Taiwan/China May Sales - Seasonal Recovery Continues; Modest Optimism for Auto Sales & World Economy; Unimicron/PPT Merger; Global Disk Storage Update

06.15.2009 // Posted by: Walt Custer // Posted in: Articles, Industry Conditions

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Global Economy: deep trough but some encouraging comments

Global GDP growth went negative in 1Q’09 (Chart 1) and the most recent industrial production growth data (through April) still painted a bleak picture (Chart 2).

However a recent meeting of the G8 nations (Chart 3) gave indication that the major economies have seen the worst of this recession and their focus may soon shift from “stimulus” to “inflation control.”

Auto sales recovering (slightly) from a deep trench

U.S. and European auto shipments may have now “bottomed” (Chart 4 & Chart 5) but it will be a long climb to regain pre-2008 levels.

European car sales to increase in 2010 and almost return to 2008 Sales level by 2014

(Chart 6 & Chart 7)

"Because automotive is among the most important of European industries-perhaps the most important-many governments have passed stimulus packages to help stabilize their auto markets during the recession," said Egil Juliussen, principal analyst and fellow for automotive electronics at iSuppli, "the most popular stimulus is the so-called scrappage incentive that gives buyers of new cars a discount if they trade in old cars that generate more air pollution than new, cleaner vehicles."

• Germany's incentive of €2,500 for a new car started in mid January and immediately impacted sales. The nation's auto sales increased by nearly 17% in February, jumped by 40% in March and grew by another 18% in April, compared to the same months in 2008.
• France's incentive, which started in December, 2008, was €1,000 euros, so its impact was less.
• First-quarter auto sales in France declined by 3.9% compared to the same period in 2008, which is actually a relatively strong performance compared to overall double-digit decline in Europe.
• Europe is the largest auto production region in the world, and is a net exporter of autos.
• European auto production in Q109 compared to Q108 dropped by 46% in France, 33% in Germany, 40% in Italy and more than 50% in the UK.

The good news is that Q1’09 was most likely the bottom of the downturn for Europe and auto production declines will be smaller in the remaining quarters of 2009.

The only area to rise in 2009 will be ADAS, which will manage a slight sales increase in 2009. ADAS consists of ultrasonic and camera park assist, adaptive cruise control, lane departure warning and blind spot detection systems.

Source: Electronics Weekly & iSuppli

Taiwan/China May Data

Electronic equipment production in Taiwan/China followed its normal seasonal pattern although May 09 was 7% below May 08 based upon composite monthly sales of 101 Taiwan listed OEMs, many with manufacturing in China (Chart 8). On a 3/12 growth basis revenues for March+April+May 2009 were down 4% compared to the same months in 2008 (Chart 9).

Computer motherboard producers (Chart 10) and ODMs (Chart 11) both showed similar monthly sales patterns compared to the OEMs.

TFT panel producers (Chart 12) have seen sales improve – partially due to increased internal demand in China. However May 09 was 39% below May 08.

Taiwan listed wafer foundries (Chart 13) reported a decent May increase although May 09 was still 25% below May 08. Most of the large chip foundries are in Taiwan or China (Chart 14).

Taiwan-listed chip foundries monthly revenues have historically been a leading indicator for global semiconductor shipments (Chart 15).

Package & Test companies (Chart 16) enjoyed a sharp May recovery while memory chip makers (Chart 17) and passive component producers (Chart 18) reported sales well below 2008 levels.

Taiwan-listed printed wiring board companies (Chart 19) had a relatively good May but were still 10% below May 2008. Remarkably these companies aggregate net income vs. sales remained positive (barely) during the sharp 1Q’09 downturn (Chart 20).

CCL base material makers did not see the same May surge as their PCB producing customers (Chart 21). Recent news stories indicate that PCB inventory replacements partially drove the printed circuit sales increase.

Vendors of capital equipment for the PCB, LCD and touch screen industries continued to struggle (Chart 22) but history tells us that capital equipment sales trail the PCB business cycle by 6-9 months.

Unimicron to merge with PPT

PCB makers Unimicron Technology (Chart 23) and Phoenix Precision Technology (Chart 24) have agreed to merge, with the effective merger date tentatively set for December 1, 2009. The company name after the merger will remain as Unimicron, according to the companies.

Unimicron saw its consolidated May revenues increase 5.6% to NT$3.44 billion (US$105.07 million) and said its current utilization rate has improved to more than 80%, representing relatively outstanding performance compared to its rivals.

Source: DIGITIMES

Global storage market shrinks in 1Q’09 (Chart 25)

Revenues for the external controller-based disk storage market worldwide totaled US$3.8 billion in the first quarter of 2009, an 11.1% decline from the same period in 2008, according to Gartner.

"The on-year double-digit decline primarily resulted from the economic downturn and longer sales sycles," said Donna Taylor, principal research analyst for Gartner's global Storage Quarterly Statistics program.

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