Walt Custer Elaborates on his Annual IPC APEX EXPO Forecast Presentation


Reading time ( words)

IPC APEX EXPO 2016 has come and gone, and this year, Walt Custer’s annual presentation forecasting the upcoming year for the industry was much anticipated, as always. I met up with Walt at the show to learn about his presentation and dig deeper into his findings.

 

Barry Matties: Walt, we are here at IPC APEX EXPO 2016 and you've just given another talk about what we can expect in the upcoming year. Why don't you start by sharing a little about what you discussed?

Walt Custer: Sure. As most people know, we follow the entire global electronics supply chain. We try to track the economy, electronic equipment demand, the active and passive components, EMS and ODM companies, materials and process equipment.   Starting 2016 the U.S. economy is in a very modest growth mode. Europe is the same way.

walt_table.jpg

Asia, especially China, S. Korea, Taiwan, and now Japan, are flat or shrinking. These Asian countries are large producers of electronic goods, so their downturn has greatly impacted the whole industry.

Looking forward we use leading indicators to predict what's going to happen and these indicators say that, globally, we're at zero growth right now, with North America and Europe expanding a little bit and much of Asia contracting.

Leading indicators predict business conditions two months to six months in advance and they currently suggest that early to mid-2016 will not be very robust.  Hopefully demand will accelerate in the second half of this year but that is not clear right now. We monitor the leading indicators every month to see likely changes in business conditions.

Matties: I think you and I spoke last in Germany at productronica, and at that time you said that this was most likely the trend that was going to happen. It looks like it's really coming to fruition.

Custer: I don’t believe we've been too far off. The leading indicators are always going to be a three- to six-month guide, and so I always look at those.

Another key factor is currency exchange rates. The U.S. dollar is currently very strong versus other currencies, which means that our exports are more expensive and imports are cheaper. But of equal importance are exchange rates and their impact on global growth rate calculations. When weaker non-dollar currencies are consolidated to stronger U.S. dollars, effectively the dollar totals are effectively weaker. This exchange rate loss impact has been substantial lately for multinational companies that report their financial results in dollars. Last year this impact was negative, about -5%.

For the first quarter 2016 vs. 2015 this exchange rate impact may have degraded dollar growth rates by as much as 8%.

In addition to exchange rate effects, overall demand has weakened, especially in China. Normal post-Christmas holiday slowing of consumer good demand is one factor. In addition there was the Chinese New Year shutdown in February coupled with Apple cutting back orders for iPhones. So the first quarter in Southeast Asia started slowly, especially for high-volume consumer electronics.

Turning to the U.S. market, the major electronic equipment sectors are instruments & control, medical, defense and aerospace. Domestically we are not very dependent upon computers or cellphones. Because of the U.S. product mix, we're in better shape than places like China where volume market growth really weakened.

I think, as you look at the global end markets right now, there's no big driver. Last year smartphone growth was very robust and before that it was media tablets and PCs. This year, smartphone growth has slowed, media tablets have gone flat and PC growth is negative.

We're waiting for the next big market driver.

Automotive is still key with electronic content constantly rising and self-driving cars on the horizon.  Other “next volume market” prospects include wearables, robots, virtual reality and the Internet of Things. You can make a list of them. They are emerging… but are still in their infancy.

Share

Print


Suggested Items

RBP Discusses New Management and Plans for the Future

11/23/2021 | Nolan Johnson, I-Connect007
Ernie Litynski, president of RBP Chemical Technology and Dan Carey, incoming executive vice president, brief Nolan Johnson on the recent organizational changes that brought Carey on board. Both Litynski and Carey outline how they see these changes benefiting their customers and partners, including in the defense and aerospace sectors. As they explain, it's their expertise at helping solve problems that customers value most.

I-Connect007 Editor’s Choice: Five Must-Reads for the Week

03/26/2021 | Andy Shaughnessy, Design007 Magazine
This week, we have a round-up of stories from around the industry, including a Real Time with… IPC APEX EXPO interview with Ventec, an article by Tamara Jovanovic about eliminating “garbage in, garbage out,” a review of an EIPC webinar by Pete Starkey, and news about another trade show going virtual this summer. And last but certainly not least, we bring you our one-minute video salute to all the fantastic people in this industry who we’ve worked with for decades. Enjoy!

Bonding Hybrid Multilayer Constructions at Rogers Corporation

03/10/2021 | Real Time with...IPC
John Ekis, Rogers Corporation's market segment director for aerospace and defense, discusses the SpeedWave family of low-dielectric constant, ultra-low-loss prepreg materials with excellent filling and bonding characteristics for hybrid multilayer constructions. SpeedWave prepreg is also compatible with FR-4 fabrication processes and lead-free PCB assembly processing. SpeedWave is available in multiple spread and open weave glass style and resin content combinations, and is also compatible with FR-4 fabrication processes and lead-free PCB assembly processing.



Copyright © 2021 I-Connect007. All rights reserved.