When? Reaching the elusive ‘bottom’ and beginning r
Resolution of solder voids in pin-in-hole product
ecovery
Walt Custer and Jon Custer-Topai
When? Reaching the elusive
‘bottom’ and beginning
recovery
When will the global electronics ‘food distributors (Chart 3). However 4th quarter tor producers (Chart 7) saw 4Q’08 sales drop
chain’ reach bottom and begin to recover? growth was an entirely different story (Chart 24% compared to 4Q’07 with a combined
That is the ‘$64 thousand dollar’ question! 4) as only military and medical equipment ‘guidance’ (based upon those who gave it) of
Based upon the composite sales of 61 eked out small gains. a 36% drop in 1Q’09/1Q’08.
global OEMs representing over 50% of the Looking forward, 2009 looks to be a Suppliers of SEMI equipment to the
world’s electronic equipment sales, 4Q’08 year of double-digit declines for many sec- chip makers and packagers (Chart 8) saw an
revenues declined 8% vs. 4Q’07 (Chart 1). tors. Electronic equipment shipment growth even larger 4Q’08 drop with a disastrous
And these firms’ net income plunged from began the year in negative territory in all (-62%) 1Q’09 outlook. Net income was
+7.1% of sales in 4Q’07 to -3.4% in 4Q’08. regions (Chart 5). For it to resume growth, strongly negative for both chip makers and
The electronics ‘recession’ was well under- the 3/12 curves must reach bottom and
their equipment suppliers.
way by the fourth quarter 2008. Fortunately then recover their declines cross 1.0 heading
The EMS and ODM sectors are also
(except for components), inventories relative ‘north.’ Based upon their current trajectory,
slowing. Chart 9 compares the 2008 vs. 2007
to sales remained reasonably stable (Chart
end market recovery may not happen until sales of the largest global EMS companies.
2). Actually semiconductor inventories were
late 2009 at the earliest. Fortunately we have Where Foxconn fits (EMS or ODM?) is
also steady, but because chip sales plunged,
access to monthly global data to track each debatable but it is the largest and highest
the inventory/sales ratio increased substan-
regions performance. growth company in Chart 9. Excluding
tially.
Semiconductor shipment growth (Chart Foxconn, a composite of the large EMS
By ‘food chain’ sector, all of the equip-
6) is similar—negative for all regions and companies saw declining sales beginning in
ment end markets (except SEMI Fab) grew
continuing to deteriorate. Many semicon- 2Q’08 (Chart 10).
in total 2008 vs. 2007. So did the EMS and
ductor market gurus are projecting a 20%+ The large ODM and motherboard
ODM companies and electronic component
global decline in 2009 vs. 2008. A compos- makers (Chart 11) fared somewhat better
ite of 18 of the world’s largest semiconduc- than the pure EMS companies in 2008,
20090221 20090221
Electronic Equipment Suppliers Inventory/Sales Ratio
Composite of 61 Public Companies
Large Component Distributors, Semiconductor, EMS &
Revenue, Net Income & Inventory
Quarterly Inventory/Sales ($) OEM Companies
0.85
$ Billion
250 0.80
Semiconductor
-8% Preliminary estimate based upon incomplete 4Q'08 data
Preliminary based upon incomplete 4Q'08 data 0.75
EMS
200
OEM
0.70
Distributor
0.65
150
0.60
Chips
0.55
100
0.50
50
0.45
Distr
0.40
EMS
0 0.35
0.30
-50
OEM
0.25
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
00 01 02 03 04 05 06 07 08 0.20
Revenue 137 142 146 154 130 136 128 136 120 123 124 136 125 131 137 154 147 155 151 170 157 162 163 180 167 175 179 197 181 193 201 224 202 213 212 206
3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1
Income 10 10 9 5 -3 -24 -15 -2 2 -12 -2 0 5 4 7 10 10 11 11 14 12 12 12 17 13 9 15 18 15 19 17 16 16 15 11 -7
Inventory 59 61 65 67 68 61 53 48 45 43 42 39 38 39 37 38 40 41 41 41 41 41 42 42 44 46 49 47 47 50 51 51 53 54 54 51
00 01 02 03 04 05 06 07 08 09
CY
Computer 13, Internet 2, Storage 9, Telecom 6, SEMI 14, Medical 4, Instruments 7, Military 6
4 Component Distributor, 18 Semiconductor, 12 EMS and 60 OEM Company Composite
Chart 1. Chart 2.
24 – Global SMT & Packaging – March 2009 www.globalsmt.net
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