Consumer electronics demand trends printed circuit boards (PCB) downward

By Dominique Numakura

The Japanese Ministry of Economy, Trade and Industry (METI) recently released May's production data from Japan's printed circuit industry. The data clearly indicates a downward trend from the printed circuit industry whose primary customers are within the consumer electronics market.

Total shipments (revenue) for printed circuit products in May was 75.46 billion yen, a 3.8% drop from the previous month and 6.2% decline in revenue compared to the same month one year ago. Shipments for May dropped to their lowest level of the year.

Total volume shipped during May amounted to 1.994 million square meters, a 2.4% decrease from the previous month and a 2.5% decline compared to the same period last year. The data suggests operating rates for printed circuit board manufacturers are not significantly lower; however, revenues are declining because of decreased pricing.

Declining prices coupled with substantial increases in fixed costs (material and energy) further erode margins while continuing to squeeze these margins more and more.

Similar trends can be seen across all major electronics product segments (except module circuits). Revenue growths are negative compared to the same period last year.

Below are printed circuit board volume and revenue changes for May 2008 compared with May 2007:

	Volume change	Revenue change
Double-sided, rigid	-11.9%	-9.7%
4-layer, rigid	-2.1%	-1.3%
6 to 8-layer, rigid	-7.8%	-9.6%
Build-up, rigid	+8.3%	-2.9%
Single-sided, flexible	-11.8%	-29.8%
Double and multi, flexible	+11.4%	-4.8%
Module, rigid	+17.3%	-4.7%
Module, other	+20.6%	+9.0%

TOTAL	-2.5%	-6.2%

Meanwhile, some major product segments recorded positive volume growth. Rigid build-up circuits, double and multi-layer flex, and rigid module circuits did post solid volume gains; however, their revenue performance came in at negative rates. It should be noted all of the product segments mentioned above are each major products in the Japanese printed circuit board industry.

Volumes shipped year-to-date grew 0.6%, whereas revenue shrank by 4.7%. It may prove difficult for the industry to see positive growth in 2008 unless a remarkable turnaround occurs during the second half of the year.
Most major circuit manufacturers and material suppliers polled did not seem too optimistic.

This downward trend in printed circuit boards is being felt across other major Asian countries; Japan is not alone this time.

Looking at the printed circuit board industry in Taiwan, there are a few manufacturers whose sales volume increased in May compared with the same period last year, but most manufacturers posted negative growth for the same period. These manufacturers expect a remarkable rebound (read: optimistic viewpoint) during the third quarter, or later, in the year.

These same manufacturers made similar comments a few months ago, which leads me to believe business remains sluggish and most manufacturers do not have a clear forecast into next quarter.

The Asian consumer electronics trade depends on the buying power from the U.S.A. and Europe. Both countries are knee deep in their own recessionary atmosphere.

I am pessimistic about a turnaround in the second half of this year.

VentureOutsource.com, July 2008