-
- News
- Books
Featured Books
- pcb007 Magazine
Latest Issues
Current IssueThe Growing Industry
In this issue of PCB007 Magazine, we talk with leading economic experts, advocacy specialists in Washington, D.C., and PCB company leadership to get a well-rounded picture of what’s happening in the industry today. Don’t miss it.
The Sustainability Issue
Sustainability is one of the most widely used terms in business today, especially for electronics and manufacturing but what does it mean to you? We explore the environmental, business, and economic impacts.
The Fabricator’s Guide to IPC APEX EXPO
This issue previews many of the important events taking place at this year's show and highlights some changes and opportunities. So, buckle up. We are counting down to IPC APEX EXPO 2024.
- Articles
Article Highlights
- Columns
Search Console
- Links
- Events
||| MENU - pcb007 Magazine
U. S. Electronic Equipment Orders Surge in September. Will Components Soon Follow?
November 1, 2004 |Estimated reading time: 2 minutes
U. S. Electronic Equipment Orders Surge in September Will Components Soon Follow? By Walt Custer November 1, 2004
N. American PCB Market The slump in the N. American PCB market continued through September. For rigid printed circuits, the 3-month average (July-August-September) book/bill was 1.01 but the 1-month (September only) dropped to 0.87 (Chart 1). With few exceptions, most of the N. American PCB supply chain reported September as a difficult month.
N. American flexible circuits continued their volatile ways as the flex book/bill (Chart 2) saw its 3-month average jump from 1.0 in August to 1.38 in September. While flex demand is strong, the book/bill can be a bit misleading as those companies reporting to the IPC survey supply a mix of bare and assembled circuit data. That is, the sharp monthly changes could be attributed to volume and/or product mix (bare vs. assembled) variances.
Because the flex data is "mixed", rigid PCB's (all bare boards) provide a better indication of N. American performance. Per Chart 3, shipments bottomed in 2Q'03 and peaked in 1Q'04, falling back sharply in the second and third quarters. Capacity fears, over exuberant late 2003 and early 2004 ordering and eventual inventory building explain the 2003 & 2004 shipment patterns.
TTM Technologies, one of N. America's premier PCB fabricators gained market share in both the recent upturn and subsequent correction (Chart 4). In its recent quarterly financial release, CEO Kent Alder noted "While overall business remains relatively healthy, we continue to see mixed demand from individual customers and certain end markets. We anticipate slight pressure on pricing, and a raw material price increase that took place October 1, 2004, is expected to trim gross margins by one percentage point."
TTM is in a good position in the market place. It has a strong balance sheet, good technology, an excellent customer base and both volume and quick turn capabilities. Few N. American PCB makers can match its capabilities and economies of scale.
U.S. Electronic Equipment Demand While N. American PCB sales and orders remained sobering through September, U.S. electronic orders showed a surprisingly strong upturn. Per Chart 5, orders surged to their highest level since late 2000. However since orders now far exceed shipments, it will take a few months of data to tell us whether we are now in a sustainable recovery (with shipments following orders) or a temporary "bubble" (like many we have seen in the past).
Both computers (Chart 6) and communications equipment (Chart 7) contributed to September's U.S. equipment order growth. However, communication's gear (datacom & telecom) was the real driver. Since communications equipment orders have been historically very volatile, I am not ready to declare an "industry upturn" based upon just one month of strong results.
In any case, the September surge in U.S. electronic equipment orders should flow through the N. American "food chain" with improved PCB demand to follow.
Chart 8 summarizes the 12/12 (annualized) and 3/12 (3-month) growth rates for various segments of the N. American electronics food chain. September equipment orders give us reason for hope but the outlook still remains uncertain.
At least we appear headed in the right direction!
Walt Custer www.custerconsulting.comwalt@custerconsulting.com