Electronic equipment production continues to slow ( Chart 1 ). North America, Japan, and Europe are all seeing declining growth. Taiwan/China (although at +14.6% 3-month growth in May) is at its lowest expansion rate since early 2002.

	Chart 1

European End Market Growth Slows

Europe saw flattening communication equipment production and a decline in computer equipment output in April ( Chart 2 ). Industrial electronics and instrument demand continues to hold. With the recently stabilized U.S dollar/euro exchange, both the euro & dollar denominated electronic equipment production growth is now declining in Europe ( Chart 3 ). The former weakening U.S. dollar strengthening euro is no longer inflating dollar-denominated growth.

	Chart 2

	Chart 3

Japan had a difficult April

Electronic equipment production in Japan was down 10% this April compared to April ’07 ( Chart 4 ), as 3-month growth slipped to -5.5% ( Chart 5 ).
( Chart 6 ) shows total Japanese electronic equipment and component shipments for January-April ’08 as reported by JEITA. Electronic component growth slipped to +2.7% on a 3-month basis. Japanese printed circuit shipments ( Chart 7 ) peaked in October 2007 and are now in negative growth territory ( Chart 8 ).

	Chart 4

	Chart 5

	Chart 6

	Chart 7

	Chart 8

North American Semiconductor Equipment Industry Posts May B/B ratio of 0.79 ( Chart 9 and Chart 10 )

	Chart 9

	Chart 10

North America-based manufacturers of semiconductor equipment posted $1.03 billion in orders in May 2008 (3-month average basis) and a book-to-bill ratio of 0.79 according to SEMI.

The May ’08 3-month average of worldwide bookings was $1.03 billion, about 5% less than April 2008 and about 37% less than May 2007.

The 3-month average of worldwide billings in May 2008 was $1.31 billion - about 2% less than the April 2008 and about 21% less than the May 2007.

"Bookings are approaching levels observed in 2005, which was the last time the semiconductor industry reported a year-over-year decline," said Stanley T. Myers, president and CEO of SEMI. "The data does not indicate a change in this trend over the next quarter."

SEMI Reports First Quarter 2008 Worldwide Semiconductor Equipment Figures; Billings US$10.56 Billion ( Chart 11, Chart 12, Chart 13, & Chart 14 )

	Chart 11

	Chart 12

	Chart 13

	Chart 14

SEMI reported that worldwide semiconductor manufacturing equipment billings reached $10.56 billion in the first quarter of 2008, 7% greater than 4Q’07 and 2% less than 1Q’07.

"While bookings have weakened in the first quarter, overall industry billings remain at levels higher than the end of last year," said Stanley Myers, president and CEO of SEMI. "Some regions, specifically North America, Korea, and China, posted strong quarter-over-quarter growth in spite of the conservative capital environment."

IC Distributors see Stockpiled White-Box Handset Inventory in China

Despite leading handset chipmakers guiding a positive outlook for 2H’08, sources at IC distributors have revealed white-box handset inventory has stockpiled in the Chinese market.

The sources noted in saying that white-box handset customers from China are currently very conservative over booking, in contrast to the aggressive pre-stocking as seen in previous years.

In addition to the gloomy economy, another reason said to be responsible for the dampening sales is that leading handset vendors have strengthened ties with local telecom service carriers resulting in competitive price offerings for branded devices.

Source: Digitimes

China Raises Fuel Prices 17 to 18%

According to the Wall Street Journal, China raised government-set domestic prices for fuel and electricity, responding to increasing shortages at home and growing global criticism that its energy subsidies are fueling global price increases.

The Wall Street Journal noted that China has kept its price controls in place because of fears that raising them could hurt the country’s poor rural residents at a time when consumer inflation is already at decade-high rates.

China is the world’s second-largest energy consumer and is forecast by the International Energy Agency to account for more than half of the global oil demand growth of 800,000 barrels a day in 2008.

Vietnam’s Electronics Industry Targets to Reach U.S. Dollar

Frost & Sullivan Asia Pacific reported that Vietnam is emerging as an important EMS/ODM and semiconductor manufacturing services destination. In January 2007, Vietnam entered the World Trade Organization. Vietnam’s low-cost of labor, availability of trainable local population and favorable government policies are attracting global EMS/ODM companies to set-up operations in this country.

The government’s emphasis on making electronics a key export earner is pushing Vietnam to migrate to the path of high-tech industry. The country is also experiencing rapid increase in semiconductor consumption. Many investors feel that it is easier to do business in Vietnam than in China due to lesser regulatory hassles and business-friendly government policies. The country has witnessed a double-digit growth rate. In recent years, electronics and IT industries have recorded an average growth rate of 25-35% a year.

iPhone 3G Suppliers

Infineon, Broadcom, and Foxconn Electronics will be key component suppliers for Apple’s 3G iPhone, said China’s Commercial Times newspaper. Also included are touch-screen panels from Sharp, camera modules from Altus Technology and Primax Electronics, camera lenses from Largan Precision and Genius Electronics Optical, integrated circuit packaging from Siliconware Precision Industries, and PCBs from Unimicron Technology, Nanya PCB, and Compeq.