Slowdown Signs are Pervasive

Most economic data series confirm a global economic slowdown. No surprise!

Industrial production growth is in negative territory for the USA, Canada, Japan and most of Europe ( Chart 1 ). And oil prices have plummeted
( Chart 2 ) as global demand has sagged.

	Chart 1

	Chart 2

In the U.S. consumer confidence ( Chart 3 ), housing starts ( Chart 4 ), the NAHB/Wells Fargo Housing Market Index ( Chart 5 ), the Conference Board CEO Confidence Index ( Chart 6 ) and the Silicon Valley Venture Capitalist Confidence Index ( Chart 7 ) are all at or near historical lows. We’ll keep watching these indices but no recovery appears to be imminent.

	Chart 3

	Chart 4

	Chart 5

	Chart 6

	Chart 7

Japanese Printed Circuit Board production

Thanks to the diligence and hard work of my friend and colleague, the ubiquitous Dr. Hayao Nakahara, ( Chart 8 ) lists the top 25 Japanese PCB producers with their 2005, 2006 & 2007 sales. Naka reports that Japanese-owned PCB producers (including their foreign subsidiaries) produced 32% of the world’s printed circuits in 2007 ( Chart 9 ).

	Chart 8

	Chart 9

However, Japan is also feeling the current global economic pinch. Domestic Japanese PCB shipments have been slowing throughout 2008 based upon the monthly JPCA trade association statistical survey ( Chart 10 ) as 3-month growth ( Chart 11 ) has dipped to 0.957 (-4.3% compared to same 3 months in 2007). ( Chart 12 ) provides domestic Japanese PCB production by type for the first eight months of this year.

	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

North American SEMI Industry - September 2008 Book-to-Bill Ratio 0.76 ( Chart 13 & Chart 14 )

	Chart 13

	Chart 14

North America-based manufacturers of semiconductor equipment posted $754 million in orders in September 2008 (3-month average basis) and a book-to-bill ratio of 0.76 according to SEMI. The 3-month average of worldwide bookings in September 2008 was 13% less than August 2008 and 39% less than September 2007. The 3-month average of worldwide billings in September 2008 was $990 million, 7% less than August 2008 and about 36% less than September 2007.

“The continued decline in capex spending is accompanied by a major global economic downturn that may have a significant impact on overall consumer electronics spending,” said Stanley T. Myers, president and CEO of SEMI. “Clearly, concern over these larger economic issues is restraining any immediate capacity investment plans.”

2008 Cellphone Sales: Gartner Cuts Growth View ( Chart 15 )

	Chart 15

Mobile phone sales will grow slower this year than previously estimated as economic turmoil hits demand in Europe and Asia-Pacific regions. Gartner said it has cut its volume growth forecast for the handset market to around 8% from above 10%. “We have changed our view of the market,” Carolina Milanesi, a Gartner analyst stated. She said the forecast was changed before Nokia released its weaker than expected third quarter earnings.
Source: Reuters

Notebook PC Shipment Outlook Positive, Volume Up in Q2’08 and Strong Through 2009

Despite the dismal outlook of many industries, DisplaySearch expects the notebook PC market to remain strong through the rest of 2008 and well into 2009. DisplaySearch analyzed the trend towards desktop PC replacement with notebook PCs and the surging popularity of Mini-Note PCs (also known as netbooks) and how they are expected to propel the market for all such portable computing devices to 23% Q/Q and 38% Y/Y growth rates in Q3’08. The fourth quarter is also expected to be strong, with forecasted growth of 19% Q/Q and 44% Y/Y. The combined market for these two product categories is expected to be more than 153 million units in 2008.

Worldwide PC Market Grew 15% in 3Q’08 on Strength of Mini-Notebook Shipments
Industry Feeling the Impact of the Economic Crunch ( Charts 16, 17, 18 & 19 )

Worldwide PC shipments reached 80.6 million units in 3Q’08, a 15% increase from 3Q’07 said Gartner, Inc.

“The mini-notebook segment experienced strong growth in the global PC, led by robust growth in the Europe, Middle East and Africa (EMEA) region,” said Mika Kitagawa, principal analyst for Gartner’s Client Computing Markets group. “In the North America market, the economic crunch created more interest in the sub $500 segment. Because the mini-notebook is still a new segment, it is too early to determine if the emerging segment created new market opportunities, or if it cannibalized lower priced systems.”

“At the same time, global PC market finally felt the impact from global economic downturn. The U.S. professional market experienced the biggest hit from the economic crunch. The U.S. home market saw definite softness in PC sales after a few quarters of strong growth,” Ms. Kitagawa said. “The Asia/Pacific PC market was impacted by a slowdown in China. PC growth in Latin America was slow relative to historical levels, but it was still in line with the forecast.”

Gartner slashes 2009 tech spending forecast: “In a worst case scenario, our research indicates an IT spending increase of 2.3% in 2009, down from our earlier projection of 5.8%.”

Gartner sharply cut its forecast for global technology spending next year, seeing a drop in spending in Western Europe and a slim rise in the United States. It said that information technology spending could rise only 2.3% in 2009, with businesses cutting back as the economic crisis spreads.

“Developed economies, especially the United States and Western Europe, will be the worst affected, but emerging regions will not be immune,” Peter Sondergaard, Gartner’s senior vice president and head of research said.