Many reports, anecdotal and evidentiary, point to a general slowing in PCB production and sales over the past quarter.
- The July PMI, a broad-based manufacturing index, remains positive but is at its lowest mark in a year.
- Moreover, the New Orders Index dropped below parity, suggesting future contraction.
- The North American PCB book-to-bill ratio is at 1.0, but the outlook for rigid boards has turned negative.
- The semi gear B2B has been under 1.0 for nine straight months.
- Semiconductor sales forecasts are being downgraded.
- Auto sales are slowing.
- General aircraft demand dropped nearly 16%.
Yet there are some reasons for optimism:
- Wafer shipments rose in the June quarter.
- Germany’s PCB book-to-bill remains very strong.
- Several key PCB fabricators, including Multek, MFlex, Sanmina-SCI and TTM, expect sequential growth.
- Chemicals giant OMG predicts second-half sequential growth in PCBs.
- Auto sales are expected to rebound.
- Smartphones are forecast to continue their lightspeed growth pace.
I am of the mindset that what we are seeing is a return to cyclicality after roughly two years of recession followed by a year-plus of bottled-up demand. Clearly there’s some market turbulence ahead, especially when we take the macro vectors into account. Some of the end-markets need a boost: Now that Windows 7 has taken over, PCs are stagnant, with new tablet demand offset by rather humdrum desktop/laptop interest coupled with some migration to smartphones. Nokia and RIM are skidding, and Apple can’t make up for everyone’s lack of flair. Autos are a big-ticket item and many consumers today need stronger feelings of job security before taking on new debt.
A forecast slowdown in US defense spending (the nation’s fiscal year starts in October) could be partially offset by new deliveries of jumbo passenger jets (Boeing last month announced a record single order and will ship its first Dreamliner next month).
The tea leaves are murky. We hope for the best.