video imaging market segment. The company will focus more heavily upon industrial machinery and tools for factory automation and construction; power related components for energy; medical and healthcare electronics; security, lighting and agricultural related electronics. The company also will focus on expanding sales in greater China and the United States, and use their strong position in supplying the automotive markets to expand into growth markets such as energy, medical and security electronics.
AVX Corporation noted a 3% decline in revenues for the June 2012 quarter to $364 MM USD. During the quarter, AVX was impacted by their customer’s uncertainty and particularly their reluctance to take any inventory beyond the immediate end market demand. This uncertainty impacted prices and margin as long-term orders were limited. The inventory situation, particularly in the distribution channel eased somewhat during the June quarter, but the global economic outlook and tepid consumer demand kept it below the normal replenishment that we had expected. AVX shipments to distributors increased 7% from the March 2012 quarter with increases in both May and June. Distribution demand improvement is still anticipated by the company in the coming quarters, but the company believes it will not occur until after the summer period. AVX expects then to see more bookings from the distribution channel as a result of their need to restock as well as increased demand from our OEM and EMS customers. Overall visibility concerns remain as many customers continue to be reluctant to order product beyond the immediate demand. Regionally, Europe remains a question mark. Surprisingly, we continue to see strength in automotive in this region, while non-automotive declines and currency movement hurt this region and overall AVX results. Looking at the market segments, we continue to see growth in the Aerospace and Automotive markets. The weakness in the southern region for Europe in automotive has had a limited impact on AVX to-date due to the mix of our customers. AVX’s FLEXITERM product from the Ceramics Group has seen growth in the Automotive segment with its increased reliability and that line is now fully loaded. The company is adding capacity as fast as it can. Moreover, electronic content in the Aerospace segment mainly in the commercial avionics sector for new planes and retrofitting of older planes is driving demand for both high-end technical solutions and also the legacy established reliability products. The overall increase in demand for new aircraft is helping offset the slower defense related projects. Alternate energy and transportation are also showing signs of encouragement, according to AVX. The slowdown in solar is starting to ease and the transportation market involving high-speed trains promises more orders for AVX’s medium and high-power film capacitors. The company expects to see a large portion of this growth in Asia. Industrial markets appear to be holding up outside of Europe and for upgrades such as Smart Meters where AVX’s double layer carbon capacitors the BestCap continues to grow. In the more moderate areas, tablets are slowing down the growth in the notebook and the ultra-book market. This will further apply pressures on the PC segment although the subset of high performance gaming towers should remain steady. Global PC shipment activity has been about flat for several quarters although overall the company saw growth in the computer markets that they serve. The computer market in general is projected to grow in the 5% range in the second half prior to the holiday period. Another possible improvement to PC demand could be the launch of Windows 8; again, this operating system is designed to run on laptops and tablets.
The medical segment is improving from a slow year and should be stable going forward, especially in the area of pain management and drug administration. The cell phone segment continues to hold steady even though the mix of customers is radically changing as well as a mix to higher content smartphones. We also believe that we are going to start seeing an upturn in the infrastructure business that should help the second half. With respect to pricing, AVX saw more pressure on prices as uncertainty continues and much more spot buying activity as opposed to long-term orders is prevalent. This always puts pressure on the commodity product pricing which, according to AVX, fell 2% to 3% during the quarter; although this is consistent with long-term historical trends.
The general consensus is that the overall economy will be better in the third calendar quarter and this should have helped the September quarter. Based on the input from AVX’s customers, they would expect that revenues in September quarter could be flat to up in the 1% range compared to the June quarter.
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