June 2009 shipments declined 30.4% compared to June 2008. Any rebound will be slow during the second half 2009. Total production for 2009 will come in at 80% of the previous year’s number and could take 2 years to return to previous highs.
The Japanese Ministry of Economy, Trade and Industry (METI) released June’s production data for the Japanese printed circuit industry. As much as it pains me, let’s review performance for the first half of the year.
Revenue during June reached 55.7 billion yen, representing a 12.7% increase from the previous month.
Shipments have increased month-over-month since March; however, revenue is still down 30.1% from the same month of the previous year.
Shipments during June totaled 1.466 million square meters, a 17.9% increase from the previous month, but a 30.4% decline compared to June 2008.
There is a slight rebound from a horrible February where volume was 50% lower compared to the previous year-to-date figures for the same period. The rate of decline is slowing and seems to be turning around.
Sales for most major product lines have significantly improved since the worst months on record immediately following the financial credit crisis in September 2008. Total sales remain much lower compared to the previous year; however, all barometers are indicating clearing skies. We may be on the road to recovery.
Total revenue for the first half of 2009 came in at 270.0 billion yen, representing a 43.3% decline compared to the same period in 2008; and total volume shipped during the first half totaled 6.8 million square meters, a 44.1% decline.
Product category performance
Performances varied for each product category. Declines in manufacturing volume for high-end products such as built-up, multi-layer boards was -21.3%, double-sided and multi-layer flexible circuits -15.8% and rigid base module substrates -16.3% are significantly smaller than the industry average.
Volume decline for other module substrates that include tape-automated-bonding (TAB) and chip-on-flex (COF) are significantly higher than the industry average at -61.9%.
The main distribution channel for COF products was aimed at Korea and Taiwan. The export business for Japanese manufacturers is way off due to a strengthening yen over the last year (lay offs in Japan skyrocketed during the last 9 months).
Japan’s fortune cookie
What does the future hold? Let’s look at the facts. Products manufactured by the Japanese printed circuit board industry typically end up in consumer products or industrial applications.
Traditional rigid boards that include double-sided and four layer boards are used in consumer products. Business has shifted to foreign vendors. This business has not returned to Japanese manufacturers, nor will it. The high-end rigid board segment, mostly built-up boards, will remain with domestic manufacturers.
Sales have increased steadily since February, but this rebound will slow during the second half of the year. We may be looking at another 12 to 18 months before sales reach their highs posted a couple of years ago (this assumes new applications surface to help spur activity).
In the short term, the single-sided flexible circuits segment will perform adequately relative to sales; however, all signs point to a down turn next year. Business from the double-sided and multi-layer flexible circuits segments will continue on the upswing due to strong demand from domestic and foreign customers. Sales could possibly reach their historical peak in 6 months.
Performance for the rigid module substrates segment is dependant on positive trends from the global semiconductor market as well as fluctuations in exchange rates against the Japanese yen.
Sales will continue to increase over the next few months; however, it is very difficult to forecast sales past 6 months. Sales for other module substrates, mostly COF tape circuits, will continue to increase for the rest of the year, but things could be dismal next year unless this segment can also tap into some new applications.
The entire Japanese printed circuit board industry will show improvements during the second half of 2009, but the recovery rate will slow down. Total production for 2009 will come in at 80% of the previous year’s number, and it may take as long as two years to return to its highest levels.
Source: EPT Newsletter, VentureOutsource.com, August 2009
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