MarketEye: Generally "Slightly Better" News: End Markets, PCBs, Personal Computers, SEMI Equipment

06.30.2009 // Posted by: Walt Custer // Posted in: Articles, Industry Conditions

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U.S. May Electronic Equipment “Durable Goods” Orders Rebound Slightly

The U.S. electronic equipment book/bill ratio moved into positive territory (Chart 1) as 3/12 rate of change order growth may have finally hit bottom (Chart 2). Actual orders (Chart 3) increased slightly vs. the prior month while the ratio of inventories/orders eased modest (Chart 4). Communications equipment (Chart 5) and computers (Chart 6) saw slight order growth while domestically made semiconductor sales slipped a bit (Chart 7).

U.S. Recession to “Bottom Out” this Year: OECD

A severe U.S. recession will bottom out this year, but any recovery will be weak due to anemic markets and shrunken consumer wealth, the Organization for Economic Cooperation and Development said in late June.

"In this environment, a considerable degree of economic slack, especially in the labor market, is likely to persist ... bringing inflation to very low rates," the OECD said in a twice-yearly report on global economic conditions.

It estimated that U.S. national output will contract 2.8% in 2009 but grow 0.9% in 2010.

Source: Reuters

Japanese & SE Asian PCB Update

From Custer Consulting Group’s Daily News there was an article titled “Japan exports fall 40.9% in May.”

Dr. Hayao Nakahara responded:

Japanese PCB shipments are almost proportional to this article. The average loading at most of the PCB makers in Japan is about 65-70% from the viewpoint of equipment capacity. However, most of the PCB makers in Japan have shed about 20-40% of employment when their business nose-dived in the fourth quarter of last year and have not added manpower since then. The loading measured in terms of "manpower capacity" is not so bad, between 80 and 90% loading.

I am in the last stretch of a three-week China tour of PCB makers. The business situation here in China changed drastically since I was here for four weeks in March/April. The makers engaged in high-end MLB were loaded in March and April, but their loading is now around 70%. On the other hand, those makers catering to consumer electronics have had high loading since the beginning of May. Some of the PCB makers that I visited, which belong to this category, are fully loaded. One PCB supplier (with 5 million square feet per month capacity) for Panasonic flat TV programs is literally "fully loaded".

Unlike Japan, whose exports have been hurt by the strong YEN and poor consumption from its top two exporting countries, the United States and China, S. Korea's exports have been humming thanks to favorable exchange rates and strong products by Samsung Electronics and LG Electronics, which absorb more than 60% of Korean made PCBs. The Korean PCB makers report loading at 85-90% in general.

Although the outlook for July is not so clear, PCB makers in the Asian countries expect a stronger August and September. If this is not the case, the world PCB shipment in 2009 may plunge by 25% from 2008.

Source: H. Nakahara from Beijing

N. American PCB Industry Results for May 2009 (Chart 8), (Chart 9), (Chart 10), and (Chart 11)

N. American rigid PCB shipments were down 34.2% and bookings were down 25.7% in May 2009 from May 2008. Year to date, rigid PCB shipments were down 29.0% and bookings were down 32.2%. Compared to the previous month, rigid PCB shipments grew 3.6% and rigid bookings decreased 1.1%. The 3-month average book-to-bill ratio for the North American rigid PCB industry in May 2009 continued to climb and reached 1.03.

Source: IPC

Domestic PCB Orders Slip vs. End User Demand

The N. American PCB business cycle may be improving although per (Chart 12) domestic PCB orders have been generally deteriorating vs. U.S. electronic equipment. Although the 3/12 growth of N. American produced rigid PCBs appears to have hit bottom actual growth won’t resume until the 3/12 again exceeds 1.0. Domestic PCB growth has generally been below electronic equipment since 2006 suggesting ongoing share loss to printed circuit offshore production.

Worldwide PC Shipments to be down 6% to 274 million in 2009: Gartner Revises Forecast Up from 12% drop to 257 million (Chart 13) & (Chart 14)

Worldwide PC shipments are on pace to reach 274 million units in 2009, a 6% decline from 2008 shipments of 292 million, according to Gartner, Inc. Gartner now expects the PC market to post positive growth in the fourth quarter of 2009, setting the stage for a healthy market recovery in 2010 with units forecast to grow 10.3%.

Gartner's latest forecast is somewhat brighter than its preliminary forecast from mid-May, which anticipated a 6.6% unit decline in 2009, and considerably stronger than its last detailed forecast from March, which projected a 9.2% unit decline. However, analysts urged caution and said that while the market appears to be strengthening, it is still premature to say that the worst is over and the market is recovering.

Worldwide Cellular Base Station Market Contracting

After many years of rapid growth, the worldwide cellular base station market revenues will decline 22% in 2009, with shipments falling from the high levels of the 3G rollout frenzy of the last few years, reported In-Stat. Declining base station shipments are one clear reason for the revenue decline. However, intense competition from China equipment manufacturers ZTE and Huawei Technologies have pressured base station selling prices, as operators demand that infrastructure manufacturers decrease costs.

"As voice revenues per subscriber drops, base station demand depends on data growth," said Allen Nogee, In-Stat analyst. "Operators have spent billions on 3G, and are reaping the benefits of increased data revenues. Operators are so worried about not having the fastest wireless network that they will spend billions more on LTE and WiMAX, though not at the spending pace seen with 3G."

Source: DIGITIMES

N. American Semiconductor Equipment Industry May 2009 Book-to-Bill Ratio of 0.74 (Chart 15) & (Chart 16)

North America-based manufacturers of semiconductor equipment posted $288.5 million in orders in May 2009 (3-month average basis) and a book-to-bill ratio of 0.74 according to SEMI.

"Bookings for the North American semiconductor equipment market are still near historically low levels, though the sharp declines have subsided,” said Dan Tracy, senior director of Industry Research and Statistics at SEMI. “While recent industry data show increased semiconductor device unit sales, the industry is waiting for stronger signals to increase capital investments.”

Worldwide Lithography Stepper Revenue to Contract 54% in 2009 to 118 Units (Chart 17)

Dutch lithography vendor ASML Holding NV lengthened its lead in the lithography stepper market in 2008, according to market research firm Gartner Inc.

Gartner projected that 2009 will be a difficult year for the stepper market, which has enjoyed a market position of "outperform" for a number of years. Gartner projects that stepper sales will contract 54% in 2009. Total unit sales across all technologies and vendors are projected to amount to roughly 118 units, less than a quarter of total unit sales in 2007.

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