Global electronic equipment sales and profits (OEM shipments) were up 11% in the first quarter of 2008 ( Chart 1 ). However, due to both seasonality and weakening demand, inventories climbed throughout the supply chain ( Chart 2 ).

	Chart 1

	Chart 2

In the United States (somewhat surprisingly) electronic equipment orders and shipments ( Chart 3 ) maintained a continued upward trajectory. Stock levels are generally reasonable - although communication equipment inventories have recently begun to creep upwards ( Chart 4 ).

	Chart 3

	Chart 4

U.S. end market performance is mixed. Automotive sales ( Chart 5 ) have “hit the skids” while both military and commercial aircraft shipments are strong ( Chart 6 ). In the first quarter of this year military electronics shipments rose 8% compared to the same quarter in 2007 ( Chart 7 & Chart 8 ). However, as the “hawkish” Bush administration “winds down,” less aggressive military spending may be on the horizon.

	Chart 5

	Chart 6

	Chart 7

	Chart 8

Instruments and control equipment ( Chart 9 & Chart 10 ) continued their “good ride.” And world telecom gear saw a 17% sales increase in 1Q’08 sales, but this double-digit growth was measured relative to a very weak 1Q’07 ( Chart 11 ). Data storage equipment (primarily hard disks) grew 18% in 1Q’08 vs. 1Q’07 ( Chart 12 ) but SEMI capital spending ( Chart 13 ) dropped due to overspending by the DRAM producers in 2007, weak demand and terrible memory chip pricing/margins.

	Chart 9

	Chart 10

	Chart 11

	Chart 12

	Chart 13

Electronic Components

Semiconductor purchases rebounded globally in March ( Chart 14 ) following a very difficult winter. The normal post-holiday slowdown was made worse by excess inventories, a slowing global economy, reduced demand for consumer electronics and heavy February snows in China. March chip demand in the United States looked more heartening ( Chart 15 ) as did North American printed circuit bookings.

	Chart 14

	Chart 15

Looking Forward

Despite many economic concerns the “bottom has not fallen out” of the electronics market - although rising inventories and higher consumer and wholesale prices are certainly a concern. 2008 will have its challenges!

General Market Comments

Here are some “snippets” from Custer Consulting Group’s Daily New service. E-mail me (walt@custerconsulting.com) if you would like an evaluation trial of this service. We also have a “Daily News” for the solar/photovoltaic panel industries.

Semiconductor & Passive Components

• Worldwide semiconductors sales increased 3.8% YoY to $63.4 billion in 1Q’08. - SIA
• World semiconductor capital equipment spending will decline 19.8% YoY to $47.5 billion in 2008. - Gartner
• Global IC packaging and testing industry is expected to enter a year of ‘stagnation’ in 2008, before staging an upturn in 2009. - SPIL chairman, Bough Lin
• Global contract chip foundry revenue rose 2.5% YoY in 2007 to $22.2 billion. - Gartner
• Worldwide fabless semiconductor revenue increased 7% YoY in 2007 to $53 billion. - Global Semiconductor Alliance
• SIA launched a directory of authorized silicon distributors to limit channels for fake chips.
• Global GPU market shipments dropped 5.6% to 95 million units in Q4’2007. - Jon Peddie Research
• LED-backlit large LCD notebook PC panel shipments are expected to reach 17.4 million units in 2008 and replace CCFLs in a few years.- iSuppli
• Bluetooth-enabled device shipments are forecasted to reach 982 million units in Asia by 2013. - ABI Research
• Global market for sputtered films and sputtering targets is expected to grow by a CAGR of 15.8% from $2.82B in 2007 to $5.88B in 2012. - BCC Research
• Global microsensor market is expected to increase 18.5% YoY to $3.2 billion in 2008. - BCC Research
• India’s design services market grew from $4.6 billion in 2006 to $6 billion in 2007.
• NAND memory chip market is forecasted to reach $15.2 billion in 2008. - iSuppli
• North American semiconductor equipment industry posted a Book-to-Bill Ratio of 0.89 ($1.29 billion in billings and $1.16 billion in bookings) in March 2008. - SEMI
• Top 10 OEMs accounted for $91B of 2007 semi purchases. - Gartner
• World digital power management ICs market earned revenues of $161.7 million in 2007 and is estimated to reach $266.5 million by 2011. - Frost & Sullivan
• Worldwide image sensor market is expected to increase by 10% YoY in 2008 to a record high of nearly $7.6 billion. - IC Insights

End Markets

• Worldwide PC shipments totaled increased 12.3% YoY to 71.1 million units in 1Q'08. - Gartner
• Worldwide HDD unit shipments grew 18.9% YoY to 516 million units in 2007. - iSuppli
• Worldwide mobile phone market grew 14.3% YoY to 291.6 million units in 1Q'08. - IDC
• An average U.S. household spent US$1,405 on consumer electronics in the past 12 months - CEA
• China’s electronics and IT industry revenue increased 17.7% to 766.7 billion yuan (US$110 billion) during the January to February period in which it produced 94 million units of mobile phones (up 14.3% YoY), 20 million units of microcomputers (up 22.7%), 13 million LCDs (up 18.6%) and 6.9 billion IC chips ( up 14.5 %).
• China's communication service subscribers increased 19.55% YoY to 574 million in March 2008. - MII
• China surpassed U.S. and claimed #1 spot in February with 220 million Internet users. - BDA China
• China’s mobile market increased 241% YoY to 150 million units in 2007. - CCID Consulting
• Europe’s Information and Communication Technology market grew 4.3% YoY to 739 billion euros ($1.18 trillion) in 2007. - EITO
• GPS devices and systems are forecasted to generate revenues of $240 billion by 2013. - ABI Research
• PDP module shipments reached 3.65 million units in 1Q08. - Displaybank
• Russian electronics market grew by 30% to over $2 billion in 2007. - cnews
• Russia’s cellular communications penetration level reached 128% in March, 2008. - J’son & Partners
• SIM card shipments increased 28% YoY to 2.7 billion in 2007. - SIMalliance
• 25% of notebook PCs to will solid state drives in 3 years - Toshiba Semiconductor President Shozo Saito