Walt Custer’s Market Report

Estimated reading time: 8 minutes

Custer: I think that a laminate price increase was a significant part of it. If you looked at the growth or sales of laminate by month versus printed wiring boards in China and Taiwan, laminate did a big spike-up, which could be price-related. But probably people heard that things were going to be in short supply, so they were out doing some ordering. I think you have to look at that data over a couple of months and not any one month to draw that conclusion.

Matties: That panel discussion on laminate was interesting, regarding competing industries for the product line that have higher margins and less demand on quality.

Custer: Sure. Where would you sell it if you could get it at a much better price for copper foil in another industry?

Matties: With less demanding customers.

Custer: Exactly.

Matties: So when you look forward for the PCB fab sector in the U.S., what’s your forecast there?

Custer: History says it’s going to be flatter or a slow contraction. It’s been declining for years at a couple of percent a year. Every once in a while we get a growth spike, but if you average it out, it hasn’t been a growth industry.

Matties: When you see the call for manufacturing back to America, political persuasions aside, one thing that you mentioned is we might be getting manufacturing back, but it’s not necessarily bringing jobs back.

Custer: Sharp and Foxconn Hon Hai are considering building a flat-panel display plant. My guess is that it’s not going to employ a lot of people. It's probably going to be a fairly automated facility, but at least it’ll be bringing some business back to the U.S.

Matties: Supply chain business, anyway.

Custer: And if Apple really assembles in the USA, it’s likely that most of the components will come from Asia, at least initially. So, yes, I think maybe the tide has turned, but I don’t think it’s going to be a boom in six months. It’s going to take time. The whole supply chain has moved to Asia, so getting it back is not just convincing Apple to assemble iPhones here. It’s a lot more than that. Final assembly based in the USA using all imported components will only be a modest step forward in bringing electronic manufacturing back to the USA.

Matties: I know you do a lot of research. Any surprises over the last year that came to you?

Custer: Well, I’ve been spending a lot of time thinking about what’s going to be the next big market drivers, because personal computer and tablet demand has flattened out.

Matties: You could say it’s automotive, but…

Custer: Yeah, certainly automotive. The electronic content in cars is going up all the time, virtual reality, augmented reality, the Internet of Things. I think that’s going to be mostly a component boom but those IoT sensors still have to be packaged and “talk” to something.

Robots…I was talking to Happy [Holden] and I said that I think robots are a two-edged sword because they’re going to automate manufacturing but they’re probably also going to put people out of jobs. His theory was, at least short-term, robots aren’t going to grow as fast as I had thought  because there aren’t engineers to program those robots, so that a massive robot takeover is  going to take time. And robots still aren’t as nimble as humans for a lot of things. They can do repetitive tasks but are not as flexible as humans for many applications.

There are a lot of things on the horizon. The medical electronics industry and remote surgery is a pretty exciting field.

Matties: Then the point about reliable Internet needs to be considered, too [laughs].

Custer: But a lot of these things are going to take time to develop. I think 5G is probably going to have the biggest volume impact short-term because not only are people going to go to 5G Internet connections, but 5G is also going to drive the Internet of Things. It’s going to drive autonomous cars. It’s going to drive a lot of things that rely on fast connection. It has to be very fast and very reliable, and so that will have a lot of demand.

Matties: Any final thoughts for our readers?

Custer: If anyone wants a copy of the talk I gave today you can write to walt@custerconsulting.com and I’ll send you the charts.

Matties: All right, and you also provide a news service to the industry. Tell the readers a little bit about that.

Custer: Well, I think you guys do that, too, to some extent, but my son Jon scours the world for news articles and tries to find one of each kind. I think it’s fairly good. We have a lot of people who get it. It has no ads, and then, it’s strictly news delivered six days a week. We have a cover page where you can click on each individual item, and go to a full news story.

Matties: Good, and people can subscribe to that at your website as well?

Custer: Yeah, or send us an email. You could also subscribe to all our charts and data which are downloadable from a Sharefile site, so we offer those as annual subscription products.

Matties: Walt, thanks for your talk today, and thanks for taking the time for our readers.

Custer: Thanks, Barry.

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