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In this edition of MarketEye, Custer provides a business update for the United States and Asia. .

U.S. and Taiwan/China Data Dump

Walt Custer Dec. 17, 2007

Recently released data include:

  • U.S. Factory Orders Report (October domestic electronic equipment & components orders, shipments & inventories from U.S. Dept of Commerce).
  • North American printed circuit board orders and shipments (October data from IPC).
  • Taiwan listed electronic equipment & component companies (most with manufacturing in China) – November revenues from Taiwan Stock Exchange filings.

U.S. Electronic Equipment and Component Orders, Shipments & Inventories – October Data

The U.S. electronic equipment book/bill (Chart 1) dropped in October as orders dipped below shipments for the first time since January 2007 (Chart 2). The ratio of electronic equipment orders/inventories (Chart 3), but this was due primarily to an order decline rather than an inventory increase. Actual inventories by equipment type (Chart 4) remained in control. Computers and communication equipment drove the October U.S. order decline (Chart 5) while military electronics orders (Chart 6) remained above shipments. While defense sales rose, non-defense aircraft and parts sales rose at a faster pace (Chart 7) – presumably because the weak dollar is aiding domestic producers such as Boeing. U.S. electromedical, measurement, and control equipment (Chart 8) saw increased revenues although order growth appeared to slow in October, presumably due to lower SEMI Capex. (Chart 9 and Chart 10) show the end markets contained in this aggregate. Globally passive components grew about 8% in 3Q’07 (Chart 11). In October although the U.S. “passives” book/bill was about 1.03 (Chart 12) both orders and shipments have been relatively flat (Chart 13).

North American PCB Orders and Shipments Dip in October

Based upon IPC’s statistical survey, although the North American rigid PCB book/bill remained above 1.0 (Chart 14), actual orders and shipments declined (Chart 15 and Chart 16). The September “recovery” was short lived.

Taiwan/China – Seasonal Peak in October/November

Taiwan-listed companies (often with major production in China) generally see a seasonal peak by November. A composite of 101 large OEMs saw sales flatten last month (Chart 17) as their 3-month growth (Chart 18) slowed from +36.7% in October to +30.5% in November. Growth in the 30% range is clearly nothing to complain about, but these companies’ pre-holiday season consumer electronics surge is now completed for 2007.

Surprisingly computer motherboard producers (Chart 19) continued to grow but most other categories declined. TFT display makers (Chart 20), package & test (Chart 21) and memory (Chart 22) companies all saw an October peak.

Taiwan-listed wafer foundries peaked in August (Chart 23). Since these companies are typically a leading indicator to global chip sales (Chart 24) it is likely that a semiconductor slowdown will soon be upon us.

Taiwan passive component producers also reported an August peak (Chart 25). In November Taiwan/China PCB shipments flattened (Chart 26) while rigid CCL base material sales nosedived (Chart 27). The Southeast Asian decline in laminate shipments likely portends a seasonal PCB slowdown – probably beginning in December (Chart 28).

Global PCB Model – About to Take a Breather?

Custer Consulting Group’s global PCB shipment model (Chart 29) remained strong through October. However the normal seasonal “busy season” is done for 2007. I expect our PCB model to reflect declining shipments through early spring 2008.