3Q global revenues, net income and inventories by equipment sector
Based upon 3Q’06 financial data from a broad range of companies in the global electronics ‘food chain’, we now have an updated, quantitative picture of 2006 business conditions. Composite sales, net income and inventories of 61 large OEMs serving all market sectors show that 3Q’06 OEM revenues rose 11% vs. the same quarter in 2005. Net income rose 15% and inventories 16%. The ratio of inventories to sales remained relatively flat for OEMs, EMS companies and component distributors but semiconductor manufactures (dominated by Intel) maintained their large inventory bulge.

Regional updates
Globally, Europe saw growth for most of 2006 in telecom infrastructure equipment; however production dipped in August . This European slowing was also evident in distributor chip shipments. Q1 & Q2 European chip sales boomed but Q3 slowed slightly.

Japan continues to outsource lower tech products while maintaining a tight hold on its high IP content electronic equipment. The Taiwan ODMs with major production in China are up 21% YTD in 2006. Because of Microsoft Vista operating system delays many personal computer purchases have been temporarily put on hold. The planned 1Q’07 Vista release will moderate 2006 holiday ‘busy season’ computer sales – stretching PC orders into early 2007.

In the USA electronic equipment orders continue to grow. Keep in mind that the DOC ‘Factory Orders’ data measure ‘final production.’ Actual electronic assembly is often done in SE Asia.

This column originally appeared in Global SMT & Packaging magazine 7.1 - January 2007.

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