SUPPLY CHAIN TRACKER

Transcription

1 Published for the Members of IPC SAMPLE PAGES Electronic Interconnection Industry SUPPLY CHAIN TRACKER Includes Industry Results for First Quarter 2009

2 Table of Contents About this Report...2 Section 1: The World Economy...3 Section 2: The North American Electronics Industry: Results and Leading Indicators...4 Section 3: Electronics Supply Chain Performance Overview...10 Section 4: Results from the EMS Industry...14 Section 5: Results from the PCB Industry...18 Section 6: Results from the Solder Industry...23 Section 7: Results from the Process Consumables Industry...26 Section 8: Results from the Assembly Equipment Industry...28 Section 9: Results from the Laminate Industry...30 Section 10: Findings from Recent IPC Fast Facts Surveys...34 Section 11: Metal Prices...37 Appendix: IPC Market Research and Statistical Programs...39

3 About this Report The Supply Chain Tracker is part of IPC s continuing effort to provide comprehensive and up-to-date market information to its members. IPC conducts monthly and quarterly surveys that collect unique market data on many segments of the electronic interconnection industry. The surveys cover rigid and flexible printed circuit boards (PCBs), electronic manufacturing services (EMS), electronics-grade solder, process consumables including wet chemistry and dry film, and PCB assembly equipment. Complete results of these surveys are provided only to the companies participating in the surveys, and participants typically receive only the data from their industry segment (e.g., solder manufacturers receive solder reports, etc.). The Supply Chain Tracker brings together selected findings from all of IPC s statistical programs in a single report. In addition, the report includes data from other industries, such as semiconductors and electronic end-products, as well as macroeconomic data to complete the supply-chain picture. Some of the data, such as trade flows in laminates and PCBs between major trading partners, are not available elsewhere except at substantial cost. Global data has been incorporated wherever possible, and more global data will be added over time. IPC is working to make more global data available to its members by expanding survey programs worldwide and exchanging data with sister organizations around the world. Supply Chain Tracker is free to all IPC members. Nonmembers can subscribe for $1,000 per year. Quarterly reports are posted in the market research page in the members-only area of IPC s website. Members can go to to see all of the data resources available to them, or they can access the latest edition of Supply Chain Tracker directly (via a log-in page) at Members who wish to receive each edition of Supply Chain Tracker directly via as soon as it is published can request this service by contacting Ms. Piyamart Holmgren, IPC s market research coordinator, at or homupi@ipc.org. The appendix of this report provides further information about IPC statistical programs. To learn more about participating in these programs or to subscribe to Supply Chain Tracker, please contact Piyamart at or homupi@ipc.org. Copyright 2009, IPC, The Association Connecting Electronics Industries, All rights reserved under both international and Pan-American copyright conventions. Any copying, scanning or any other reproduction of these materials without the prior written consent of the copyright holder is strictly prohibited and constitutes infringement under the Copyright Law of the United States. 2

4 Section 1: The World Economy World Economy Contracts in the First Quarter Economists are now calling the current global recession the worst since the Great Depression. There are early signs of recovery in a few of the leading indicators, however, some of which are shown in this report. In an IPC webcast on May 19, DuPont chief economist Bob Shrouds said, Our forecast has the economic recovery beginning late in the 3rd quarter. He expects to see growth in real Gross Domestic Product (GDP) and industrial production before the end of this year. If the financial system gets turned around we could be surprised with a much stronger recovery than we are currently forecasting, Shrouds added. Current numbers, however, are still bleak. The American economy contracted at its steepest pace in 50 years by 6.1 percent in the first quarter, hit by record declines in business inventories and exports. U.S. GDP, which measures total goods and services produced within U.S. borders, has now dropped for three straight quarters for the first time since the recession. The U.S. Federal Reserve Bank, which left its benchmark overnight lending rate in the zero to 0.25 percent range, has pumped tens of billions of dollars into the market to help credit markets and break the economy's downward spiral. The Eurozone has also plunged deeper into recession, with German exports and investments falling and France suffering its longest downturn in 60 years. The 16 nation economy shrank by 2.5 percent in the first three months of the year from the previous quarter. Compared with a year ago, Eurozone GDP shrank by 4.6 percent. Germany, Europe s biggest economy, shrank by 3.8 percent over the previous quarter and by 6.9 percent from a year ago. This was the biggest drop since France contracted by 1.2 percent and Italy shrank by 2.4 percent over the previous quarter. The U.K. economy shrank in the first quarter of 2009 by 1.9% after declining by 1.6% in the previous quarter. The UK business services and financial sector fell 1.8 percent, the biggest decline since records for the category began in Manufacturing contracted 6.2 percent, the most since at least Russia s economy shrank by 7 percent year on year in the first quarter of 2009, a major setback for an economy that enjoyed eight years of oil-fueled growth. China reported its worst quarterly economic growth in nearly two decades. The 6.1% rise in its first quarter GDP was lower than its 6.8 percent expansion in the fourth quarter of 20. Those quarters mark a significant slowdown from past growth that reached 13 percent for the year of 20. South Korea's economy contracted 4.3 percent in the first quarter of 2009 from the same period last year, as manufacturing and exports slumped amid the global downturn. It was the second straight quarter that South Korea's economy grew smaller. GDP shrank 3.4 percent in the fourth quarter of 20 in the first year-on-year contraction in a decade. Singapore's economy plunged nearly 20 percent in the first quarter, its biggest contraction ever, flagging a miserable start to the year for other export-dependent Asian nations grappling with the worst global slump in decades. The high volume of economic stimulus spending by various governments around the globe, however, can be expected to have a moderating influence on the severity of the global recession. 3

5 Section 2: Overview of the North American Electronics Industry Purchasing Managers Index Remains Low, but Decline Stopped in First Quarter Manufacturing contracted in March as the Purchasing Managers Index (PMI) registered 36.3 percent, which is far below parity but is half a percentage point higher than the 35.8 percent reported in February. This is the 14th consecutive month of contraction in the manufacturing sector. The rapid decline in manufacturing appears to have moderated somewhat, as the PMI remains in the mid-30s for a third consecutive month (January to March). A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates contraction. The PMI generally leads end-product orders by about one month. Long-Range View One-Year View Purchasing Managers Index and New Orders for Computer & Electronic Products in the U.S. Mar Mar Purchasing Managers Index and New Orders for Computer and Electronic Products in the U.S. Mar. 20 Mar New Orders for Computer and Electronic Products in the US (in Billion US $; Seasonally Adjusted) Purchasing Managers' Index New Orders for Computer and Electronic Products in the US (in Billion US $; Seasonally Adjusted) Apr- May- Jul- Aug- Oct- Nov- Jan-09 Feb Purchasing Managers' Index Computer and Electronic Products Purchasing M anagers' Index Computer and Electronic Products Purchasing M anagers' Index Source: US Census Bureau; The Institute for Supply Management 4

6 U.S. Leading Indicators Show the Economy May Have Hit Bottom The first quarter indicators reflect the current decline in the U.S. economy. They have remained stable, however, and the first April numbers available show some improvement in the economic outlook. U.S. Economic Indicators Indicators Jan-09 Feb Apr-09 U.S. New Orders for Computer & Electronic Products $23.0bn $24.7bn $24.8bn N/A Purchasing Managers Index The Conference Board Leading Index N/A NEMA Electroindustry Business Confidence Index Federal Funds Rate (effective) 0.15% 0.22% 0.18% 0.15% NA = not available at time of publication 8

7 Section 3: Electronics Supply Chain Performance Overview In the Global Supply Chain, Equipment Shows Steepest Decline Global shipment growth across the electronics supply chain remained negative in the first quarter of Global Sales in the Electronics Supply Chain for First Quarter 2009 Jan-09 vs. Jan- Percentage of Change Feb-09 vs. Feb- 09 vs. Q1-09 vs. Q1- Assembly Equipment Sales (Global, US$) (preliminary results) -70.8% Wet Chemistry Sales (Global, US$) ** ** ** -36.1% Dry Film Sales (Global, square meters) ** ** ** -32.5% Solder Sales (Global, kilograms) ** ** ** -41.6% Laminate Sales (Global, square meters) ** ** ** NA EMS Sales (Global, US$) ** ** ** -19.1% Semiconductor Shipments (Global, US$) -28.5% % ** Monthly data is not available; process consumables, dry film and solder surveys are conducted quarterly. Trends in Year-on-Year Global Sales Growth of Electronic Supply Chain 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% -20.0% -40.0% -60.0% -80.0% % Q1 20 Q2 20 Q3 20 Q4 20 Q Dry Film Sales (Global, Square meters) Solder Sales (Global, Kilograms) Assembly Equipment Sales (Global, US$) Wet Chemistry Sales (Global, US$) Semiconductor Sales (Global, US$) Source: IPC Statistical Programs; SIA for semiconductor sales. 10

8 In the North American Supply Chain, Only Flexible Circuit Sales Show Positive Growth The first quarter of 2009 continued to offer gloomy signals about the state of the electronics supply chain in North America. All of the supply chain remained in negative territory. The only positive growth was seen in flexible circuit sales. North American Orders and Sales in the Electronics Supply Chain for First Quarter 2009 Percentage of Change Jan-09 vs. Jan- Feb-09 vs. Feb- 09 vs. Q1-09 vs. Q1- Rigid PCB Orders (North America, US$) -30.7% -35.5% -39.8% -35.6% Rigid PCB Sales (North America, US$) -18.9% -23.2% -30.5% -24.6% Flexible Circuits Orders (North America, US$) -1.8% -6.1% -12.0% -7.4% Flexible Circuits Sales (North America, US$) 16.6% 3.6% 1.0% 6.0% EMS Orders (North America, US$) -20.8% -14.5% -19.6% -18.5% EMS Sales (North America, US$) -13.6% -14.3% -21.3% -16.7% Wet Chemistry Sales (North America, US$) ** ** ** -29.6% Dry Film Sales (North America, m 2 ) ** ** ** -41.9% Solder Sales (North America, kg) ** ** ** -23.8% Assembly Equipment Sales (North America, US$) (preliminary results) ** ** ** -66.0% Semiconductor Sales (North America, US$) -26.1% -24.5% -22.1% -22.1% US Electronic Equipment, Appliances, & Components Orders (US$) -26.5% -30.0% -24.3% -27.0% US Electronic Equipment, Appliances, & Components Sales (US$) -19.9% -18.9% -21.4% -20.1% US Electronics & Computer Products Orders (US$) -15.7% -10.9% -11.2% -12.6% US Electronic & Computer Products Sales (US$) -22.5% -15.3% -16.1% -18.1% Notes: For items included in US Electronic Equipment, Appliances & Components and US Electronics & Computer Product, please visit Sources: IPC Statistical Programs; SIA for semiconductor sales; U.S. Census Bureau for end-product sales and orders. ** Monthly data are not available; wet chemistry, dry film, solder and assembly equipment surveys are conducted quarterly. 11

9 Recession Hits all Segments of the Electronics Industry The graph below illustrates how all segments of the electronics supply chain reflect the current economic picture. In the first quarter of 2009, all of the sales are in negative territory. Semiconductor sales are showing a slight upward trend, but all others are still on a downward trend. Typically, the assembly equipment industry is experiencing the sharpest downturn. Trends in Year-on-Year Growth Rates for the North American Electronics Supply Chain 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% -35% -40% -45% -50% -55% -60% -65% -70% -75% Q1 Q2 Q3 Q4 Q1 09 PCB Sales EMS Sales Dry Film Sales Semiconductor Sales Wet Chemistry Sales Solder Sales Assembly Equipment Sales Sources: IPC statistical programs and SIA (semiconductor data) 12

10 New Measurement Tools Created for IPC Members and Subscribers IPC members and subscribers to Supply Chain Tracker now have the opportunity to access an interactive graph, similar to the one on the preceding page, in Excel. This graph shows these industries as well as macroeconomic leading indicators from Q1 20 to the present, and it gives users the ability to enter their companies growth data. The interactive graph then shows all of the trend lines along with the individual company growth trend so that users can see how their companies performed in comparison to the rest of the industry. Members can download the interactive graph at IPC has also integrated the data trends from all key segments of the electronic interconnect industry with leading indicators to create an index of North American electronics industry performance. This index is being introduced for the first time in this issue of Supply Chain Tracker. The trend to date is shown in the graph below. IPC North American Electronics Industry Performance Index 10% 6.2% 5% 0% -5% -3.0% -1.0% -3.3% 0.4% -1.2% 1.2% -1.1% -10% -15% -12.1% -20% -25% -30% -35% -28.6% Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 09 Source: IPC Market Research 13

11 Section 4: Results from the EMS Industry North American EMS Industry Sales Still Falling Year-on-year growth in the North American EMS industry has been negative since November 20 and the rate of decline continues to worsen. Thanks to ongoing growth in outsourcing by OEMs, however, the downturn in the EMS industry has been less severe than in other segments of the electronics supply chain. Year-on-Year Growth Rate Trend in North American EMS Industry Sales 25% 23.2% 23.9% Year-on-Year Growth Rate 15% 5% -5% 14.6% 13.1% 10.5% 9.5% 11.3% -1.4% 5.1% 6.4% -4.3% -4.0% 12.0% 11.3% 9.6% 9.2% 6.6% -1.5% 9.4% 0.0% 6.0% 1.1% -1.1% -1.3% -15% Jan- Feb- Apr- -25% May- Jul- Aug- Oct- Nov- Jan- Feb- Apr- May- Jul- Aug- Source: IPC EMS Monthly Statistical Program Oct- Nov % -14.3% -21.3% Jan-09 Feb

12 EMS Book-to-Bill Ratio is First Sign of Recovery While orders and sales remain below last year s levels in the North American EMS industry, the book-to-bill ratio turned upward in February. It is still below parity (1.0), but it appears to be moving in the right direction. A book-to-bill ratio below 1.0 indicates that current supply is greater than demand, which is a negative indicator for sales in the next several months. Trends in North American EMS Industry Business Activity and Book-to-Bill Ratio Index ( 2005 Baseline = 100) Book-to-Bill Ratio (3-Month Rolling Average) 0 Jan- Feb- Apr- May- Jul- Aug- Oct- Nov- Jan- Feb- Apr- May- Jul- Aug- Oct- Nov- Jan- Feb Shipment Index Bookings Index Book-to-Bill Ratio Source: IPC EMS Monthly Statistical Program 15

13 Flex Backlogs Down From 2004 to early 2006, flexible circuit backlogs grew to more than 700 percent of the current month s production, equivalent to about seven months of production. After several months of negative bookings growth, they moved closer to a more normal level. Flexible circuit backlogs in the first quarter of 2009 stand at 290 percent or about three months of production. Rigid PCB backlogs have remained flat over the past three years, at around 200 percent. Backlogs in both segments declined in the first quarter in response to the decline in new orders. Rigid PCB and Flexible Circuit Backlogs (Backlog as Percentage of the Month s Shipments, Apr Apr 2009) 900% 800% 700% 600% 500% 400% 300% 200% 100% 900% 800% 700% 600% 500% 400% 300% 200% 100% 0% 0% Apr-06 Jul-06 Oct-06 Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan-09 Apr-09 Backlog as Percentage of Shipment - Rigid PCB Backlog as Percentage of Shipment - Flexible Circuits Source: IPC PCB Monthly Statistical Program Source: IPC Monthly PCB Statistical Program More detailed data on PCB sales and orders by product category, as well as backlogs, returns and finished goods inventories, can be found in the monthly statistical report for this program, which is free and available to companies that participate in the program. 20

14 Strong Growth Continues for Asian Trade in PCBs PCB exports and imports have grown steadily in Asia since 2001, with the highest growth rates seen in China. China continues to be a magnet for foreign investment in electronics manufacturing facilities. In 2006, for the first time, China s exports exceeded its imports. In the first quarter of 2009, however, China s trade has suffered due to the global recession. PCB Exports From Six Key Countries/Regions to the World* (HTS: , US$ Billion, st Quarter 2009) Billions China EU15 (External Trade) United States Japan South Korea Taiw an Q Q PCB export data from EU 15 and Taiwan are not yet available. Source: Global Trade Information Services, PCB Imports of Six Key Countries/Regions from the World* (HTS: , US$ Billion, st Quarter 2009) Billions China EU15 (External Trade) United States Japan South Korea Taiw an Q Q PCB import data from EU 15 and Taiwan are not yet available. Source: Global Trade Information Services, 22

15 Section 6: Results from the Solder Industry The global solder industry has responded rapidly to the demand for lead-free solder, despite immense technical challenges. The demand was originally driven by European Union (EU) legislation. Effective on July , the EU banned lead in electrical and electronic applications, as mandated by the Restriction of Hazardous Substances (RoHS) and Waste from Electrical and Electronic Equipment (WEEE) Directives. Although PCBs used in automotive, aerospace, military and high-reliability telecommunications equipment are currently exempt from the requirement, all other products sold in Europe must be lead free. China has similar legislation. The movement to lead-free products has been industry-driven and voluntary in Korea and Japan, but has had just as big an impact The shift to lead free affects the entire supply chain, including the end markets. As the trend continues, industries that are currently exempt from lead-free requirements are finding a dwindling number of suppliers offering lead-based components. IPC has led several initiatives to help the industry respond to the lead-free challenges. For information about lead-free requirements worldwide, and initiatives to help manufacturers be compliant and remain competitive, visit Lead-Free Solder Market has Stabilized The growing proportion of lead-free solder in the marketplace seems to have leveled off. For more than a year it has hovered around 62 percent of worldwide solder consumption. Trend in Consumption of Standard versus Lead-Free Solder Worldwide 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 15% 19% 21% 22% 27% 85% Q % Q % Q % Q % Q % 39% 43% 67% Q % Q % Q % 52% 55% 54% 54% 55% 58% 62% 63% 61% 63% 62% 53% Q % Q % Q % Q % Q % Q % Q % Q % Q % Q % Q % Q % 37% Q Standard Lead Free Source: IPC Global Quarterly Solder Statistical Program 23

16 China and the Americas are the Largest Solder Markets Solder consumption in the Americas is disproportionately high when compared to the volume of electronics production in the region, as measured by semiconductor consumption. This is due to the nature of the market. Electronic assembly of military electronics typically involves more solder than commercial products. Military cables and box build assemblies involve soldering wires to connectors, and that consumes more solder than other applications. EMS companies in the USA typically do a much greater proportion of work in these applications than EMS companies in other regions. Electronic grade solder is also used to seal enclosures, solder RF shields and make cable harness assemblies. The survey sample in IPC s Global Solder Statistical Program comprises more than 90 percent of worldwide solder production. Solder Consumption by Region in 20 Rest of Asia 21% Europe 11% Americas 23% Japan 19% China 26% Americas China Japan Rest of Asia Europe Source: IPC Global Quarterly Solder Statistical Program More detailed data on solder sales by region and product category can be found in the quarterly statistical report for this program, which is free and available to companies that participate in the program. 25

17 Section 7: Results from the Process Consumables Industry Process Consumables Growth Trend Continues Downward Process consumables followed the rest of the electronics supply chain in its downward trend, which started in third quarter 20 and continued lower into first quarter The rate of decline has slowed somewhat, however. Of the three major regional markets, Europe has seen the sharpest decline. 30% Year-on-Year Growth in Process Consumables Market Worldwide 20% 19.6% 10% 9.8% 5.5% 1.9% 0% -10% -20% -9.1% -2.4% -21.4% -30% -40% -25.4% Q1 20 Q2 20 Q3 20 Q4 20 Q % -36.1% Dry Film (m2) Wet Chemistry ($US) Year-on-Year Growth in Process Consumables Market in Asia 30% 25.1% 20% 10% 6.4% 5.7% 4.1% 0% -10% -10.0% -4.3% -20% -21.1% -30% -40% -25.7% -30.3% -36.2% Q1 Q2 Q3 Q4 Q1 09 Dry Film (m2) Wet Chemistry ($US) 26

18 Section 8: Results from the Assembly Equipment Industry Assembly Equipment Sees Steepest Decline in the Electronics Supply Chain Typically the most volatile segment of the electronics supply chain, worldwide sales of assembly equipment plunged from a year-on-year growth rate of 98 percent in Q1 20 to minus 71 percent in Q The Q growth rates presented here are based on preliminary data as Q1 data collection for this program was not complete at the time of publication. Worldwide Assembly Equipment Sales Growth Trend (based on preliminary data for Q1 2009) 120% 100% 96.7% 80% 60% 40% 36.6% 20% 0% -7.4% -20% -40% -60% -80% -37.8% -70.8% Q1 20 Q2 20 Q3 20 Q4 20 Q Source: IPC Global Quarterly Assembly Equipment Statistical Program More detailed data on sales of assembly equipment by specific product categories, by region, and by industry end-market can be found in the quarterly statistical report for this program, which is free and available to companies that participate in the program. Companies that participate in the assembly equipment statistical program also receive annual data from IPC s North American EMS statistical program on the EMS industry s plans for capacity expansion and equipment purchase. The graphs on the following page provide an overview of this year s forecast. Program participants also receive this data by specific sub-regions to help them better target their sales efforts. 28

19 U.S. and Japanese Laminate Exports Outpaced Imports By 2003, laminate exports from China, Japan and South Korea had returned to their 2000 levels or higher. Laminate exports from the USA and Japan surpassed their 2000 levels by Laminate Exports from Six Countries/Regions to the World* (HTS: ; US$ Million; Q1-2009) Millions China EU15 (External Trade) Japan South Korea Taiwan United States Q Q laminate export from EU 15 and Taiwan are not yet available. Source: Global Trade Information Services, 32

20 Section 10: Findings from Recent IPC Fast Facts Surveys Survey Points to Opportunities in HDI Boards in North America and Europe In the third quarter of 20, IPC surveyed design engineers, PCB buyers and other key personnel at original equipment manufacturers (OEMs) in North America and Europe about the current state of supply and demand for high-density interconnect (HDI) boards. Seventy-three percent of the respondents claimed their need for HDI boards was growing and, on average, the responding OEMs expected to spend 4.3 percent more on HDI boards in 2009 than in 20. Nearly 30 percent of the respondents in North America and 20 percent in Europe claimed the local supply of HDI boards was inadequate to meet the demand. OEMs' Views on Whether HDI Supply is Adequate to Meet Demand, by Region Where Companies are Headquartered 100.0% 100.0% 90.0% 80.0% 70.0% 80.0% 70.6% 60.0% 50.0% 40.0% 30.0% 20.0% 20.0% 29.4% Yes No 10.0% 0.0% 0.0% Asia Europe, Middle East & Africa North America The respondents cited communications, instrumentation/medical and government/military/aerospace as the leading end-markets for HDI boards. 34

21 Section 11: Metal Prices Metal Prices Decline The prices of all metals except gold and silver continued their decline through the first quarter of The first quarter decline is partly due to the global recession and weaker demand. $12,000 Copper Daily Price, Dollar per M etric Ton Dec Mar $1,100 Gold Daily Price, Dollar per Troy Dec M ar $10,000 $1,000 $8,000 $6,000 $4,000 $2,000 $900 $800 $700 $600 $500 $ $ $1,050,000 Indium Daily Price, Dollar per M etric Ton Dec Mar $4,200 $3,600 Lead Daily Price, Dollar per M etric Ton Dec Mar $850,000 $3,000 $650,000 $2,400 $450,000 $1,800 $1,200 $250, $ $64,000 Nickel Daily Price, Dollar per M etric Ton Dec Mar $22 Silver Daily Price, Dollar per Troy Dec Mar $56,000 $48,000 $40,000 $32,000 $24,000 $16,000 $8, $20 $18 $16 $14 $12 $10 $8 $

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