Japan Update

JEITA just released the December 2012 domestic production of Japanese electronic equipment, components and devices:

  • Electronic equipment production declined 20% in December 2012 compared to December 2011 (Charts 1 & 2).
  • PCB shipments declined 6% in 2012 vs. 2011 (Chart 3) as there rate of decline accelerated. Their 4Q’12 vs. 4Q’11 “growth” was -16.5% (3/12=.835 per Chart 4)
  • Total domestic Japanese production of printed circuit boards by type for 2012 is given in Chart 5.
  • Domestic Japanese electronic component production is expanding (3/12 = 1.04) and device production “growth” is approaching parity (3/12 nearing 1.0 per Chart 6).
  • Total domestic Japanese production of electronic components and devices for 2012 is given in Chart 7.

Sources: www.jeita.or.jp/ and www.jpca.org

Custer “Business Outlook for the Global Electronics Industry” Charts Available

Custer spoke on business conditions last week at the joint IPC EMS Management Council and PCB Supply Chain Leadership Meeting at IPC Expo/APEX in San Diego.

If you would like an updated copy of this presentation, e-mail walt@custerconsulting.com

While most world leading indicators are now improving and the global electronic supply chain CURRENTLY appears to be in a recovery phase, we are concerned about the proposed "sequester" budget cuts in the U.S. and their potential negative impact on domestic and global economic growth.

Potentially the U.S. could fall back into a recession due to poorly planned and implemented federal budget adjustments. Hopefully this won't occur and we won't be forced to significantly downgrade our forecasts.

Taiwan/China January Numbers Delayed

Effective January 2013 Taiwan-listed electronics companies (many with manufacturing in China) must now report to the Taiwan Stock Exchange on a consolidated sales basis including subsidiaries. In many cases historical data for companies’ “consolidated” sales are not reported and from December 2012 forward “non-consolidated” company sales are no longer available. This change in TSE reporting will require an adjustment to our global electronic equipment and PCB monthly sales models. We hope to have this resolved by next week.

Source: Custer Consulting Group

North American SEMI Equipment January 2013 B/B = 1.14 (Charts 8 & 9)

North America-based manufacturers of semiconductor equipment posted $1.09 billion in orders worldwide in January 2013 (3-month average basis) and a book-to-bill ratio of 1.14 according to SEMI.

The 3-month average of worldwide bookings in January 2013 was $1.09 billion. The bookings figure is 17.2% higher than the final December 2012 level of $927.4 million, and is 8.5% lower than the January 2012 order level of $1.19 billion.

The 3-month average of worldwide billings in January 2013 was $952.1 million. The billings figure is 5.4% lower than the final December 2012 level of $1.01 billion, and is 23.2% less than the January 2012 billings level of $1.24 billion.

“In January 2013, the three-month average for bookings improved again for new semiconductor manufacturing equipment orders placed by worldwide customers to North American manufacturers, while billings declined slightly,” said Denny McGuirk, president and CEO of SEMI. “The ratio is above parity for the first time since May 2012, although both orders and billings currently remain tempered by the economy and relatively conservative spending plans at the start of the year.”

Source: www.semi.org

Japanese SEMI Equipment Global Orders fell 25.2% on 3-Month Average basis in January (Chart 10)

Global orders for Japanese semiconductor manufacturing equipment fell 25.2% in January from a year earlier to Y74.32 billion..

The book-to-bill ratio for Japanese chip equipment manufacturers was 1.18 in January, above 1.00 for the second consecutive month.

Source: www.seaj.or.jp/english/

Silicon Wafer Revenues Decline in 2012 (Chart 11)

Worldwide silicon wafer revenues declined by 12% in 2012 compared to 2011 according to the SEMI Silicon Manufacturers Group (SMG) in its year-end analysis of the silicon wafer industry. Worldwide silicon wafer area shipments declined 0.1% in 2012 when compared to 2011 area shipments.

Silicon wafer area shipments in 2012 totaled 9,031 million square inches (MSI), down from the 9,043 million square inches shipped during 2011. Revenues totaled $8.7 billion down from $9.9 billion posted in 2011. "Much like semiconductor unit shipments, semiconductor silicon shipments started out the year strong, however shipments weakened during the second half of the year,” said Byungseop (Brad) Hong, chairman of SEMI SMG and director of Global Marketing at LG Siltron. ”Despite challenges in the market, 300 mm volume shipments reached record levels.”

Shipments are for semiconductor applications only and do not include solar applications

Silicon wafers are the fundamental building material for semiconductors, which in turn, are vital components of virtually all electronics goods, including computers, telecommunications products, and consumer electronics. The highly engineered thin round disks are produced in various diameters (from one inch to 12 inches) and serve as the substrate material on which most semiconductor devices or "chips" are fabricated.

All data cited in this release is inclusive of polished silicon wafers, including virgin test wafers, epitaxial silicon wafers, and non-polished silicon wafers shipped by the wafer manufacturers to the end-users.

Source: www.semi.org

Smart Connected Device Market Rises 29.1% in 2012 Driven by Tablets and Smartphones (Charts 12 & 13)

When looking at a holistic view of smartphones, tablets, and PCs, one thing is clear – smartphones and tablets are driving mobility growth. According to the International Data Corporation vendors shipped 367.7 million desktop PCs, portable PCs, tablets, and smartphones – a collective view IDC refers to as "Smart Connected Devices" – in the fourth quarter of 2012 (4Q’12), up 28.3% from the prior year. As desktop PCs and portable PCs declined (-4.1% and -3.4%, respectively), the overall smart connected device space continued to surge to just over 1.2 billion shipments cumulatively in 2012. Tablet shipments experienced the largest year-over-year growth in 2012, up 78.4% over 2011, while smartphones grew 46.1% but accounted for 60.1% of all smart connected devices shipped throughout the year.

After finishing 2011 second to Apple in the smart connected device market, Samsung arose to the number one position in 2012 with just over 20% share across the four device categories. Samsung shipped 250.0 million PCs, tablets, and smartphones in the past year, up 119.3% from the previous year, driven largely in part by its surge in the smartphone space. While Samsung managed to ship more smartphones and portable PCs than Apple in 2012, Apple led all in tablet shipments, was eighth in portable PC shipments, and fifth overall in desktop PC shipments.

"Smartphones and tablets are growing at a pace that PCs can't realistically keep up with because of device prices and to some extent disposability," explained Ryan Reith, program manager, Worldwide Mobile Device Trackers at IDC. "The average selling price (ASP) for a tablet declined 15.0% in 2012 to $461, and we expect that trend to continue in 2013. However, smartphone APSs are still lower at $408. We expect smartphones to continue to carry a shorter life cycle than PCs for the years to come based on price, use case, and overall device size."

Rounding out the top five smart connected device vendors in 2012 was Lenovo at number three with 6.5% share. Lenovo's strong point is still in portable PCs where it shipped just over 30 million units in 2012. However, smartphones are a growing space for the Chinese vendor as shipments grew from 3.7 million in 2011 to 23.7 million in 2012. In the fourth position was HP with 4.8% share, however shipments of smart connected devices were down 8.5% year over year primarily for the lack of smartphone and tablet offerings. And in the fifth position was Dell with 3.2% share, down 12.9% from 2011 as it also struggles with a lack of presence in the smartphone and tablet markets.

"The fourth quarter market share numbers showed a fairly dramatic resurgence for Apple," said Bob O’Donnell, program vice president, Clients and Displays. "After falling well behind Samsung early in 2012, Apple came roaring back in final quarter of the year thanks to its latest hits – the iPhone 5 and the iPad Mini – and reduced the market share gap to less than a single percentage point. The question moving forward will be whether or not Apple can maintain its hit parade against the juggernaut of Samsung."

Source: www.idc.com

U.S. Index of Leading Economic Indicators Rose 0.2% in January

The Conference Board's gauge of the outlook for the next three to six months increased 0.2% from a 0.5% rise in December.

Six of the 10 indicators in the leading index contributed to the increase, led by stock prices and the interest-rate spread between the federal funds rate and 10-year Treasury notes.

"The indicators point to an underlying economy that remains relatively sound but sluggish," Ken Goldstein, an economist at the Conference Board said. "The biggest positive factor is housing."

Source: www.conference-board.org

Walt D. Custer

Walt Custer

Walt Custer is an industry analyst focused on the global electronics industry. Prior to forming Custer Consulting Group he was Vice President of Marketing and Sales for Morton Electronic Materials, a global supplier of specialty chemicals and process equipment for the PCB industry.

Custer has been a member of the IPC trade organization since 1975 where he received both the President's and the Raymond E. Pritchard Hall of Fame Awards. He is currently a member of the IPC Executive Market & Technology Steering Committee. Custer is also a Director of the EIPC European PCB trade organization.

He authors regular “Market Outlook” columns for Global SMT & Packaging magazine, the Journal of the HKPCA and the TTI MarketEYE website.

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