Many key world economic/market indices were updated in the last week.

U.S. Dollar Continues to Weaken

The euro  ( Chart 1 ) hit an all time high against the U.S. currency (approaching 1.52 $/euro). The Japanese yen ( Chart 2 ), Chinese yuan ( Chart 3 ) and Taiwanese NT$ ( Chart 4 ) all continued to strengthen.  The weak U.S. dollar helped to push dollar-denominated oil prices ( Chart 5 ) to over $100/barrel (although the euro price rise is more modest).

	Chart 1

	Chart 2

	Chart 3

	Chart 4

	Chart 5

Global Electronic Equipment - Slowdown Signs Persist

Per ( Chart 6 ) the most recent 3-month (3/12) growth of electronic equipment demand has slowed in Southeast Asia and Japan, flattened in Europe but (strangely) improved in the United States.  However, looking at the most recent (1-month) data, Europe ( Chart 7 ), Japan ( Chart 8 ), and Taiwan/China ( Chart 9 ) dipped and U.S. electronic equipment orders declined even though shipments rose ( Chart 10 ) as both domestic computer and communication equipment demand softened ( Chart 11 ).

	Chart 6

	Chart 7

	Chart 8

	Chart 9

	Chart 10

	Chart 11

Semiconductor Shipments Weaken Also

Globally the 3-month (3/12) growth of chip shipments hit “no growth” territory in January ( Chart 12 ) with the actual January numbers ( Chart 13 ) declining in all regions.  North American electronic assembly activity (based upon semiconductor demand) peaked in September ’07 and is now headed down for both seasonal and “weaker business conditions” reasons ( Chart 14 ).

	Chart 12

Foxconn Electronics (Hon Hai) ( Chart 13 )

Revenue grew 49% in 4Q’08 versus 4Q’07.

	Chart 13

	Chart 14

European Distributors’ Semiconductor Sales Fell 1.9% in '07  ( Chart 15 and Chart 16 )

According to DMASS (Distributors' and Manufacturers' Association of Semiconductor Specialists), European semiconductor distributors reported a 6% decrease in 4Q’07 (vs. 4Q’06) sales (to 1.21 billion euros) and a 1.7% year-on-year decline.

"After the record year 2006, a cyclical slowdown was almost inevitable," said Ian Bass, Chairman of DMASS. "I would call a decline of 1.9% a comparably soft landing."

Bass stated that: "Europe is doing much better than the numbers might suggest at the moment and it has huge opportunities to dominate some dynamic markets like industrial, automotive and increasingly environmental technology, globally. Europe is leading the development in those fields and will benefit from it in the next up cycle."

	Chart 15

	Chart 16

North American Semiconductor Equipment Industry Posts January 2008 Book-to-Bill of 0.89 ( Chart 17 )

North America-based manufacturers of semiconductor equipment posted $1.12 billion in orders and $1.27 billion in shipments in January 2008 (3-month average basis) and a book-to-bill ratio of 0.89 according to SEMI. The 3-month average worldwide bookings in January 2008 were down 3% from December 2007 and 22% less than January 2007.

	Chart 17

"Orders remain below levels reported in early 2007 and are consistent with the reduction in capital spending announced by many device manufacturers," said Stanley T. Myers, president and CEO of SEMI. "While new capacity will be added this year, the industry appears cautious about new investments in the near term."

Elcoteq Leaves Russia, Citing High Component Import Duties

Per The Moscow Times Elcoteq sold its 550-person St. Petersburg Russia plant to Flextronics because of low profitability due to high import duties on high-tech components.

"The problem is that it is cheaper to import ready-made goods into the country than the components," Elcoteq CFO Mikko Puolakka.

“Illegal” Strikes in Vietnam

Per a recent Japanese news article there have been frequent labor strikes at several Japanese enterprises in Ho Chin Min City. The article noted that it is normal in Vietnam to set new wages and bonuses from early February through the Luna New Year period.   One of the reasons for the strikes has been consumer price increases.  The January ‘08 consumer price index rose 14% vs. January ’07.  Workers have demanded wage increases of 20~30% to maintain their standard of living.  

Per Dr. Hayao Nakahara (based upon his translation from the original Japanese):

“I sent this article to his Japanese friend who operates a factory in Vietnam.  The friend then wrote me the following.”

“I don't know why, but this year, we have been experiencing very large scale strikes at the Japanese factories in Vietnam.  Sanyo Electric, Mabuchi Motors, Furukawa, Kao, etc., have all experienced "Wild Cat Strikes."

Unlike many previous strikes, the companies stood firm against these illegal strikers and took measures to dismiss the strikers' leaders and organizers, resulting in the workers returning back to work without gaining anything.

Many Japanese companies pay higher than average wages and this year, several have given their employees 15% wage increases, but the workers tend to think that they can get more money if they strike.   Finally, the government wrote a law on February 19th that states that the illegal strikers must compensate their employers with the losses caused by the strikes.   It would probably take more than 100 years for the strikers to pay the losses back and therefore, practically speaking, I cannot see the effectiveness of this law." wrote Naka.

Worldwide Server Unit Shipments Grew 7% and Revenue Rose 4% in 2007 ( Chart 18 and Chart 19 )

	Chart 18

	Chart 19

2007 worldwide server shipments increased 7.4% from 2006, while worldwide server revenue grew 3.8% in 2007, according to Gartner, Inc.

“The server market did exhibit growth for the fourth quarter and for the year as a whole,” said Jeffrey Hewitt, research Vice President at Gartner. “In fact, the fourth quarter climbed almost 11% in shipments and just under 3% in revenues in spite of the fact that there have been concerns about a slowdown due to downturns in certain economic sectors of particular geographies.”

Flash-based solid-state drive shipments to grow from 84,000 in 2007 to 1.5 million in 2008 and to 55 million by 2011
( Chart 20 )

	Chart 20

Per Purchasing Magazine and iSuppli prices for solid-state drives and hard-disk drives should fall as the two storage technologies compete against each other.

Growth Projections for Taiwan`s IT Sectors in 2008

According to CENS Taiwan’s production of electronic goods is expected to remain strong in spite of recession fears in the United Sates (and worldwide). Here is the Taiwan-based Topology Research Institute’s forecasts for 2008:

Source: Topology Research Institute