November 2018

North American Electronics Business Growth Cycle Plateaued but Remains Strong

North American electronics industry sales growth remained solid in September 2018 although the pace of growth for printed circuit boards (PCBs) continued to slow slightly. After sales growth strengthened in the first half of 2018, the growth rates for PCBs and electronics manufacturing services (EMS) appear to have plateaued. Semiconductor sales growth peaked at the end of 2017 and continues to fall but is still positive. These year-over-year growth rates reflect three-month rolling averages.

The leading indicators are also strong. The U.S. Purchasing Managers’ Index (PMI), which tends to lead industry sales by two to six months, decreased in September but remains high. It has been in positive territory (above 50) for two years. The 3/12 rate of change for U.S. new orders for electronic products, which leads industry sales by one to three months, continued to slow gradually but remains strong.

Another leading indicator is IPC’s PCB book-to-bill ratio. It is based on three-month rolling averages of orders and sales, and normally leads industry sales by three to nine months. The book-to-bill ratio decreased slightly to 1.04 in September due to weaker orders. The ratio remains in positive territory, where it has been for the past 20 consecutive months, driven mainly by order growth. Ratios above parity (1.00) indicate greater demand than supply, which may be a precursor of sales growth for electronics manufacturers, especially when a run of positive ratios over several months is seen.

These indicators suggest the likelihood of continued sales growth in the industry at least through the end of 2018.


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Notes:

  1. This information is provided by IPC International, Inc. 
  2. Other industry data can be found at www.ipc.org.
  3. Three-month rolling averages smooth out some of the volatility in monthly data to show clearer trends.
  4. The U.S. Department of Commerce revised its historical data on U.S. new orders and issued new data on May 17, 2018. The graph above reflects the revised data.

Sources: IPC statistical programs for the EMS and PCB industries; SIA for semiconductor data; U.S. Census Bureau for U.S. new orders for computer and electronic products; and Institute for Supply Management for the U.S. Purchasing Managers’ Index.

Market Research Reports

World Market Size Estimates

  Billions of U.S. Dollars For Year Source
Printed Circuit Boards (PCBs) $70.5* 2017 N.T. Information Ltd.
Electronics Manufacturing Services (EMS) $463.3 2017 New Venture Research
Electronic Equipment (Including Components) $1,756 2017 Reed Electronics Research

*The PCB estimate for 2017 includes the assembly value of PCBs (mainly flexible circuits) sold by fabricators that include some assembly, unlike previous IPC estimates of world PCB market size. The new data are published in IPC’s World PCB Production Report for the Year 2017, which is available in IPC’s online store..

Note: Changes in currency exchange rates affect these dollar amounts from year to year.

Lead-Free Trends

Source: IPC Global Solder Statistical Program and Global Solder Market Report

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