Thu, Jan 16, 2014 - Page 14 News List

PCB suppliers face slow first quarter

STEADY FROM LAST QUARTER:The unchanged outlook for PCB suppliers is offset by a negative view on smartphone and tablet shipments from inventory adjustments

By Kevin Chen  /  Staff reporter

Taiwanese suppliers of printed circuit boards (PCBs) are likely to see the low-season effect continue this quarter from last quarter, with signs of recovery in this industry likely emerging in late next quarter, KGI Securities Co (凱基證券) analyst Bonny Weng (翁筱雯) said yesterday.

Weng, who won the nation’s best technology analyst award from Asiamoney magazine last year, said in a note that PCB orders for flatpanel display and PC products look steady this quarter because of lower inventories.

However, shipments for smartphone and tablet products would see a negative impact this quarter from US clients’ inventory adjustments, she said, without identifying the US companies.

“The latest North American PCB book-to-bill ratio data show the industry lost steam in the second half of last year, and we expect the weakness to remain there in the first half this year,” Weng said.

“Taiwanese PCB suppliers are expected to see a substantial recovery in their business at the end of next quarter,” she added.

On Friday last week, the Bannockburn, Illinois-based industry association IPC reported that the book-to-bill ratio for North America-based PCB makers declined to 0.91 in November from 0.94 in October, marking the lowest level in nearly five years.

The book-to-bill ratio measures new orders against products sold each month, with a ratio of greater than one indicating strong demand over the next three to six months, while a ratio of less than one showing weakness in the near term.

The IPC found that November’s orders declined 15.5 percent month-on-month and 6.7 percent year-on-year, while billings in the month were down 6.3 percent from the previous month, but were 4 percent higher than the previous year.

“While sales continued to strengthen in the North American PCB industry compared to last year, orders declined,” IPC’s director of market research Sharon Starr said in a statement posted the association’s Web site.

“This disparity between sales and order growth pushed the book-to-bill ratio to its lowest point since March 2009, indicating a slow and possibly bumpy recovery going into 2014,” she added.

HSBC Securities Taiwan Corp yesterday echoed KGI Securities’ view, saying that most Taiwanese PCB makers would experience the same situation in the current quarter as they did during the last quarter.

The fourth quarter of a year is the traditional low season for PCB suppliers, who normally suffer from significant sales declines in December as clients conduct physical inventory checks.

However, flexible-PCB business would be the key growth driver for the industry going forward, HSBC analyst Yao Tse-yong said in a separate report, citing the corporation’s latest quarterly sales data.

Among the eight PCB makers under the brokerage’s coverage, Yao said companies that focuses primarily on flexible PCBs — Flexium Interconnect Inc (台郡), Zhen Ding Technology Holding Ltd (臻鼎) and Career Technology Co (嘉聯益) — saw their combined revenues grow 32.6 percent last quarter from the previous quarter and 26 percent higher year-on-year.

Meanwhile, companies that specialize in the rigid-PCB business — including Tripod Technology Corp (健鼎), Unimicron Technology Corp (欣興電子), Kinsus Interconnect Technology Corp (景碩科技) and Nan Ya Printed Circuit Board Corp (南亞電路板) — posted a cumulative decline of 5 percent in sales over the same period but 1.5 percent increase year-on-year, Yao said.

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