Key Metrics and Supply Alert
Staff -- Purchasing, 11/21/2002
The book-to-bill ratio for connectors was under 1.00 for a third consecutive month. The ratio was 0.97 in September, down from 0.99 in August, according to connector industry market researcher Bishop and Associates. The ratio means that for every $100 of connectors shipped, connector manufacturers received only $97 in new orders. Connector demand is especially weak from the telecommunications and computer industries.
Keep an eye out for integrated drive electronics (IDE) prices. Demand is growing and prices are rising. Some shortages of Seagate and Maxtor 80 gigabyte IDE drives are being reported. Tags for Maxtor drives have increased from about $95 in September to $105 in October on the spot market. Seagate drive prices increased from the mid $70 range to the mid-to-high $80 range, according to Converge, an independent distributor.
Expect the semiconductor industry to recover next year. Chip revenue will increase a healthy 15% to $161.6 billion in 2003 after growing just 1% this year, according to IC Insights. Growth will be driven by demand from the computer, automotive, medical equipment and consumer electronics industries.
Buy business equipment by Dec. 31 to save on taxes. Up to $24,000 of equipment costs can be expensed if you put $200,000 or less of assets in use this year. You can claim a bonus 30% write-off on the remaining cost if purchased equipment is new rather than used.
Portable electronic equipment will help power battery sales over the next four years. Battery revenue will grow from $43.3 billion in 2001 to $58 billion in 2006, according to The Freedonia Group. Digital cameras, cell phones, personal digital assistants and handheld game systems will result in a 6.4% annual growth rate in battery revenue.
China is emerging as the next manufacturing location for electronics. Many U.S. and Japanese OEMs, component manufacturers and EMS providers are flocking to China to take advantage of low cost labor. However, when it comes to buying parts in China, caveat emptor is the rule. See story page 31.
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| Electronics-consuming companies | Up | Down | Same | Index* | Trend |
| Business Activity Index | 32% | 32% | 36% | 50.3 | down |
| Forward Demand Index, all commodities (90 days) | 38% | 31% | 31% | 53.5 | down |
| Forward Demand Index, electronics (90 days) | 40% | 30% | 30% | 54.9 | down |
| Inventory strategy, all commodities | 9% | 60% | 31% | 24.7 | down |
| Inventory strategy, electronics | 13% | 50% | 37% | 31.7 | down |
| Availability from producers | 20% | 18% | 62% | 51.2 | down |
| Availability from distributors | 15% | 18% | 67% | 48.8 | down |
| All companies | |||||
| Semiconductor buying plans (30 days) | 14% | 39% | 47% | 37.7 | down |
| Semiconductor price expectations (90 days) | 17% | 19% | 64% | 49.0 | up |
| Passive components buying plans (30 days) | 17% | 35% | 48% | 40.8 | down |
| Passive components price expectations (90 days) | 14% | 16% | 70% | 49.1 | up |
| Computer buying plans (30 days) | 10% | 44% | 46% | 32.5 | down |
| Computer price expectations (90 days) | 10% | 35% | 55% | 37.1 | up |
| *Diffusion indexes: above 50=rising/building/tightening, below 50=falling/reducing/loosening; up/down=index change from month ago. SOURCE: PURCHASING | |||||
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