Circuits Assembly Online Magazine - News

Latest News

ST. PETERSBURG – The economy could sink not just Jabil's near-term growth, but also more than $30 million in tax rebates and other incentives tied to the EMS company’s new headquarters here.

Under a controversial deal agreed on earlier this year, Jabil must begin construction on a new, $50-million headquarters within a year and add about 860 jobs by 2012, according to reports. The company must also keep local employment above 1,800; it currently employs 1,872.

MANASSAS, VA – Zestron has expanded its team with the addition of Alexander Koegel as junior product manager.

Koegel primarily will be responsible for products related to surface cleanliness and bath analysis, and will support activities related to the German press and the company’s services.

Started in 1975, Zestron has global technical centers in the US, Europe and Asia.

EL SEGUNDO, CA – The deck appears stacked against the global semiconductor industry, with six separate market forces conspiring to cause revenue to decline by nearly a double-digit margin in 2009, says iSuppli Corp.

The research group became the latest to lower its 2009 worldwide semiconductor industry revenue forecast, estimating a 9.4% drop year-over-year to $241.5 billion. iSuppli previously predicted 6.8% growth.

SAN DIEGO – KIC, a provider of thermal process and control products, will move into a larger facility in San Diego next month.

KIC has been expanding its product range of thermal process tools. The company also recently entered the solar cell manufacturing industry.

“Our new facility is larger and provides a layout that is more suitable for our needs in production as well as R&D,” says David Nason, operations manager at KIC.

KIC’s headquarters will house the majority of the company’s production and R&D, as well as administrative services. To be central to its customer base, however, KIC also has built up R&D, sales and customer support centers during the past several years in Europe, China (three separate facilities) and Singapore, in addition to its R&D facility in Oregon.

VANCOUVER – Northstar, a supplier of EMS services and certain ODM parts, said today it expects add-on orders for the Lockheed Martin P-3 aircraft re-wing upgrade in 2009. Orders for sonar equipment are expected to start during the year and should be ongoing thereafter, the company added, while the first orders for fiber optic cables for the F-35 Joint Strike Fighter airplane are expected in '09. Orders for submarine consoles are expected to increase substantially over those in 2008.

Northstar management also expects an increase in sales of the Netmind commercial system, as marketing efforts expand in new areas.

Based on current backlogs and forecasts, the company guided for revenues of $8 million to $11 million in 2009 with a potential profit of $1 million to $1.5 million.

In a statement, Northstar CEO Dr. Wilson Russell said, "The defense sector is the best one to prosper in these tough economic times, with prime contractors such as Lockheed Martin having large, long-term contracts in place. Having laid a solid foundation in defense contracting, we believe 2009 will be our year to 'break out.'"

EAST PROVIDENCE, RI – For a change, the politician wasn’t the butt of the joke, just the teller.

At EFD Inc.’s open house last Friday, Rhode Island Governor Don Carcieri took to the podium and noted how years ago, as head of Cookson, he tried to buy his smaller competitor. When it comes to solder paste, Carieri beamed, EFD is “clearly the best in the world.”

NEW YORK – Research firm Gartner Group today sharply lowered its global semiconductor revenue outlook, saying the market would fall 16.3% in 2009 to $219.2 billion.

EL SEGUNDO, CA – Excess semiconductor stockpiles in the global electronics supply chain are likely to nearly triple this quarter, says iSuppli Corp.

The research firm projects excess semiconductor inventories could balloon up to $10.2 billion in value, up 268% sequentially. This rise is having a deleterious impact on chip pricing, revenue and profitability, and could delay the semiconductor industry's recovery from the current downturn – even when demand rebounds, the firm says.

iSuppli has issued a red alert on semiconductor inventory levels for the first time. The company issued a yellow alert warning on semiconductor inventory in July of 2004, in light of a major surge in stockpiles in the third quarter of that year.

“Three critical factors are driving semiconductor inventories to a higher level than expected,” said Derek Lidow, president and CEO of iSuppli. “First, many companies have reduced inventory targets during the fourth quarter, even as revenues are plummeting.”

Many industries have reset their inventory target levels in anticipation of a long economic downturn, expecting reduced stockpile goals will help cash balances. These new targets mean, even if semiconductor revenues were anticipated to remain flat, inventory levels would need to drop in proportion to the new lowered DOI targets to not have any "excess" inventory at that node of the supply chain, says iSuppli.

“The second factor is semiconductor demand has fallen in the fourth quarter, and it declined much faster than expected at the end of the third quarter, as shown by a rash of lowered guidance announcements,” Lidow added. “This means initial fourth-quarter production schedules were set too high. Production schedules have been ratcheted down during the quarter in what are mainly reactive moves, resulting in excess inventory buildup.

“Third, OEMs have not been able to cut production as fast as they would like to due to supply chain rigidities, mostly because of workforce rules in some parts of the globe and cancellation windows at subcontractors and component suppliers.”

The near-tripling of excess semiconductor inventory throughout the electronics supply chain in the fourth quarter will significantly extend the time necessary for the semiconductor industry and contract manufacturers to benefit from any recovery in demand. It also will wipe out several additional percentage points of growth from the semiconductor industry in 2009.

iSuppli has determined the level of excess semiconductor inventories is the factor that most directly relates to future electronic industry production levels.

Retailers likely will not build up major excess inventories of finished products in the fourth quarter. iSuppli sources indicate retailers are planning to price inventory at whatever levels are required to hit their January inventory targets, or in the case of Wal-Mart and a few of the mega-chains, to return unsold stock. In most cases, retailers did not significantly reset their target inventory levels, and instead have focused on OEMs giving price protection or return privileges.

Wireless service providers also are not likely to build up significant additional inventories, and are modestly targeting reduced inventory levels. They have been ordering smaller lots to be shipped in the fourth quarter, with return privileges or price protection on unsold inventory.

PC OEMs have been particularly aggressive in setting lower inventory targets and also in pushing out build schedules and component orders. These companies will reduce overall inventories by several billion dollars, and these cancellations and production cuts will show up as inventory increases further upstream in the supply chain.

PC OEMs will, however, show an increase in excess semiconductor inventory of $1 billion because they had been running below their old targets; now they will be running slightly above their new targets, says iSuppli.

OEMs producing products destined for consumers will accumulate major excess inventories, both from resetting their target inventory levels and also from production they could not cut quickly enough. iSuppli expects significant jumps in excess inventory in these three areas, with the automotive supply chain adding up to $1.7 billion in surplus semiconductor stockpiles. Wireless OEMs and consumer product makers, including companies that produce both consumer and non-consumer items, should see their overall product inventories increase by $2.4 billion, adding $300 million to iSuppli's tally of excess semiconductor inventories.

ODMs also are resetting target inventory levels and will be forced to hold some PC and consumer electronics shipments in inventory, resulting in an increase of about $1.1 billion in stockpiles by the end of the quarter, and adding almost $200 million to the excess semiconductor inventory count.

EMS suppliers were holding excess inventories at the end of the third quarter, but have been particularly aggressive, often as a matter of survival, about pushing out orders while tightening inventory targets. This will result in a drop of more than $1 billion in absolute inventories, but will still slightly exceed their new revised target DOI, says iSuppli.

Electronics distributors also have aggressively cut inventory targets, as they worry anything on their shelf could grow stale in a prolonged downturn. But electronics distributors have become excellent inventory managers during the past three years, and iSuppli predicts they will meet their new lowered targets.

Semiconductor companies will see their stockpiles rise by at least another $1.5 billion, but with reduced inventory targets, excess inventories on their shelves will actually increase by almost $2.2 billion.

Overall, from iSuppli's sampling of 180 electronics companies, representing more than 80% of the revenues of the industry, total inventories are expected to grow from $94 billion at the end of the third quarter to more than $104 billion at the end of the fourth quarter. Of the total semiconductor inventories throughout the entire electronics supply chain, $3.8 billion represented excess at the end of the third quarter. However, iSuppli predicts $10.2 billion will be excess at the end of the fourth quarter.

Another major shift to be aware of is that for most of the period since the dot-com recovery, more than 80% – and often almost 90% – of excess semiconductor inventories have been on the shelves of chip suppliers. This will change dramatically in the fourth quarter, with $4.23 billion – or 41.5% – of the excess inventory now being held downstream of the semiconductor suppliers. This will result in at least 2% reduced semiconductor growth in 2009 that has not been factored into most people's forecasts, says the firm.

TIANJIN, CHINA – The three-day Bohai Electronics Week attracted a reported almost 4,000 visitors, show organizers said.

More than 700 delegations from 25 electronics manufacturing companies visited the Tianjin International Exhibition Centre, including Fujitsu, Motorola, Samsung Electro-Mechanics, said Reed Exhibitions.

Panasonic Corporate launched a soldering machine at the show. Other manufacturers to showcase their latest technologies included Folungwin, Unicomp, Techwin, Shimadzu, A&P, Autoveyor, Ellsworth, Evest, Mirae, Mirtec, Musashi, Nihon Superior, Toshiba, Tronic and more.

“We introduced new products at BEW and reached our promotional goals. We also established more contacts through BEW. Nihon Superior will exhibit at BEW 2010,” Takashi Fujimoto, managing director of Nihon Superior, said.

In conjunction with the show, SMTA held a conference covering Pb-free alloys, antioxidants, and printing and cleanliness requirements.

TAIPEI – EMS provider Sinbon Electronics reported November consolidated revenues of NT$512 million ($15.4 million), down 33% sequentially and 37% year-over-year.

SHENZHEN – MatriX Technologies, a manufacturer of high-speed x-ray systems, has opened a subsidiary here.

The Dachau, Germany-based company is also intensifying its activities in the NDT area of automatic material analysis for casting parts, said to appeal to the Asian automotive industry.

“The majority of MatriX AXI installations are globally operating clients who typically have increasing manufacturing sites in Asia,” said Eckhard Sperschneider, managing director for MatriX.

Howard Zhou Jianquan heads the recently opened sales and service office in Shenzhen.

STAMFORD, CT – Worldwide semiconductor revenue was $261.9 billion in 2008, down 4.4% year-over-year, according to preliminary results from Gartner Inc.

"In the last quarter of 2008, market conditions deteriorated significantly, and as the fourth quarter has progressed, many vendors have issued updated guidance for the quarter, reflecting weakening market conditions," said Andrew Norwood, research vice president at Gartner. "Unfortunately for vendors, 2009 is going to be considerably worse. Some have compared the precipitous decline in semiconductor demand to that of the 2001 ‘dot-com' bubble. However, unlike 2001, this economic downturn is much more broad-based and not limited primarily to the technology sector.

"Given this increased uncertainty, all semiconductor companies should be focused on cash preservation and inventory management," Norwood said. "This is also an excellent opportunity for the larger companies with stronger balance sheets to make strategic acquisitions."

For the 17th consecutive year, Intel held the top spot, increasing its market share to 13.1% this year. When looking at continuing operations, Intel's revenue increased 6.5%, 11 percentage points above the market average.

Qualcomm had the strongest growth rate among the top 10, growing revenues 15% in 2008. Although the first three quarters were strong, the company felt the impact of the economic downturn in the fourth quarter.

Hynix Semiconductor’s revenue fell 29.7%, the most of any of the top 10 semiconductor vendors. This decline is attributed to the price drop of DRAM and NAND.

Infineon Technologies struggled this year as well. "Infineon had a tough year, as its memory subsidiary, Qimonda, which it is looking to divest, is becoming marginalized within the DRAM industry," Norwood said.