PCB Industry Performance in Asia
The Japan Ministry of Economy, Trading and Industry (METI) recently released September’s production data for the Japanese PCB industry. With three quarters of data under our belts, let’s review performance from the first three quarters and provide forecasts for the last quarter and fiscal year 2008.
September’s total revenue from Japanese PCB manufacturers came in at 82.74 billion yen, representing an 18.4% increase from August and a 5.2% increase from the same month last year. Figures for September’s total shipments or volume equaled 2.083 million square meters, representing a 12.8% increase from the previous month and a 4.6% decrease for the same month last year.
The typical business cycle within the Japanese electronics industry is a decline in production during August due to long summer vacations, followed by an upswing in production during September in preparation for the Christmas holiday spending spree. However, production fluctuations during August and September were more extreme than usual, and were not specific to one segment. This trend was widespread amongst most product categories, including flexible circuits and module circuits, and, in most cases, September’s shipments were larger than July’s shipments. The segments that bucked this trend were single-sided flexible circuits and other module circuits; the majority of them are substrates used in LCD driver moles. Unfortunately, their performance continues to weaken and continues a decline that began several months ago.
Management teams from PCB manufacturers are stumped with predicting future business trends and providing accurate forecasts using current market statistics. They are in the midst of a year long slump and expect more downward pressure on business after the doom and gloom financial crisis reported in September from the U.S. Most major Japanese manufacturers of rigid board circuits and flexible circuits restated their earning and volume projections for fiscal year 2008 and expect lower revenues and incomes compared to their original annual budget and targets.
The business trend from the Taiwanese PCB market is rather strange. Market data shows a continuous increase for several months leading up to October. Now, unfortunately, Taiwanese manufacturers have hit a wall and business has turned sour. The slump has lasted throughout the fourth quarter and forecasts are very pessimistic about a quick recovery over the next quarter or two due to slow demand for personal computers and cellular phones. They are not alone; Korean manufacturers are in a slowdown that began with in the third quarter.
I cannot provide accurate trends for the Chinese PCB industry because the statistical market data is not readily available; however, the growth rates of imports have been declining over the last several months. Date release for October came in at a negative growth compared to the same month last year. This certainly suggests the slowdown is widespread and the Chinese electronics industry is not immune.
The increase in business during the third quarter in Japan and Taiwan could be a flash in the pan caused by a push to decrease all inventory in the distribution pipelines. The market trend in fourth quarter is one I will pay particular attention to and will report on current market conditions once the data has been digested.
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