U.S. Durable Goods Orders Drop in March, but Electronic Equipment Demand Improves

First the bad news:
New orders for manufactured durable goods in March decreased $0.7 billion or 0.3% to $212.2 billion, the U.S. Census Bureau announced. This was the third consecutive monthly decrease and followed a 0.9% February decrease. Excluding transportation, new orders increased 1.5%. Excluding defense, new orders increased 0.3%. Shipments of manufactured durable goods in March, down four of the last five months, decreased $0.8 billion or 0.4% to $210.1 billion. This followed a 2.6% February decrease.

Now the good news:
U.S. electronic equipment orders increased 1.9% in March versus February 2008 ( Chart 1 ) and 9.4% comparing March 2008 to March 2007. The 1-month electronic equipment book/bill ( Chart 2 ) improved to 1.06 (stronger orders & weaker shipments) and the 3/12 (3-month growth) of orders reached 1.09 (Chart 3 ). All end market categories’ orders are holding relatively steady ( Chart 4 ). Is the weak dollar boosting exports significantly even in the face of a domestic recession?

	Chart 1

	Chart 2

	Chart 3

	Chart 4

North America Printed Circuit Industry Rebounds ( Chart 5, Chart 6 & Chart 7 )

	Chart 5

	Chart 6

	Chart 7

Per IPC - Association Connecting Electronics Industries, North American rigid PCB shipments increased 9.5% and bookings rose 16.2% in March 2008 from March 2007. "The book-to-bill ratio has returned to parity and March sales of PCBs in North America are up nearly 10% over last year" said IPC President Denny McGuirk. "Despite the current economic worries, these numbers look very encouraging."

Maquiladoras making a comeback in Nogales, Mexico
Fuel costs, China worries boost border city in Sonora

According to The Arizona Daily Star (Tucson) after nearly collapsing at the beginning of the century, the maquiladora industry in Mexican border city Nogales is re-emerging. The 43-year-old industry is fighting low-wage competition from China by recruiting aerospace, medical and military suppliers to move manufacturing jobs to Nogales, said Thomas Skwiat, marketing manager for Nogales, Arizona-based Collectron International, which helps U.S. and European firms set up maquiladora operations in Mexico.

Skwiat said manufacturing in a neighboring state means companies can save money in transportation costs and time in getting products into the hands of U.S. consumers. That's particularly important with oil prices approaching a record $120 per barrel. "In today's market, more than ever, companies want that quick response," Skwiat said.

Between 2001 and 2003, Nogales, Sonora, lost 12,000 of its 38,000 maquiladora jobs, said Jesus Montoya, executive director of the Maquiladora Association of Sonora.

Taiwan's PCB demand remains weak

Per DigiTimes the demand for PCBs remains weak as seasonal effects persist. (Taiwan-listed) makers generally expect sales to grow only 5-10% for the second quarter ( Chart 8 ).

	Chart 8

Some PCB makers have already received orders from clients for May, but order visibility can only be extended to one to two weeks, the players said, adding growth momentum for April and May has been weak.

Presumably both weaker global end market demand and the strengthening Taiwanese NT$ ( Chart 9 ) and Chinese yuan ( Chart 10 ) are impacting exports.

	Chart 9

	Chart 10

1Q’08 Cell Phone Shipments up 14.3% vs. 1Q’07 ( Chart 11 & Chart 12 )

	Chart 11

	Chart 12

The worldwide mobile phone market experienced an expected sequential downturn in shipments following a busy holiday quarter. According to IDC, vendors shipped 291.6 million units in 1Q’08, down 11.6% from the 330.8 million units shipped in 4Q’07.

"The mobile phone market will be under increased pressure from a number of factors that compete for users' attention and wallets," said Ramon Llamas, senior research analyst with IDC's Mobile Device Technology and Trends team. "Disposable income is being eroded by rising food and fuel prices and worries about global financial markets and slow economic growth are creating a cautious outlook for the months ahead. Against this backdrop, many emerging markets continue to offer tremendous growth potential and IDC expects highly competitive pricing and innovative service plans will keep the overall market on track for the year."

2007 World HDD Shipments Rose 18.9% YoY to 516 Million Units ( Chart 13 )

	Chart 13

Worldwide hard disk shipments grew 18.9% to 516 million units in 2007 up from 434 million from in 2007 according to researcher iSuppli. Factory revenue for HDDs grew from $31.2 billion in 2006 to $32.8 billion in 2008.

Vietnam: Thousands of Workers Strike

Per Manufacturing.Net and AP more than 4,000 workers walked off the job at a Ho Chi Minh City factory, demanding higher pay to keep pace with rising inflation.

Workers asked for an increase in their average monthly salary of 850,000 Vietnamese dong (US$53), said Nguyen Quang Hung, human resource manager of Hue Phong Footwear. The company agreed to increase their salary 38% to1,170,000 Vietnamese dong (US$73). That's about 75% higher than the minimum wage for workers at Vietnamese-owned firms.

Consumer prices in Vietnam are 19% higher than they were a year ago.

SIA Offers a Directory of Authorized Chip Distributors

The Semiconductor Industry Association launched a directory of authorized chip distributors to counter the rising problem of chip counterfeiting.

"Over the last two years many of the components we have found were destined for use in avionics, many of them in military applications," said John Sullivan, chairman of the SIA's Anti-Counterfeiting Task Force and director of worldwide security for Texas Instruments.

"This problem is really rising to the level of national security, public health and safety," said Sullivan.