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Getting to Know Your Designer
In this issue, we examine how fabs work with their design customers, educating them on the critical elements of fabrication needed to be successful, as well as the many tradeoffs involved. How well do you really know your customer? What makes for a closer, more synchronized working relationship?
In this issue, the biggest names in PCB manufacturing share their economic outlook for the upcoming year and beyond. As you will see, they were all bullish on our industry, but there was some apprehension as well. No one wants to get burned by another the supply chain disruption.
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Walt Custer Elaborates on his Annual IPC APEX EXPO Forecast PresentationMarch 31, 2016 | Barry Matties, I-Connect007
Estimated reading time: 6 minutes
IPC APEX EXPO 2016 has come and gone, and this year, Walt Custer’s annual presentation forecasting the upcoming year for the industry was much anticipated, as always. I met up with Walt at the show to learn about his presentation and dig deeper into his findings.
Barry Matties: Walt, we are here at IPC APEX EXPO 2016 and you've just given another talk about what we can expect in the upcoming year. Why don't you start by sharing a little about what you discussed?
Walt Custer: Sure. As most people know, we follow the entire global electronics supply chain. We try to track the economy, electronic equipment demand, the active and passive components, EMS and ODM companies, materials and process equipment. Starting 2016 the U.S. economy is in a very modest growth mode. Europe is the same way.
Asia, especially China, S. Korea, Taiwan, and now Japan, are flat or shrinking. These Asian countries are large producers of electronic goods, so their downturn has greatly impacted the whole industry.
Looking forward we use leading indicators to predict what's going to happen and these indicators say that, globally, we're at zero growth right now, with North America and Europe expanding a little bit and much of Asia contracting.
Leading indicators predict business conditions two months to six months in advance and they currently suggest that early to mid-2016 will not be very robust. Hopefully demand will accelerate in the second half of this year but that is not clear right now. We monitor the leading indicators every month to see likely changes in business conditions.
Matties: I think you and I spoke last in Germany at productronica, and at that time you said that this was most likely the trend that was going to happen. It looks like it's really coming to fruition.
Custer: I don’t believe we've been too far off. The leading indicators are always going to be a three- to six-month guide, and so I always look at those.
Another key factor is currency exchange rates. The U.S. dollar is currently very strong versus other currencies, which means that our exports are more expensive and imports are cheaper. But of equal importance are exchange rates and their impact on global growth rate calculations. When weaker non-dollar currencies are consolidated to stronger U.S. dollars, effectively the dollar totals are effectively weaker. This exchange rate loss impact has been substantial lately for multinational companies that report their financial results in dollars. Last year this impact was negative, about -5%.
For the first quarter 2016 vs. 2015 this exchange rate impact may have degraded dollar growth rates by as much as 8%.
In addition to exchange rate effects, overall demand has weakened, especially in China. Normal post-Christmas holiday slowing of consumer good demand is one factor. In addition there was the Chinese New Year shutdown in February coupled with Apple cutting back orders for iPhones. So the first quarter in Southeast Asia started slowly, especially for high-volume consumer electronics.
Turning to the U.S. market, the major electronic equipment sectors are instruments & control, medical, defense and aerospace. Domestically we are not very dependent upon computers or cellphones. Because of the U.S. product mix, we're in better shape than places like China where volume market growth really weakened.
I think, as you look at the global end markets right now, there's no big driver. Last year smartphone growth was very robust and before that it was media tablets and PCs. This year, smartphone growth has slowed, media tablets have gone flat and PC growth is negative.
We're waiting for the next big market driver.
Automotive is still key with electronic content constantly rising and self-driving cars on the horizon. Other “next volume market” prospects include wearables, robots, virtual reality and the Internet of Things. You can make a list of them. They are emerging… but are still in their infancy.
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Collins Aerospace, an RTX business, has been selected by Air India for a full suite of avionics hardware catering to the airline's expanding Boeing 737 MAX fleet.
Further to the announcement of 17 August 2023, BAE Systems has now received the necessary regulatory approvals and will be executing steps in the coming days to complete the acquisition of Ball Aerospace from Ball Corporation.
With such an extremely newsy week, it was hard to select just five items you absolutely must read, but here goes. We have advocacy news from PCBAA and IPC, global market data on AI PC and GenAI smartphone hardware, a roundtable discussion on sales and marketing, a bookended pair of international milaero stories emphasizing a healthy aerospace industry, and an industry report on global semiconductor sales.
Honeywell announced it will invest $84 million to expand its Olathe manufacturing facility in Kansas. The project, which is expected to generate nearly $47 million in total gross domestic product (GDP) and contribute $18.3 million to state and local taxes in the first six years, supports the company's alignment with the compelling megatrend of the future of aviation.
Ventec International Group Co., Ltd. is pleased to announce that its VT-901 polyimide material is now fully and exclusively qualified by ESA in ACB Belgium’s manufacture of High-Density Interconnect (HDI) Printed Circuit Boards.