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Throughout the electronics manufacturing industry chain upstream, CCL industry there needs to light trends. CCL to the electronics manufacturing industry, associated with almost all sub sectors, CCL light indicates to the electronics manufacturing industry has to light possible.
Semiconductor is the core of electronics components, the data from the SIA also less optimistic. Quarterly analysis of data from the semiconductor industry began in 2004, the amount of growth has been shipped down to monthly data analysis, the amount of growth in shipments of the semiconductor industry have accelerated the recent downward trend.
North American semiconductor equipment, semiconductor leading indicator B B value since August 2006 has been below the fundamental at 1.0, from the June 2007 start, B B value of starting from 1.0, the semiconductor industry, the situation is not optimistic.
We believe that the electronic manufacturing industry to the light of the main reasons for demand reduction. Reduced demand on the one hand because there is no killer products appear on the other hand is a global economic slowdown brought about a decline in global demand for consumer electronics.
Yuan appreciation, rising costs, macro control of the listed companies in China’s electronics manufacturing industry have put pressure on, e business have to upgrade the product structure, improve product gross margins in order to ensure the company’s growth.
In summary, we believe that electronic manufacturing industry is facing greater pressure, thus reducing the electronic components industry, a neutral rating. Of course, since a number of electronic manufacturing sub sectors, the economy of some sub sectors such as energy efficient lighting, LCD, and RFID, we remain optimistic attitude and pay close attention to core competencies has been made in the company.
CCL industry has begun to chill In the PCB industry research company, when we found, to health benefits on behalf of the CCL technology products has begun to price cuts, price cuts in the range of between 5% 10%. With the implementation of the new labor law, health benefits of technology to increase labor costs, raw material costs are also high hover. CCL usual shift the cost of enterprises have a stronger capacity to health benefits of the product price cuts mean?
CCL to determine the entire electronic manufacturing industry is the leading indicator for CCL Bonded Copper in the electronics industry chain, the most upstream, there is no alternative appeared, almost all electronic products must be used in CCL, CCL is to determine the degree of electronic manufacturing leading indicator for the economy.
CCL high degree of industry concentration, product transfer ability. Globally, the output of the top ten CCL manufacturers accounted for 60% of the total CCL, in China, the top ten CCL’s market share accounted for 86%. For this reason, the CCL is located in the upper reaches of the industrial chain in prices has a greater right to speak.
Health benefits technology sales growth and productivity growth is not match the Analysis of health benefits the performance of science and technology in 2007 Express, the company’s fourth quarter sales of 1.12 billion, a decline of 7.12%, operating profit was 0.89 billion yuan, down 47.7% chain, chain net profit fell 34.31 percent, the profit decline is much larger than income, may be construed as the end of last year, prices have presented low.
From the production point of view, health benefits last year, a large scale expansion of scientific and technological capacity, capacity expansion of circumstances such as in Table 1, the actual increase in production capacity in the range of more than 70% is already the world’s sixth largest manufacturer of CCL for the country’s largest copper clad laminate production enterprises, accounting for about 4% global market share, accounting for about 20% of the domestic market. The company’s substantial increase in production capacity, the company’s sales revenues are falling, meaning that the downstream demand and there is no synchronization to keep up with.
From the September 2007 start, CCL demands of the industry’s growth began to slow down. This is the analysis of science and technology on the health benefit is consistent, compared with health benefits and technology grew faster than counterparts in Taiwan, but because of poor degree of CCL big business in the economy, its performance can hardly be expected good performance. Initially, we determine the CCL industry will continue to hover at the bottom, and further depends on the health benefits to determine the quarterly data and the Taiwan company’s follow up data. CCL electronics manufacturing industry is the source, CCL industry, if the cold, you can view the entire electronic manufacturing economy to the degree of light. To further prove our point of view, we have to observe the electronics industry at the very core part of the semiconductor industry.
Similarly, the semiconductor industry, the data can not be optimistic about the Global semiconductor shipments quarterly data showed that from the third quarter of 2004, the global semiconductor shipments started to decline in the amount of growth in the Asia Pacific region is no exception. At the same time, the market research group Gartner in December 2007 that the 2008 semiconductor market will have a 6.2% growth. This year in March, in its latest outlook, expected to fall by half, that the semiconductor market in 2008 grew by only 3.4%. At the same time in 2009 the semiconductor market will have a 9.4% growth.
Slowdown in demand for electronic manufacturing CCL industry and the semiconductor industry entered the two leading indicators of low, but also means that the entire electronics manufacturing industry slowdown, we believe that the most important reason is that the demand slowdown. Reduction in demand there are two main reasons: on the one hand because there is no killer products appearing demand for electronic products still remain in the upgrading of the main aspects; the other hand, America’s subprime mortgage crisis and the global decline in consumer demand.
The product has no killer The electronics industry’s rapid growth phase usually accompanied by the emergence of revolutionary applications. From television, computers, office supplies, computers, mobile phones, every time a new product applications have brought rapid growth of electronics manufacturing. Today, these products have entered a relatively mature life cycle, in the absence of a new killer application arise, the future growth in demand for electronic products should primarily rely on price cuts to stimulate consumption upgrade, product turnover, rather than new technology driven. Therefore, the demand slowdown is also reasonable. Despite the current flat panel TVs, demand for automotive electronics has grown rapidly, but with a revolutionary technology to more than, their fast growth of demand is insufficient to spur the growth of the entire electronics manufacturing industry. And flat panel televisions and CRT showing the shift in trend growth rate of China’s color TV last year, only 0.7%. From my country’s situation, even though the electronics manufacturing industry to China in large scale transfer of the Troika of the growth rate began to slow down.
The world economic slowdown has brought a decline in spending power electronics In the latest release of the annual “Global Economic Prospects” report, the World Bank in 2008 economic growth forecast down to 3.3% in 2007 to the 2008 expected 3.6% growth in 2006, expectations for 2008 is 3.9% increases, in 2008 growth is expected to gradually lowered. According to World Bank projections, the U.S. sub prime mortgage crisis, global credit problems will continue until the end of this year is expected to the United States in 2008 economic growth rate 1.9%, while the U.S. economy does not rule out completely the possibility of a recession there. In China, also will take measures to cool the overheated economy. The world economy slowdown and the U.S. sub prime mortgage crisis is a further decline in demand for the most important reason.
China faces more pressure Accelerated appreciation of the renminbi Accelerated appreciation of the renminbi, exchange rate is consistent with expectations. Continued upward pressure on the yuan would lead to reduction in the level of electronic products, and exchange losses of profits increase. Export enterprises, in accordance with appreciation of the shared loss of both buyers and sellers to assume (and many enterprises are here to approach to pricing), yuan for every 1% appreciation of the enterprise’s gross margin declined by 0.5% would be roughly about. Electronic manufacturing exports accounted for by the end of 2007 already accounts for 37% of the country’s total foreign trade, enterprises are facing great pressure. As far as we understand the past, on dollar loans to exporters to avoid the practice of the appreciation of the risks the bank has stopped the export enterprises to resist appreciation of the renminbi means less and less.
Increase in the cost increase in costs comes from two aspects: The main raw material prices continue to rise and labor costs rising. Main raw materials of metal materials, electronic manufacturing, such as copper, gold, silver, tin, and other chemical materials such as epoxy resin, oil hovering at historically high levels and so on, but there is no pricing power in most electronic products, the enterprise’s cost pressures.
At the same time, enterprises are faced with rising labor costs. As the staff continued growth in personal income inevitable trend of social development, and the new labor law regulates business employment practices, at present, the domestic electronics enterprises has been a lot of difficult employment issues have emerged. Recently the electronics industry, “go south” wind continued, the United States, Intel, South Korea’s Samsung, LG, Japan’s MEIKO, Sony, Canon, Sanyo, Taiwan’s Hon Hai, Compal, China’s TCL and other companies invest and build factories in Vietnam, and China’s rising labor costs are not unrelated. Only the structure of enterprises through product upgrades, improve product gross margins, increased costs in order to withstand the pressure.
Macro Macroeconomic and financial policies changes will cause the Company’s cost of capital increases. As the credit squeeze, companies hope to use the new loan is also credit to the old method of raising funds will be more difficult works.
Conclusion Through the above analysis, we believe that electronic manufacturing industry is facing greater pressure in the short term will be at the low ebbs, thus reducing the electronic components industry, rating, adjusted to neutral. Industry recovery in the economy will depend on the demand increase, demand for an increase from two aspects: one is the rebound in the global economy has brought an increase in consumer electronics, electronic products the other hand, new applications continue to emerge. We will closely follow the international environment, monitoring the industry leading indicators of changes and new electronic applications.
At the same time, due to a number of electronic manufacturing sub sectors, industries with high growth characteristics of the economy for some sub sectors such as energy efficient lighting, LCD, and RFID, as well as major demand in the domestic companies, we remain optimistic, and close attention has been has made the core competitiveness of the company.
