Market Outlook - Walt Custer and Jonathan Custer-Topai -January 6, 2007
General Business Conditions
PCB Fabrication
Materials & Process Equipment
Electronic Manufacturing Services & Related Assembly Activity
2007 Begins: Modest Global Growth for Most Sectors
2006 was a decent year for the world electronic food chain. A composite of
61 large, global OEMs saw sales grow 10% in 3Q’06 vs. 3Q’05, with a 20%
increase in net income and a 15% increase in inventories (Chart 1).
Through October N American electronic assembly activity (as measured by
semiconductor shipments) was still growing nicely (up 9.9% in October 2006
vs. October 2005 per Chart 2).
However higher interest rates, energy and commodity costs are definitely
slowing the U.S. economy. The ISM (Purchasing Managers’) Index dipped
below 50 in November signaling the first contraction in procurement
activity since mid-2003 (Chart 3). And domestic electronic equipment
demand took an autumn “hit.” Microsoft’s delayed release of its new
Vista operating system temporarily throttled PC purchases. This coupled
with a downturn in communication equipment orders drove U.S. electronic
equipment bookings sharply lower in October (Chart 4). Presumably the late
2006 “cooling” in computer equipment orders represented only a shift in
demand from the normally strong holiday season until 1Q’07--when Vista
becomes generally available.
Looking forward into 2007 (Chart 5) the prognosticators see slower growth
in the global GDP, electronic equipment production and PCBs, and a slight
upturn in semiconductors. Only the capital equipment sector is expected to
contract (following an overly robust 2006). It appears that 2007 won’t be
a boom year but the outlook is still reasonable.
General Business Conditions
“Excess inventory of flat TVs and mobile phones in Japan is becoming
visible and everybody is now painting a cloudy picture for the PCB
industry in the next few months”. - H Nakahara.
China’s total PCB production is projected to be 150 billion RMB (US$19.2
billion) in 2010. – CPCA.
Taiwan’s PCB production was NT$235 billion (US$7.2 billion) in the first
three quarters of 2006, up 21% from a year earlier.
The Indian Printed Circuit Association elected Anil Kumar President.
PCB Fabrication
Advanced Circuits’ parent, Compass Diversified Trust, refinanced a $250
million credit facility with Madison Capital.
Aspocomp obtained a EUR 10,300,000 convertible debenture loan to finance
possible acquisitions, strengthen operations and/or for financing
investments; is cutting 240 personnel at its Salo and Padasjoki plants;
and is investing $100 million to set up a Chennai, India plant with a
capacity of 50 million HDI PCBs operational in 2007.
Coretec received the 2006 Pollution Prevention Award from The Canadian
Association of Metal Finishers for its role in environmental stewardship.
Dyconex developed liquid crystal polymer multilayer substrate technology
with uniform relative dielectric constant of 2.9-3.0 in the range 0.5 to
40 GHz and a low loss factor.
Dynamic Electronics is moving its traditional PCB production to China and
refocusing Taiwan on HDI board production.
Elprint increased Bergen, Norway production capabilities to include
flex-PCB manufacturing.
Eltek licensed STABLCOR Technology.
Endicott Interconnect received its 27th U.S. Patent since becoming
independent four years ago.
Firan Technology signed a 3-year, US$5.8M sourcing agreement with Rockwell
Collins for illuminated cockpit control panels, bezels, and keyboards.
Fuba Printed Circuits inaugurated its 7.5 million euro extension of its
dedicated multilayer production at El Azib, Tunisia.
Graphic PLC purchased Orbotech Paragon 8000 LDI, Discovery 8 AOI and
Discovery 8HR AOI systems.
Kestrel International Circuits appointed Adrian Burdfield General Manager
of its UK Customer Support and Technical Center and expanded its logistics
services in China.
KSG is investing 45 million Euros in Gornsdorf, Germany to double
production capacity.
Meadville Technologies plans a $200M IPO to finance the second
construction phase of its Guangzhou Meadville plant.
Meiko is building a PCB factory in Northern Ha Tay Province, Vietnam with
an initial investment of 10 billion yen to be completed spring 2008, and
is spending $304 million to build a new Thailand PCB manufacturing plant
operational spring 2008.
Multi-Chem borrowed up to US$ 6 million to finance new CNC mechanical
drilling machines.
Multi-Fineline Electronix & MFS Technology’s merger legal battles
continued as Stark Master Investment Fund sued to pressure M-Flex to
complete the acquisition.
Multi-Fineline Electronix filed an amendment with the US SEC to withdraw
its MFS Technology offer.
Parlex USA will shut down its Cranston plant by spring and move
manufacturing to Methuen, Mass., eliminating 250 jobs in Rhode Island.
Schweizer Electronic purchased three Orbotech Discovery 8 HR AOI systems.
Screaming Circuits added a Blog to its website for electronic design and
layout engineers.
Sumitomo Electric Interconnect Products is investing two billion yen to
build a FPC factory in Bac Ninh Province, Vietnam operational June 2007.
Titan Global Holdings appointed Michael Kadlec Executive VP of Sales and
Marketing for Titan’s Electronics and Homeland Security division.
Congratulations Mike! It also established a new $15 million revolving
credit facility and $7,950,000 senior term loan with Greystone Business
Credit II, LLC.
Tyco Printed Circuit Group is looking to sell its unfinished factory in
Salem’s Fairview Industrial Park for $5.4 million.
Viasystems added lead free HASL capability to its Zhongshan, China
facility.
Vogt Electronic appointed Dr. Sturhahn, Hans Fahr, André Bour, and
Bernhard Herzig as replacements for Chairman Larissa Vogel and Supervisory
Board members Werner Folger, Peter Dennstedt and Hans-Joachim Wolff who
resigned.
Vulcan Electric Company named Chester Wright Quality Assurance Manager of
its Flex Circuit Division.
Xiamen New Flex Electronics opened its new $10 million facility at Xin
Yang Industrial Park in Haicang, Xiamen. Volume production will begin
October 2007.
Yang An will start operations at its new plant in Wuxi, China by Q1’07.
It will initially have 400,000 SF of capacity for GPS display PCBs.
Materials & Process Equipment
Agfa and CCI Eurolam updated a distribution agreement to now include
Belgium, Luxembourg and the Netherlands.
Arlon opened its new specialty laminate and prepreg facility in Suzhou,
China.
Assembléon and Zhengjiang Pound Precision Electronics Manufacturing
formed a long-term production technology partnership worth 20 million Euro
regarding PPEM’s new Jurong, China facility.
Asymtek named Frank Wang General Manager, China.
Dielectric Solutions formed a glass fabric business alliance with
Compunetics and Isovolta Group.
ESI won the mid/small cap company of the year award at the 2006 Oregon
Technology Awards.
Harima Kasei expanded its nano-paste material business for inkjet printing
PCBs.
Hioki Denki acquired PCB test equipment company Cabin Industry from Uchida
Shoko.
HMS Höllmüller opened a 2,500 m2 facility in Wykroty, Poland and started
manufacturing parts of its wet-processing systems there in January 2007.
Illinois Tool Works purchased Speedline Technologies from KPS Special
Situations Funds.
Intech Machines is moving all its PCB equipment operations to Suzhou,
China in 2007.
Isola upgraded its IS620 with 25% lower dielectric loss and improved
thermal performance.
Kingboard Laminates forecasts its annual output of glass epoxy laminates
will increase to 45.5 million sheets in 2008 and paper laminate capacity
will rise to 35.57 million sheets in 2007.
Mitsubishi Gas Chemical added a new high speed PWB materials line in its
Yokkaichi plant that is capable of producing 300 tons of OPE per year.
Nikko Metal added a new manufacturing line for advanced RA copper foils
for flexible circuits.
Nordson acquired testing and inspection equipment manufacturer Dage
Holdings.
Orbotech and DEK collaborated on a paste deposition project to reduce
interventions, increased productivity, and lower operating costs for an
optimally controlled print process.
Orbotech named Yoav Harel to replace Jacob Azran as president of Orbotech
S.A.
Speedline Technologies celebrated its 55th Anniversary of its Electrovert
brand.
Taiflex projects that its new Kunshan, China facility will add 400,000 m2
to its current monthly output of 750,000 m2 of 3-layer FCCL by 2Q’07.
ThinFlex and Matsushita opened a FCCL plant in Kunshan, China.
Ticer Technologies’ Director of Technical Marketing, Rocky Hilburn,
earned IPC’s Leadership award for development of the embedded passive
specification IPC-4821.
Toray is investing 3 billion yen in a new adhesiveless flexible laminate
manufacturing line in Korea with total capacity of 1.9 M2/year.
Electronic Manufacturing Services & Related Assembly Activity
A-Data opened its new Suzhou, China plant on November with eight SMT lines
and a monthly capacity of 1.8 million DDR2 modules and 1.2 million NAND
flash modules.
Axiom Electronics completed a management buy-out from Ambitech
International.
Benchmark Electronics received antitrust approval for its $300 million
Pemstar acquisition.
Celestica and HCL Technologies formed a JV to provide complete
concept-to-manufacturing solutions for OEMs; appointed Craig Muhlhauser
President and CEO. Stephen Delaney resigned to pursue other business
interests. Celestica also set up Rs30 crore manufacturing facility in
Hyderabad for prototyping and PCBAs, and closed its Scottish Telford,
Shropshire plant earlier than expected.
CirTran opened a marketing office in Bentonville, AR to promote its
distribution relationship with Wal-Mart.
Flextronics completed the first phase of its planned 1.9 million SF
facility in Ciudad Juarez, Mexico and its 8 million SF industrial park in
Chennai, India. Its Billingstad, Norway factory received a 20 MEUR
contract for military communication equipment from Nacre. Flextronics also
received FTC clearance to buy International DisplayWorks; and will dismiss
30% of its Nyiregyháza, Hungary plant workers in February 2007.
Foxconn will ship 10 million own-brand motherboards in 2006.
Gigabyte is transferring its own-brand desktop motherboard and graphics
card business valued at US$124 million, to Gigabyte United, a JV with
Asustek Computer.
Hon Hai is investing US$1.2 billion to establish a 6,000-acre hi-tech park
for cell phones and parts in Hebei, China.
Jabil acquired mobile phone casing maker Green Point for US$881 million,
and is investing $50 million in a new handset plant in the Zakarpatskaya
region in Ukraine scheduled to be operational by spring 2007. Jabil’s
Hungarian facilities will be transferred to this new plant. Also, it will
build 3 million SF corporate headquarters on its 95-acre vacant parcel in
St. Petersburg, Florida.
Plexus promoted Michael Verstegen to Sr. VP, Global Market Development and
Paul Ehlers to Exec VP and COO.
ProWorks received IPC certification for lead free electronics assembly
process capability.
Sanmina-SCI Enclosure Systems, Forserum, Sweden laid off 100 employees;
exited the ODM business and is focusing more on JV manufacturing. The
Guadalajara operations received the National Export Award; is providing
Sarantel with procurement, manufacturing and logistics services and has
acquired some of Sarantel’s manufacturing assets. Sanmina-SCI will take
additional expenses of $125 million to $150 million for errors in its
stock option practices dating back to 1997.
Simclar laid off 240 workers at its Irvine, Ayrshire factory and it is
withdrawing from hard-tooling manufacturing.
SMTC hired Carl Munio as VP and General Manager of its San Jose facility
and promoted Russ Morrow to VP of Sales for the Western Region.
Solectron is closing plants in Fife, Scotland, Puerto Rico and Kanata,
Ontario.
Sumitomo Denko is building a FPCA plant in Vietnam
Suntron Corporation and Applied Materials reached a confidential
settlement to terminate litigation.
TT electronics acquired Apsco for £14.9m from Morgenthaler Partners.
UMC is building a new assembly plant with 3 SMT lines in Vietnam operative
summer 2007.
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