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IPC Releases New Book-to-Bill Ratios and IMS/PCB Business Report for December 2006
January 24, 2007 | IPCEstimated reading time: 4 minutes
IPC-Association Connecting Electronics Industries(R) announced today the findings from its monthly Printed Circuit Board (PCB) Statistical Program.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
PCB Book-to-Bill Ratios
The North American rigid PCB industry book-to-bill ratio for December 2006 held steady at 0.92. The North American flexible circuit book-to-bill ratio edged up to 0.90. These ratios are based on monthly data collected from PCB producers that participate in IPC's monthly PCB Statistical Program. The combined (rigid and flex) industry book-to-bill ratio in December 2006 remained at 0.92. Some analysts find the separate ratios for rigid and flex more meaningful than the combined ratio, because of the divergence in recent years between the rigid PCB and flexible circuit segments of the industry in growth rates and book-to-bill patterns.
The ratios are calculated by dividing the value of orders booked over the past three months by the value of sales billed during the same period from the companies in IPC's survey sample. A ratio of more than 1.00 suggests that current demand is ahead of supply, which indicates probable near-term growth.
Rigid PCB Growth
Rigid PCB shipments are up 1.8 percent and bookings are down 12.5 percent in December 2006 from December 2005. Year to date, rigid PCB shipments are up 8.8 percent and bookings are up 4.8 percent. Rigid PCB shipments from the survey sample increased 2.3 percent from the previous month and rigid bookings increased 9.3 percent from the previous month.
Flexible Circuit Growth
Flexible circuit shipments in December 2006 were down 5.7 percent and bookings were down 27.9 percent compared to December 2005. Year to date, flexible circuit shipments are up 5.5 percent and bookings are down 12.1 percent. Compared to the previous month, flexible circuit shipments from the survey sample increased 12.5 percent and flex bookings increased 35.6 percent.
Total Industry Growth
For rigid PCBs and flexible circuits combined, industry shipments in December 2006 increased 1.2 percent from December 2005, and orders booked decreased 14.1 percent from December 2005. Year to date, combined industry shipments are up 8.6 percent and bookings are up 3.5 percent. Combined industry shipments for December 2006 are up 3.0 percent over the previous month and bookings are up 11.1 percent over the previous month.
"It was a normal December for the PCB industry," said IPC President Denny McGuirk. "Despite slowing growth during the fourth quarter, the year ended well, with 8.6 percent overall growth in North American PCB sales for 2006 compared to 2005," he added.
The book-to-bill ratios and growth rates for rigid PCBs and flexible circuits combined are heavily affected by the rigid PCB segment. Rigid PCBs represent an estimated 85 percent of the current PCB market in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />North America, according to IPC's World PCB Production and Laminate Market Report for the Year 2005.
The Role of Domestic Production
IPC's monthly survey of the North American PCB industry tracks bookings and shipments from U.S. and Canadian facilities, which provide indicators of regional demand. These numbers do not measure U.S. and Canadian PCB production. IPC asks survey participants for the percent of their reported shipments that were produced domestically (i.e., in the USA or Canada). In December 2006, 87 percent of total PCB shipments reported were domestically produced. Domestic production accounted for 87 percent of rigid PCB and 95 percent of flexible circuit shipments in December by IPC's survey participants. These numbers are significantly affected by the mix of companies in IPC's survey sample, which remains constant throughout each calendar year, but may change with the January survey results.
Bare Circuits Versus Assembly
Flexible circuit sales typically include value-added services such as assembly, in addition to the bare flex circuits. In December, the flexible circuit manufacturers in IPC's survey sample indicated that bare circuits accounted for about 76 percent of their shipment value reported for the month. Assembly and other services make up a large and growing segment of flexible circuit producers' business. This figure is also sensitive to changes in the survey sample, which may occur at the beginning of each calendar year.
Interpreting the Data
Year-on-year and year-to-date growth rates provide the most meaningful view of industry growth. Month-to-month comparisons should be made with caution as they may reflect cyclical effects. Because bookings tend to be more volatile than shipments, changes in the book-to-bill ratios from month-to-month may not be significant unless a trend of three consecutive months or more is apparent. It is also important to consider changes in bookings and shipments to understand what is driving changes in the book-to-bill ratio.
The information in IPC's monthly PCB industry statistics is based on data provided by a representative sample of both rigid and flexible PCB manufacturers in the USA and Canada. IPC publishes the PCB Book-to-Bill Ratio and the Interconnect Manufacturing Services (IMS) Business Report each month. Statistics for the previous month are not available until the last week of the following month.
About IPC
IPC (www.ipc.org ) is a global trade association based in Bannockburn, Ill., dedicated to the competitive excellence and financial success of its 2,400 member companies which represent all facets of the electronics interconnect industry, including design, printed circuit board manufacturing and electronics assembly. As a member-driven organization and leading source for industry standards, training, market research and public policy advocacy, IPC supports programs to meet the needs of an estimated $1.5 trillion global electronics industry. IPC maintains additional offices in Taos, N.M.; Arlington, Va.; Garden Grove, Calif.; Stockholm, Sweden; and Shanghai, China.