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EPTE Newsletter from Japan: 2012 Ends on a Bad Note

The Japanese yen fell against the U.S. dollar and other foreign currencies over the last three months. The dollar was under 80 yen last December, but rose to over 95 yen this week. This translates into a 20% decline in the yen over the last three months. Automobile manufacturers that rely on exports are reporting significant financial improvement and have fueled a rise in the Tokyo Stock Exchange. The Nikkei reaches new highs every week. The U.S. stock market indices are also reaching new highs and many market analysts are optimistic that the run up in stock values will continue.

Let’s check the performance of a manufacturing industry that I am most interested in--the electronics industry. Global semiconductor shipments posted a negative growth rate in 2012 compared to the previous year. The big surprise for the year was a significant drop in December. This slowdown was felt in every country--even in Asia, where things are booming for the industry. Worldwide shipments of cellular phones were down in 2012 compared with the previous year. This was very surprising; most of us thought cell phone sales would surpass 2011 levels due to the hype with the new generation of smart phones.

The worldwide printed circuit industry declined significantly in December of 2012. The Taiwanese printed circuit industry posted record revenues every month during the first three quarters in 2012, but screeched to a halt in the fourth quarter and declined during the last month of the year.

The personal computer industry in Taiwan has an unbelievable 90% share of the global PC industry. Unfortunately, they have a very pessimistic forecast for sales in the first quarter of 2013. Historically, the Japanese circuit board industry has a high level of shipments during the last quarter of the year, but may buck that trend due to a spillover effect from a significant drop in sales during December of 2012. All the major products, build-up multilayer boards, double-layer and multilayer flex circuits, and semiconductor substrates, are showing the same downturn in business.  

The best month for the circuit board industry in North America is the last month of the quarter--most revenues are realized during this period. This trend did not come to fruition for December 2012; it was the worst month of the year. Annual shipments in 2012 came in at a 5% negative growth from 2011, the worst in recent history.

Industry trends were all over the place in 2012 for the global electronics industry. Industry analysts are not sharing any good news for 2013. It looks like we have to take a "wait-and-see" position before we can predict any stabilization, growth, or declines for the New Year.         

Dominique K. Numakura, dnumakura@dknresearch.com DKN Research, www.dknresearchllc.com

*To view back issues of the newsletter, click here.Headlines of the Week

(Please contact haverhill@dknreseach.com for further information on the news.)1. JX Nippon Oil & Energy (Major copper foil supplier in Japan) 2/28The company has decided to close its solar power generator poly-silicon business due to serious price competition in the global market.2. Moritex (Device manufacturer in Japan) 3/4The manufacturer has co-developed a new skin condition sensor, “Triplesense,” combining Near Field Communication technology provided by Dainippon Printing.3. Toppan Printing (Major printing company in Japan) 3/5The company has demonstrated a new 42” flexible signage panel using 16 panels of 10.7” e-paper provided by the UK's Plastic Logic. 4. Hitachi Appliances (Major consumer appliance supplier in Japan) 3/5The supplier has developed a new coating process for organic EL light source. It makes light emission rates higher and process cost lower compared to the traditional vacuum evaporation method.  5. Konica Minolta (Major optical device supplier in Japan) 3/5The supplier has unveiled a new flexible light source with organic EL technology. Both thickness and weight are one-tenth of glass-based products.6. Innolux (Major display panel supplier in Taiwan) 3/12The supplier will become the number one display panel supplier for Nokia cell phones with a 30 to 35% share.7. ASE (Major IC packaging house in Taiwan) 3/12The company's revenue rebounded in March after a decline in February. Demand of flip chip packaging is leading the business.8. AGC (Major glass material supplier in Japan) 3/11The supplier and Triton Microtechnologies will invest US $2.1 million for a new thin glass interposer R&D project.9. Alps Electric (Major device manufacturer in Japan) 3/12The manufacturer has developed a new, tiny magnetic sensor (1.6 mm square LGA) for geomagnetism with wide dynamic range of +/-2.4mT.

10.  Hitachi Cable (Major cable manufacturer in Japan) 3/14The manufacturer has agreed with Shindo Denshi to sell its IC packaging material business including, TAB and COF, for a total reconstruction.

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