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Walt Custer reports on the current industry conditions of Japan and North America. He also mentions that metal prices, such as copper, tin, gold, and silver, are at record highs. .

Japanese and North American Market Updates: Metal Prices near Peak; Global SEMI Equipment Demand Slowing

Walt Custer March 31, 2008

Japanese End Market & Component Update

JEITA just released January electronic equipment and component shipments.  Japan’s electronic equipment production was up 1% in Jan’08 vs. Jan’07  (  Chart 1 ); however, the 3/12 rate of change (Nov’07 to Jan’08) versus (Nov’06 to Jan’07) was down 3%  (  Chart 2 ).  End market demand is lackluster.

                           

Japanese PCB shipments rose 3% in Jan’08 versus Jan’07 and 3.8% for total 2007 compared to total 2006 (  Chart 3 ). (  Chart 4  and   Chart 5 ) show total Japanese electronic component production for all of 2007 and also January 2008.

                                         

U.S. End Markets – Shipments Decline but Orders Improve

U.S. electronic equipment demand was surprisingly strong in February.  The 1-month book/bill was 1.09 ( Chart 6 ); however, this apparently lofty B/B occurred primarily because shipments dropped substantially while orders just “inched up” ( Chart 7 ).  Based upon 3/12 order and shipment growth
( Chart 8 ), electronic equipment orders (the leading indicator) are improving.

Although the United States teeters on recession, perhaps the weak dollar is aiding exports enough to maintain stable domestic orders.  Based up the preliminary (durable goods) February data release total electronic equipment shipments dropped.  Both communication ( Chart 9 ) and computer
( Chart 10 ) shipments were stable suggesting that the military or instrument & control sectors saw a February shipment plunge.  We’ll know more Wednesday, April 2 when the more detailed U.S. DOC “Factory Orders” report is released.

 

North American PCB Demand Holding

North America PCB orders and shipments also held through February ( Chart11 ).  For the companies reporting to IPC’s statistical program (the survivors), rigid PCB orders were up 15.6% and flex circuit orders rose 12.4% compared to February 2007 ( Chart 12 ).

                           

( Chart 13 ) shows monthly orders and shipment from January 2006 to February 2008 for North American rigid PCB makers. Both PCB and electronic equipment orders have completed a mid-2007 “correction” and are now in a modest growth mode ( Chart 14 ).  I am not sure how long this expansion will continue - in this economically difficult environment.  Taking a longer-term view ( Chart 15 ) North American PCB production has been dropping about 5% per year since 2002.

                                         

Metal Prices Still "Pricey"

Metal prices remain high.  Copper (  Chart 16 ), tin (  Chart 17 ) gold (  Chart 18 ) and silver (  Chart 19 ) are all at or near their long term pricing highs.

                                         

Worldwide sales of semiconductor manufacturing equipment totaled $42.77 billion in 2007, a year-over-year increase of 6% (  Chart 20  &  Chart 21 ).

"Supported by the momentum of the 300 mm ramp and intensive memory investments, the global semiconductor equipment industry experienced its second best year ever," said Stanley T. Myers, president and CEO of SEMI. "Of note are the Taiwan and China regions where Taiwan has surpassed Japan and the China new equipment market is approaching the size of Europe's new equipment market."

For the first time, the Taiwan market region spent more on semiconductor equipment than any other region, growing 46% over 2006 to reach US$10.65 billion. Japan claimed the number two spot with $9.31 billion in equipment sales. South Korea ascended to third place reaching $7.35 billion, passing North America at $6.55 billion. China continued with its expansion by growing 26 percent over 2006, reaching $2.92 billion. The Rest of World region, which aggregates Singapore, Malaysia, Philippines, other areas of Southeast Asia and smaller global markets, decreased 18%. The equipment market in Europe decreased 8% in 2006.

The global wafer processing equipment market segment increased 11%; the assembly and packaging segment grew 15%, the total test equipment sales decreased 21%. Other front end, which includes mask/reticle equipment, fabrication facility, and wafer manufacturing equipment increased 2%.

Source: SEMI-SEAJ