Japanese printed circuit board (PCB) trends for 2007

The Japanese Ministry of Economy, Trading and Industry (METI) released printed wiring board (PWB) production data for December 2007. This release of data provides a production snapshot for 2007, allowing some predictions for 2008. Total revenue for 2007 from the Japanese printed circuit industry was 999 billion yen (US$9.5 billion), representing a 3.8% increase from 2006. Included in this revenue stream is overseas production from Japanese circuit board manufacturers. The statistical data provided from the METI may include only 70% of industry, therefore, actual revenue could top US$1.3 billion. The PWB industry enjoyed double-digit growth rates for the first half of 2007 compared to the same period in 2006; however, demand softened during the second half of the year. Total production volume during 2007 stood at 25.24 million square meters, a 1.2% increase compared to the previous year. Production numbers were weak during the first three quarters of the year, posting negatively comparing year-over-year; however, a strong rebound during the fourth quarter helped push production totals positive. This growth can be attributed to the average unit price dropping significantly during the year. I believe Japanese PWB manufacturers focused on such orders with higher margins during the first half of the year to sustain profitability; however, price reductions were necessary during the second half of the year in order to help keep manufacturing lines humming once things slowed down. This seemed to be a general market trend within the Japanese PWB industry during 2007. Some observations from individual product segments did deviate from this norm. Total 2007 revenue from the rigid circuit boards segment came in at 619.9 billion yen, a 1.9% increase from the previous year, while total volume declined 0.7%. The main product for this segment included multi-layer boards. This product line enjoyed double digit growth during the first half; however, things slowed down in the second half. The build-up of boards also performed well during the second half of the year, growing at a double digit rate; however, things are a little shaky. A serious concern for most segments is the incredible decline during the latter part of the year. This is a trend shared by the entire industry. Total revenue for flexible circuits grew to 141 billion yen, a 2.7% increase from the previous year (0.7% volume growth). Results from the single-sided printed circuit boards and double and multi-layer circuit boards were remarkably different. Single-side flexible circuits continue to decline year-over-year, and 2007 showed no changes. Double-sided and multi-layer printed circuits grew during the year, posting double digit growths in the last quarter. A common industry trend for the flexible circuit categories is the continuous decline in price throughout the year. It's important to note this is a first for the Japanese flexible circuits industry since they have never experienced such a long-term reduction in price. Total revenue from module circuits increased to 236.3 billion yen, an increase of 9.9% from the previous year, and a 13.4% growth in volume. There were several differences between rigid module circuits and other module circuits. The rigid module circuits, mostly used as substrates for IC packages, experienced a volatile year in 2007. Month-to-month shipments were sporadic; it was either feast or famine. However, the 2007 growth for this category equaled 18.7%, but the last two months of the year declined, significantly. Other module circuits, mostly substrates for driver modules in FPD panels continuously declined throughout the year, and posted a 3.1% decrease. A common theme shared throughout the industry was declining prices. Unfortunately, no positive trends were uncovered for the Japanese PWB industry in 2007. A major concern was the remarkable declines that each major product segment felt during December. Management teams from all of the Japanese PWB manufacturers are wondering if this signals the beginning of an extended slow period due from the (dare I say) recession in North America. Japanese PWB manufacturers do not export their products directly to North America, but their customers are mostly Japanese consumer electronics companies who do export to North America. A domino effect could be felt months ahead... VentureOutsource.com, March 2007