Global Electronic Equipment Production – Growth Flattens (in Positive Territory)

Per ( Chart 1 ), at the end of 4Q’08 world electronic equipment growth had slowed to +14% (3/12 basis) in Southeast Asia, leveled at +10% in Europe, flattened at +8% in the United States and was down 2% in Japan.

In March electronic equipment shipments were flat in euros (despite rising sharply when denominated in further weakened U.S. dollars). See
( Chart 2 and Chart 3 ). Japan saw a seasonal improvement in March ( Chart 4 ); however, its 3-month growth was off 4% ( Chart 5 ).

	Chart 1

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	Chart 3

U.S. Industrial Output Plunged in April ( Chart 4 )

	Chart 4

	Chart 5

Revised Historical U.S. Electronic Equipment and Component Data

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Weak Consumer Electronics and PC Demand will Cause Low Sequential Sales Growth in 2Q’08 says Nan Ya Printed Circuit Board

Per DigiTimes “In light of a weak demand trend for both consumer electronics and PCs in 2Q’08, Nan Ya Printed Circuit Board estimates corresponding quarterly sales growth will be smaller than 5% for the quarter.”

Nanya PCB indicated that there are no obvious growth drivers for quarterly revenues, with flip-chip substrates key to maintaining sales.

Third-quarter business outlook is more optimistic, said NPC. Citing historical sales patterns, NPC projected 3Q’08 sales growth should be in the 10-15% range. The company noted in saying that PC demand in the third quarter will trend better than expected, with overall shipments to grow by 11% on year. As Intel transits its CPU lineup to 45nm and chipsets to 60nm, NPC is confident in seeing stronger benefit in the long term.

Motherboard PCB Pricing to Rise

Due to rising material costs and an expected seasonal upturn for PCs, PCB makers are preparing to pass on their rising costs to customers, according to DigiTimes’ sources.

Reportedly leading notebook PCB makers including Hannstar Board and Gold Circuit Electronics have already started negotiations with customers for price adjustments, though concrete rates have not yet been discussed.

PCB makers are experiencing rising material and labor costs in China. ASPs for copper clad laminate have grown 7% through 2Q’08. Whether further price adjustments will be seen in June is uncertain.

Of the leading CCL makers, Iteq noted that there is a 2-month gap between copper costs and CCL ASPs. Iteq said a price adjustment seems unlikely in June, but a possible adjustment may be made in 3Q’08.

Taiwan Suppliers to Raise Notebook PC Prices in 2Q’08

Responding to prolonged price hikes of raw materials worldwide, Taiwan-based contract suppliers of notebook PCs, including Compal Electronics, Wistron and Quanta Computer all plan to raise prices in 2H’08.

Per DigiTimes, institutional investors said that contract suppliers wish to raise prices of barebone notebook PCs by 10%, or U.S.$20-25 per unit, from the current U.S.$200-250, saying that such a price increase is supposedly acceptable for the world`s leading notebook PC brands.

In addition to sharply increasing prices of oil and raw materials, Simon Lin, chairman of Wistron said that notebook PC’s contract suppliers have also weathered growing labor costs since last year when Chinese government passed new labor laws to protect the lowest paid people. To cope, the suppliers have managed to not only cut production costs but also push up prices.

Source: Digitimes

CCL Makers Expect Encouraging Penetration of Environmentally-friendly Laminate

Japanese laminators claim that 15-20% of the laminates that they produce are halogen-free. Probably, Sony is the largest user of halogen-free materials due to its accident in the Netherlands several years ago when its TVs were assembled with PCBs that used brominated laminate had caught fire and the harmful gases caused the TV viewers to seek medical assistance.

Many US OEMs want to use halogen-free laminates, but “I heard” that when the PCBs with "green" laminates are quoted at higher prices than normal priced PCBs, they decide against it.

Source: Dr. Hayao Nakahara

Worldwide Server Shipments Grew 8% to 2.3 Million Units; Revenue Increased 4% to US$13.6 Billion in Q1 2008
( Chart 10 and Chart 11 )

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	Chart 11

Worldwide server shipments for the first quarter of 2008 increased 7.6% over the same quarter last year, while worldwide server revenue for the same period climbed 4.3%, according to Gartner Inc. Worldwide server revenues totaled US$13.6 billion for the quarter, as worldwide servers shipments reached just under 2.3 million units.

"There were a number of dynamics that affected the market to produce an initial quarter of growth for 2008," said Jeffrey Hewitt, research vice president at Gartner. "For example, x86 server replacements were on an upswing as the year commenced; we continued to see build outs of large Web datacenters, and emerging-market growth forged ahead."

"RISC-Itanium Unix servers fell in shipments but showed a small amount of growth in revenue," Hewitt said. "In this segment, shipments fell 8.4% while revenue grew 3.7% for the quarter."

Samsung #1 in 1Q’08 Global LCD Monitor Market Share

Samsung had the top market share for worldwide LCD monitor shipments in Q1’08 according to DisplaySearch.

**Does not include Gateway or eMachines Brands

DRAM Contract Prices Sustain Upward Trend through May

Per DigiTimes DRAM contract prices maintained an upward trend throughout May, with prices of all mainstream DRAM chips increasing by double digits during the month.

Germany's Semiconductor Book to Bill was .94 in April - ZVEI

See ( Chart 12 ).

	Chart 12

Chrysler Purchasing Seeks 25% Reduction in Parts Prices

Chrysler's new global sourcing initiative is seeking a 25% component cost reduction over three years by its key suppliers, according to John Campi, Chrysler’s Exec VP and chief procurement officer.

A Chrysler spokesman told Automotive News that it plans to make some significant changes in its manufacturing and purchasing operations to help suppliers meet the cost-reduction target. He said Chrysler will give suppliers 30 days' notice of its production schedule; share more parts across car lines; reduce late engineering changes and split savings with suppliers.

Source: Purchasing Magazine