Weekly Global Update for March 20, 2013

Electronic Equipment and PCB Shipments Drop In February

Due to normal post-Christmas holiday seasonality, Lunar New Year shutdowns and possibly some inventory reducing efforts, electronic equipment shipments plunged in February (Chart 1). Taiwan/China was down much more than we estimated last week. Globally electronic equipment shipments declined 18% in February 2013 versus February 2012 (Chart 2).

Printed Circuit Board shipments also dropped substantially in February (Chart 3) however they should grow about 5% for all of 2013 (Chart 4). Custer Consulting Group’s PCB leading indicator is not predicting an immediate upturn in world printed circuit shipments (Chart 5).

Data Difficulties

Taiwan
As noted last week the Taiwan Stock Exchange changed the required financial reporting of its listed companies from non-consolidated to consolidated (including subsidiary) sales effective January 1. Unfortunately many of these TXE-listed firms published only non-consolidated results in 2012 and earlier, thus leaving historical consolidated data gaps prior to this year.

Some overlapping data are already available (presently January and February 2012 on both a consolidated and non-consolidated basis) with additional months in 2012 to be released with the corresponding months in 2013. By the end of this year all TXE companies’ monthly sales will be available on both a consolidated and non-consolidated basis for 2012 and 2013.

We are re-doing all of our Taiwan-financial charts using consolidated sales data. In some cases the historical monthly data exist but in many cases we will have to estimate historical consolidated sales via scaling of the non-consolidated figures. We expect to complete this effort after the March 2013 results are released. Until then our Taiwan charts use actual non-consolidated results for 2012 and earlier and estimated January and February 2013 sales derived from scaling the consolidated data.

Europe
The EU statistical group Eurostat changed is reporting methodology beginning with its January 2013 results. Prior to this year the monthly production indices (Chart 6) for each product were calculated so that an average month in the year 2005=100. Effective January 1 the Eurostat production indices were recalculated so that now an average month in 2010=100. Although the “base 2005” and “base 2010” charts look different, the results (including monthly growth rates) are still useful.

However in addition to the change in base year Eurostat also left some data gaps. For example series C2931, electrical and electronic equipment for motor vehicles is now blank and strangely industrial production monthly indices for Italy are no longer available for “privacy” reasons.

Hopefully Eurostat will fill in these blanks soon!

Europe

Here are January results:

• Industrial production declined across Europe in January (Chart 7).
• Electronic equipment shipments grew sequentially from December to January (Chart 8) but declined on an annualized (12/12) and 3-month (3/12) basis relative to the same periods a year earlier (Chart 9)
• Motor vehicle production dropped (Chart 10) as did aerospace equipment (Chart 11).
• Instruments and measuring equipment saw a large sales increase (Chart 12).
• Electronic assembly held steady (Chart 13).

Taiwan

February results for Taiwan-based companies, many with manufacturing in China:

• Electronic equipment shipments plunged (Chart 14) as did ODM (Chart 15) and motherboard (Chart 16) sales.
• Display shipments also declined (Chart 17).
• Wafer foundry shipments dropped sequentially from January (Chart 18).
• Passive component shipments also dropped (Chart 19).
• Solar/photovoltaic sales held (Chart 20).
• Printed circuit board shipments saw a sharp February dip (Chart 21).
• Rigid (CCL) base material shipments mirrored PCBs (Chart 22).

U.S. Industrial Production up 0.7% in February

Industrial production rose 0.7% in February as U.S. factories produced more business equipment and motor vehicles. (Chart 22)

"It looks like a pretty good quarter for manufacturing," said Michael Feroli, chief U.S. economist at JPMorgan Chase. "Capital goods are doing well, autos came back a little bit and there's strength in consumer goods. It's looked pretty broad- based."

Korean Won Hits 5-Month Low

Chart 24