1H Performance of Global PCB Industry

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The Japanese Ministry of Economy, Trading, and Industry (METI) has released PCB production data for June. Taiwan, Germany, North American, China, Korea, and other countries also released their data. Listed below is a recap of PCB production data for the first half of 2014.

June PCB shipments in Japan rebounded remarkably. Revenue came in at 40.67 billion yen, representing a 5.8% increase from the previous month, while volume reached 1.143 million square meters, representing a 4.8% increase from the previous month. Revenue and shipped volume posted a record month for 2014. However, when we drill down and compare these levels to the same month last year, volume grew 7.8%, but the revenue declined 1.9%. This tells us that volume targets were reached due to price cuts.

These trends are typical with build-up type multilayer rigid boards; the core products produced from the Japanese PCB industry. Volume increased 8.6% from the same month of the previous year, but revenue has declined 4.1%. This reflects a 12% price drop during the last 12 months. The majority of the circuits are earmarked for cellular phones from domestic manufacturers, and PCB manufacturers are forced to cut prices to remain competitive in this limited market.

The gap between revenue and volume is larger when looking at double side and multilayer flexible circuits--another core product from the Japanese PCB industry. Volume increased 6.2%, but revenue dropped 27.4% when comparing month to month from the previous year. Selling prices dropped more than 33% in just a year. The primary customers for circuits are the foreign manufacturers of smart phones and tablet PCs. Japanese manufacturers are in the midst of a price war with their Taiwanese and Chinese competitors.

The module circuits or semiconductor substrates posted a growth in revenue and shipments over the last two months. Their primary customers are overseas packaging firms.

Reviewing the first half of 2014, the cumulated revenue total was just north of 230 billion yen, a 1.2% decline when comparing year over year. Unfortunately, there are no signs of a rebound in sight for the domestic electronics industry and we are not predicting a better year than 2013 (the worst year since 2008).

Taiwan reported NT $194 billion revenue for the first of the year. This is a 7.49% increase for the same period of time last year. Flex circuit manufacturers posted double-digit growth, coming in at almost 20%. Circuit manufacturers continue to receive increased orders during the second half of the year, so Taiwan should enjoy a double digit growth for 2014.

The electronics industry in North America rebounded during the second quarter; however, the cumulated PWB shipments for the first half of the year came in at a 0.3% decline comparing year over year. This year will probably remain flat.

The PCB industry in Germany posted a 3.2% growth rate for the first half of the year. The manufacturers received increased orders during the second quarter. Business is extremely choppy in Germany, so it is difficult to forecast sales; however, we should not expect a growth of more than 5% for the year.

Unfortunately, I do not have the numerical data from the Korean PCB industry. First, a recap: Samsung Electronics, the largest customer for the PCB industry in Korea, is facing stiff price competition from new Chinese manufacturers. The Galaxy line, the flagship product for the company, continues to lose world wide market share. When Samsung sneezes, the Korean circuit board manufacturers catch cold. The competition is forcing lower prices and volume shrinkage from the overseas production in Vietnam or China. We do not forecast positive growth performance from the domestic PCB market in Korea.

The global PCB industry will post double-digit gains for 2014. Taiwan and China will remain the top dogs in the global market. Other markets that include Japan, North America, Western Europe, and Korea will remain flat for the year.

Dominique K. Numakura, dnumakura@dknresearch.com
DKN Research, www.dknresearchllc.com

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