The Tankan Survey is a popular economic survey of Japanese businesses issued by the central bank of Japan.
The report is released four times a year in April, July, October, and December. The survey focuses of companies with a specified minimum amount of capital, and is a valuable tool to determine market trends. One drawback from this survey is the age of the data. Since the report is released quarterly, the marketing data is already four months old – a lot can happen in a quarter. Another drawback is the data are inclusive of just Japanese businesses; they do not give a snapshot of global markets. For these reasons, the Purchasing Manager Index (PMI) and the book-to-bill Ratio (BB ratio) have become very popular indices to predict future market trends. Data are released monthly, but there are wide gaps between purchasing plans and sales budgets for manufacturing companies. For this reason, we have to be very analytical when referencing both these indexes.
My personal preference to measure sales and predict future trends is the actual shipments of printed circuits from manufacturers in Taiwan. Taiwan has become a manufacturing center for the global consumer electronics industry. More than 90% of the personal computers are manufactured by Taiwanese companies, and almost 100% of game consoles are assembled here. Apple’s products are all manufactured by EMS and OEM companies in Taiwan. The Taiwanese manufacturers outsource many parts in overseas plants, mostly from mainland China.
Taiwanese electronics manufacturers purchase most of their printed circuits from Taiwanese companies. Circuit manufacturers have large manufacturing capacities in China. It is important to note that these overseas productions are included in shipment data for Taiwan. Publicly traded companies in Taiwan release earnings on a monthly basis, and there are 40 publicly traded companies that derive income from producing printed circuits. Eight of them are flex circuit manufacturers, and I estimate the total revenue for these 40 manufacturers represent more than 80% of the Taiwanese production. Printed circuits are custom-designed products, so these manufacturers produce products based on purchase orders or accurate forecasts provided by their customers. This is the reason I review revenue data from these publicly traded companies every month.
Revenue data are also valuable to forecast business trends. These manufacturers provide guidance for their shareholders that include progress from prototype production and production schedules from large customers.
Total revenue from Taiwanese circuit manufacturers is steady, and grows year-over-year. Revenues drop sharply in February because of the long vacation from the Chinese New Year, but it returns to normal levels and grows throughout the fourth quarter. However, this year’s revenue trend is different from previous years. The sharp drop in February was there, but the rebound in March was smaller than expected. Revenue declined in April and May and is negative compared to the same months last year. Sales from flex circuits are higher than rigid boards because of the strong demands from smartphones (flex circuit sales are higher this month compared to the same month last year). Revenue from rigid boards are posting a double digit decline compared to the same month last year.
Equipment manufacturers and printed circuit manufacturers released pessimistic forecasts for the second half of the year. They blame their pessimism on slow sales from personal computers, and they expect negative growth from tablet PCs this year. I mentioned earlier that the business trends for the printed circuit industry in Taiwan represent the global market trends for consumer electronics. For this reason, I do not have an optimistic outlook for the consumer electronics industry this year. Hopefully, there will be a turnaround over the next few months. I will keep you posted on business trends in Taiwan.
DKN Research, www.dknresearchllc.com
DKN Research Newsletter #1524, Aug. 2, 2015 (English Edition) (Micro Electronics & Packaging, www.dknresearchllc.com )
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Headlines of the Week
1. Mitsubishi Plastic completed construction of a sunshine vegetable plant in Australia with 5000 square meter spaces. It will start operation this fall.
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3. Rohm completed its acquisition of Powervation, an semiconductor company in Ireland. Rohm plans to expand the business of digital power source controllers.
4. TIT (Tokyo Institute of Technology in Japan) developed a platinum catalyst with 20 times higher activity compared to traditional Pt/Carbon catalyst for fuel cells. It will reduce the consumption of platinum significantly.
5. SMK commercialized a new SMT type push switch “HCF Series” with clear click touch. Size: 3.5 x 3.0 1.85mm.
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7. Yamaha commercialized a new robot driver series “RDV-X” and “RDV-P”. They reduce space and positioning time significantly.
8. Tohoku University make the world's first ultra-thin single crystal layer of high dielectric material. It will be valuable to generate ultra-high density memory.
9. Seiko Instrument commercialized a new small size double layer chip capacitors, up to 402 Farad. It is available for SMT assembling process. Size: 10.0 x 8.0 x 1.9mm.
10. Taiyo Yuden unveiled a small-size wireless module “WYSAAVDXB” with dual band antenna for 2.4 GHz/5GHz for industrial equipment. Size: 30 x 15 x 2.45mm.
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