Not surprising recent global growth forecasts for 2008 and 2009 have been agressively reduced for the entire electronics food chain ( Chart 1 and
Chart 2 ). Thanks to Ed Henderson of Henderson Ventures and Gartner for their “just updated” prognostications.

World GDP growth has slowed ( Chart 3 ) and the near term outlook is not encouraging.

	Chart 1

	Chart 2

	Chart 3

U.S. Economists Expect U.S. Crisis to Deepen ( Chart 4 )

	Chart 4

The U.S. economy has sunk into a recession and government action is critical to stem the damage, according to economists in the latest Wall Street Journal forecasting survey.

If those predictions bear out, it would mark the first time U.S. GDP (the total value of goods and services produced) has contracted for three consecutive quarters in more than a half century. Economists put the odds of recession in the next 12 months at 89%, up from 60% in last month's survey.
Source: Wall Street Journal

Taiwan/China – Mixed Results in September

September financials were available for most Taiwan-listed electronics companies (often with manufacturing in China). Electronic equipment (OEM) sales increased a respectable 11% in 9/08 versus 9/07 ( Chart 5 ), but ODM revenues declined 1% ( Chart 6 ) and motherboard sales dropped 17%
( Chart 7 ). Displays ( Chart 8 ) and memory ( Chart 9 ) also had an uninspiring September – a month when the “fall busy season” should be well underway.

	Chart 5

	Chart 6

	Chart 7

	Chart 8

	Chart 9

Disturbingly Taiwan’s chip foundries reported a sharp drop in September revenues. These companies have historically been a leading indicator to global semiconductor shipments ( Chart 10 ).

	Chart 10

Rigid printed circuit board shipments rose nicely yet copper clad laminate remained in the doldrums ( Chart 11 ) - Truly a “mixed bag.”

	Chart 11

Worldwide Semiconductor Capital Equipment Spending to Decline 26% in 2008 ( Chart 12 )

A collapse in memory spending, combined with a weak economy, is driving a major contraction in semiconductor capital equipment spending in 2008, according to Gartner, Inc. The slowdown is expected to continue into 2009 before the industry recovers in 2010.

	Chart 12

“The excess spending of 2006 and 2007 has hit home in 2008, as the semiconductor equipment industry will continue to feel the pinch well into 2009,” said Dean Freeman, research VP for Gartner's semiconductor manufacturing group. “The oversupply in the memory sector and a slowdown in consumer spending due to the economic crisis in most of the G8 economies are having an impact on consumer electronic consumption, which in turn impacts foundry and integrated device manufacturer (IDM) spending.”
Source: Gartner

Flextronics Commits to OEMs in Solar Industry

Flextronics underscored its commitment to support the manufacturing requirements of solar OEMs with complex market delivery requirements in an increasingly competitive environment. As part of this commitment, Flextronics' Industrial segment created a global team dedicated to advanced solar solutions that operates in designated centers of excellence to support solar customers worldwide.

Flextronics Industrial’s commitment includes expertise in the following markets:

• Semiconductor capital equipment, energy and electro-mechanical equipment
• Solar capital equipment
• PV module assembly and manufacturing
• PV component assembly
• Photovoltaic concentrators
• Balance of System (BOS) products

Solar Industry Growth

EMS and material/process equipment focus on the solar/photovoltaic industry is easy to understand. The entire PV market is enjoying a massive expansion ( Chart 13 ). Taiwan-listed solar panel related companies ( Chart 14 ) continue to experience high double-digit growth

	Chart 13

	Chart 14

Applied Materials CEO: Solar may be 25% of '09 sales ( Chart 15 )

Applied Materials' solar equipment business could make up as much as 25% of its sales in 2009, up from about 10% this year, CEO Mike Splinter said. Splinter said orders from its solar customers were still strong, despite a weakening global economy and tightening credit outlook.

	Chart 15

"Our pipeline is still full, people are still very interested in both expanding capacity and developing new capacity in the solar cell area," Splinter said. "We are working hard to make sure we can fulfill those needs."
Source: Reuters

Global Cell Phone Demand Wanes

The global cell phone market should grow at much slower-than-expected rates next year as consumers put off buying new devices due to lengthening phone replacement cycles and weakening economies around the world for their weaker sales estimates.
Source: Reuters

Euro's Fall versus Yen Squeezing Japanese Exporters' Earnings

Earnings at some Japanese exporters may take a harder hit from the weaker euro than the dollar's fall against the yen. The euro in early October slipped below 140 yen for the first time in two and a half years (10-20 yen lower than Japanese firms had assumed at the beginning of the fiscal year).
Source: Nikkei