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Walt Custer summarizes the year in his final global outlook on the electronic industry for 2007. .

Global Summary – Seasonal Slowdown on Schedule / DRAM Prices soften; Vietnam Outlook Bright

Walt Custer Dec. 31, 2007

Economy Stabilizes (somewhat)

The global economy appeared reasonably solid through early autumn based upon year-over-year monthly industrial production growth (Chart 1). Although the U.S. IP grew 2.1% compared to November 2006, a decline (and then flattening) in domestic industrial production has occurred since the mortgage/housing woes became public in August (Chart 2).

U.S. consumer confidence also has responded to the housing woes, plunging sharply in September before stabilizing in December (Chart 3).

It would appear that the initial shock of the mortgage crisis has been absorbed and that the U.S. economy is now operating at a lower level although home sales have been hit very hard (Chart 4).

World Electronic Equipment Growth Flattens in late Autumn

Globally electronic equipment production appears to have peaked (Chart 5) with a rebound unlikely until next spring.

U.S. Electronic Equipment Orders Down - Communication Equipment Orders Dip in November

In the United States total electronic equipment orders continued to decline in November (Chart 6) as communication equipment orders plummeted over the last two months (Chart 7) in the face of a “slight” improvement in computer equipment bookings (Chart 8).

Japanese Update

In Japan electronic equipment production slid 2% in October (Chart 9) in spite of a big jump in the consumer sector. (Chart 10) summarizes Japanese electronic equipment production by sector for the first 10 months of 2007. Printed circuit board shipments (Chart 11) also improved; however, semiconductors and LCB panels dominate Japan’s electronic component production (Chart 12).

North American Printed Circuit Boards – Soft Demand at Year End

Despite a 3-month average book/bill of 1.06 in November (Chart 13) and bookings up 11.8% in November 2007 versus November 2006 (Chart 14), actual demand softened. Per (Chart 15), very weak orders in 11/06 (not strong orders in 11/07) caused the 11.8% order growth.

DRAM Makers Trim Output to Spot Market in Attempt to Stabilize Contract Quotes DRAM makers plan to trim supply to the spot market in an attempt to stabilize the overall pricing environment according to DigiTimes. Their intent is to avoid drastic price drops in the contract market. Pricing of 512Mb DDR2-667 chips closed at U.S.$0.88 whereas 1Gb chips closed at U.S.$1.75 in the second half of December (Chart 16).