Bleak Outlook for US PCB Market

Year to date, rigid PCB shipments are down 10.9 percent and bookings are down 16.3 percent. Compared to the previous month, rigid PCB shipments increased 12.3 percent and rigid bookings increased 20.8 percent. The book-to-bill ratio for the North American rigid PCB industry in June 2007 climbed back up above parity to 1.01. Flexible circuit shipments in June 2007 are down 14.1 percent and bookings are down 37.8 percent compared to June 2006. Year to date, flexible circuit shipments are down 2.3 percent and bookings are up 7.3 percent. Compared to the previous month, flexible circuit shipments increased 4.5 percent and flex bookings are down 3.4 percent. The North American flexible circuit book-to-bill ratio remained positive at 1.12 in June, indicating probable sales growth in the near term. For rigid PCBs and flexible circuits combined, industry shipments in June 2007 decreased 11 percent from June 2006, and orders booked decreased 12.2 percent from June 2006. Year to date, combined industry shipments are down 10.4 percent and bookings are down 14.9 percent. Compared to the previous month, combined industry shipments for June 2007 are up 11.8 percent and bookings are up 19.0 percent. The combined (rigid and flex) industry book-to-bill ratio in June 2007 remained just above parity at 1.01. “The combined PCB book-to-bill ratio has stayed just around parity for the past four months, indicating that PCB sales are likely to continue at about the same level during the third quarter," said IPC President Denny McGuirk. “This year's sales are continuing at around 10 percent below 2006 sales. This reflects the continuing economic slowdown, but business is holding steady at current levels," he added. The book-to-bill ratios are calculated by dividing the value of orders booked over the past three months by the value of sales billed during the same period from the companies in IPC's survey sample. A ratio of more than 1.00 suggests that current demand is ahead of supply, which is a positive indicator for sales growth over the next two to three months. Book-to-bill ratios and growth rates for rigid PCBs and flexible circuits combined are heavily affected by the rigid PCB segment. Rigid PCBs represent an estimated 88 percent of the current PCB market in North America, according to IPC's World PCB Production and Laminate Market Report for the Year 2006, which will be published in August. The Role of Noth American Production IPC's monthly survey of the North American PCB industry tracks bookings and shipments from U.S. and Canadian facilities, which provide indicators of regional demand. These numbers do not measure U.S. and Canadian PCB production. To track regional production trends, however, IPC asks survey participants for the percent of their reported shipments that were produced domestically (i.e., in the USA or Canada). In June 2007, 84 percent of total PCB shipments reported were domestically produced. Domestic production accounted for 83 percent of rigid PCB and 85 percent of flexible circuit shipments in June by IPC's survey participants. These numbers are significantly affected by the mix of companies in IPC's survey sample, which remains constant throughout each calendar year, but may change with the January survey results. Bare Circuits Versus Assembly Flexible circuit sales typically include value-added services such as assembly, in addition to the bare flex circuits. In June, the flexible circuit manufacturers in IPC's survey sample indicated that bare circuits accounted for about 85 percent of their shipment value reported for the month. Assembly and other services make up a large and growing segment of flexible circuit producers' business. This figure is also sensitive to changes in the survey sample, which may occur at the beginning of each calendar year. Interpreting the Data Year-on-year and year-to-date growth rates provide the most meaningful view of industry growth. Month-to-month comparisons should be made with caution as they may reflect cyclical effects. Because bookings tend to be more volatile than shipments, changes in the book-to-bill ratios from month to month may not be significant unless a trend of three consecutive months or more is apparent. It is also important to consider changes in bookings and shipments to understand what is driving changes in the book-to-bill ratio.