Electronics Economics: a Look at the Whole Picture

If you only followed the semiconductor equipment bookings book-to-bill ratio, news in the electronics sector would be depressing. However, IPC — Association Connecting Electronics Industries announced less-than-dismal results from its North American Printed Circuit Board Statistical Program.

Last week, the Semiconductor Electronics Association of Japan (SEAJ) reported a book-to-bill ratio for January of 0.55, a new low in a steadily decreasing semiconductor market as compared to 0.70 in December. The ratio is down 80.1% year over year.

Then the North American semiconductor equipment book-to-bill announced a new low in January, dropping to a ratio of 0.48, down from December’s ratio of 0.81, and down year-over-year 54%. “Bookings are at the lowest levels since 1991,” said Stanley T. Myers, president and CEO of SEMI.

In the IPC book-to-bill results, rigid PCB shipments are down 14% and bookings are down 24.5% in December 2008 from December 2007. The book-to-bill ratio fell to 0.89. Flexible circuit shipments in December 2008 were down 17.1%, but bookings are up 23.8% compared to December 2007. The North American flexible circuit book-to-bill ratio in December jumped to 1.08. The combined ratio for rigid and flex in December dipped, but only to 0.90.

“Rigid PCB orders have trailed shipments for nine straight months now, and that is reflected in a declining book-to-bill rate,” said IPC President Denny McGuirk. “Strong orders have been keeping the flexible circuit segment growing, but the whole industry’s December sales were weaker than in prior years. However, the industry ended the year about 1% ahead of 2007,” he concluded.

Business news is primarily negative, but not in every company. Hewlett-Packard, world’s largest PC maker, reported that sales missed experts' estimates. Sales in the year ending in October will fall 2–5% from $118.4 B in 2008.

Mark Hurd, CEO at HP, is eliminating jobs and closing offices, working under the assumption that the economy won’t improve the rest of this year. Hurd’s pay will be reduced 20% as well, and other salaries will be reduced 2.5 to 15%.

On the flip side, at medium-sized EMS providers, business varies. IEC Electronics, a full-service Newark, N.Y.-based EMS provider offering a range of design, prototype, and volume PCB assembly services, announced its Q1 2009 financial results with positive results. Sales increased 25% in 2008. Operating income increased by more than 140%. Net income before tax increased more than 220%. Customers were added in target markets. And the company intends to invest $3.5 million over the next three years in manufacturing equipment to improve productivity, cut rework, and support quality.

In a webcast of the annual shareholders meeting, IEC Electronics revealed their positive numbers, but acknowledged that the world economy is in a deep recession. Part of IEC’s strength is in that the company attracts a diverse group of industries, and the military and medical sectors are holding strong.

There are hopeful signs in all areas that things will improve. PCs may be down; however, sales of mini/ultraportable devices and Midis, iPhones, and other consumer electronics show promise. The only question regarding the turnaround is: When? Patience is a virtue.

Gail Flower, editor-at-large

VISION Awards Recognize the Electronics Assembly Industry of Today and Tomorrow

Technology has a tempestuous relationship with the past. Many people in the electronics assembly industry have been with the technology from the beginning and can wax poetic about the good old days 10, 20, 30 years ago. It’s not that this past, the glory days, is irrelevant, it’s that their memory cannot overshadow the present. To paraphrase a recent visitor to SMT’s offices, outdated business models can be as “old” as 90 days in the past. Electronics were always advanced by manufacturing technology achievements, and under the shadow of global economic uncertainty, today’s innovations — not yesterday’s business models and volumes — deserve recognition. The 17^th annual SMT VISION Awards aim to do just that, looking forward to what the industry can be tomorrow.

Much like Girl Scout Cookies, the awards are given out only once a year, but much anticipated and valued throughout. The SMT VISION awards will be presented in more than 15 categories, ranging from underfills to contract services to test equipment, recognizing the best products to lead the SMT and microelectronics assembly industry into new-generation capabilities, business models, and end products. See the companies honored at the VISION Awards ceremony, March 30, 2009 at APEX Expo, Las Vegas. The party will be held in the Banyan Room D, Level 3 of the South Convention Center at the Mandalay Bay, from 6:30 to 8:00 pm, and all are welcome.

Products are qualified to receive VISION Awards by persnickety judges, thoroughly evaluating environmental impact, cost, innovation, and other important factors. Look for VISION awards on display with materials, equipment, software, and other offerings on the show floor at APEX. The award signifies a product’s relevance to the electronics assembly and manufacturing industry today and in the future.

IPC reports that APEX attendee registration is higher than expected, in the midst of the economic troubles. It seems that — at a time when “value” is being redefined for houses, banks, assets of all kinds — the educational and influential value of programs at APEX remains high, unshaken. If you’re attending the show, be sure to soak up as much useful information as possible for the here-and-now of our industry, and apply it to your business model, job, or research. To see the highlights of the technical conference, including SMT’s free forum on EMS trends, read IPC APEX Expo Preview: Technical Courses and Tutorials and Get Ready for APEX: Preview of Technical Sessions and Noteworthy Events.

To see the winning products from the 16^th annual SMT VISION Awards, see the VISION Award Winners.

Meredith Courtemanche, managing editor