Title
Sobering first quarter
Walt Custer and Jon Custer-Topai
Sobering first quarter
Modest seasonal & cyclical recovery now underway
1Q’09 (not surprisingly) was a difficult lower SE Asian exports). recovery is now underway in SE Asia but
quarter for electronic equipment manufac- Mobile phones (Chart 6) and personal the current sales trough is very deep and
turers. OEM revenues dropped 12% com- computers (Chart 7) were among the ”con- it will take time to return to the pre-2009
pared to the first quarter of 2008 (Chart 1). sumer” goods that suffered from this year’s PCB sales trendline.
Market sector performance (Chart 2) was sharp drop in discretionary spending. Thanks to my colleague Ed Hender-
very poor with only military electronics Semiconductor shipments (a measure son, Charts 12 & 13 provide historical and
showing 1Q growth. Fortunately inven- of electronic assembly activity) are well into projected GDP and electronic equipment
tory levels are “reasonable” considering negative territory in all geographic regions production growth by region. See www.
the magnitude of our current recession. (Chart 8) however the 3/12 rate of change
hendersonventures.com for more details.
Inventories/sales ratios for the electronics curves (excluding Japan) all appear to have Although 1Q’09 was hopefully the bottom
food chain are all higher than in 2008, but “bottomed” by March. Keep in mind that of this current world recession, year/year
certainly under much better control than actual growth will not occur (present 3 growth will likely be delayed until 2010.
compared to the “2000 bubble” era (Chart months vs. same 3 months last year) until
3). the 3/12 is greater than 1.0. This suggests economy
Geographically electronic equipment that electronic assembly activity will not World industrial production growth (cur-
“growth” is negative for all major regions rebound Q/Q vs. 2008 until late 2009. rent month vs. same month in prior year)
(Chart 4). Japan is having the most dif- Large EMS companies (Chart 9) have is negative in all major countries (except
ficulty. The USA has seen a more modest been hit especially hard (negative revenue China) based upon mid-May data avail-
downturn (thanks to its focus on less vola- growth since 2Q’08) with combined com- ability.
tile electronic equipment sectors—military, pany guidance suggesting a 35% decline in Bloomberg Professional Global Confi-
medical and instruments & controls). Q2’09/Q2’08. Taiwan’s ODM companies dence Index climbed to 21.2 in April from
Taiwan/China (Chart 5) saw an unprec- (Chart 10) have fared better but they also 5.95 in March, as credit thawed.
edented in magnitude post Christmas holi- saw a sales decline in the last two quarters. U.S. Consumer confidence index rose to
day downturn. Its normal seasonal low in Global printed circuit board produc- 39.2 in April.
January was made MUCH worse by much tion (Chart 11) is dominated by SE Asia’s Inventory lessons learned from dot-com
weaker global demand for consumer and producers. World PCB output plunged bust are helping to ease this present down-
business electronics (resulting in sharply beginning in late 2008. A muted seasonal turn.
20090511 20090508
Electronic Equipment Suppliers
Global "Electronic Foodchain" Growth
Composite of 61 Public Companies
1Q'09 vs. 1Q'08
Revenue, Net Income & Inventory Electronic Equipment -12
$ Billion Military Preliminary 9
250
-12%
Business & Office
based upon
-9
Preliminary estimate for 1Q'09 data Instruments & Controls
partial 1Q'09 data
-16
200 Medical -3
Telecom -29
150
Internet -16
Computer -6
Storage -21
100
SEMI Equip -60
50 Semiconductors (SIA) -30
Passive Components TBD
0
Component Distrib -16
EMS-Large -22
EMS-Medium TBD
-50
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 1
ODM -11
00 01 02 03 04 05 06 07 08 09 PCB -41
Revenue 137 142 146 154 130 136 128 136 120 123 124 136 125 131 137 154 147 155 152 170 157 162 163 180 167 175 179 197 181 193 201 224 203 213 212 206 179
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 10 15 18 15 19 17 16 16 15 11 -7 8 PCB Process Equip TBD
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 47 49 47 47 50 51 51 53 54 54 50 48
-70 -60 -50 -40 -30 -20 -10 0 10
Computer 13, Internet 2, Storage 9, Telecom 6, SEMI 14, Medical 4, Instruments 7, Military 6 % Change
US$ equivalent at fluctuating exchange; based upon industry composites including acquisitions
Chart 1. Chart 2.
18 – Global SMT & Packaging – June 2009
www.globalsmt.net
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