IPC book-to-bill and report for January

The North American rigid PCB industry book-to-bill ratio for January 2006 remained strong at 1.09, and the North American flexible circuit book-to-bill ratio jumped back up to 1.30.

PCB Book-to-Bill Ratios
The North American rigid PCB industry book-to-bill ratio for January 2006 remained strong at 1.09, and the North American flexible circuit book-to-bill ratio jumped back up to 1.30.  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 January 2006 remained strong at 1.13.  This combined ratio has become less relevant to analysts, however, due to the divergence 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.

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Industry Growth
Rigid PCB shipments are up 1.9 percent and bookings are up 13.0 percent in January 2006 from January 2005.  Flexible circuit shipments are up 16.5 percent and bookings are down 15.4 percent year on year.  For rigid PCBs and flexible circuits combined, industry shipments in January 2006 increased 2.7 percent from January 2005, and orders booked increased 10.8 percent from January 2005. 

"The industry's positive results in December continued into January, with both rigid PCB and flexible circuit sales ahead of last year's numbers," said IPC President Denny McGuirk.  "The book-to-bill ratios are also strong, which suggests that the surplus of orders will keep sales healthy in the near term," McGuirk concluded.

The book-to-bill ratios and growth rates for rigid PCBs and flexible circuits combined are heavily affected by the rigid PCB segment, which represents more than 75 percent of the current PCB market in North America.  The influence of flexible circuits is growing, however, as flexible circuit shipments have shown stronger growth than rigid PCBs over the past two years.

The Role of Domestic Production
IPC's monthly survey of the North American PCB industry tracks bookings and shipments from US and Canadian facilities, which provide indicators of regional demand.  These numbers do not measure US 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 January 2006, 88 percent of total PCB shipments reported were domestically produced.  Domestic production accounted for 88 percent of rigid PCB and 87 percent of flexible circuit shipments in January 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 at the beginning of each year.

Bare Circuits Versus Assembly
Flexible circuit sales typically include value-added services, such as assembly, in addition to the bare flex circuits.  In January, the flexible circuit manufacturers in IPC's survey sample indicated that bare circuits accounted for about 77 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.

For more information, contact IPC Director of Market Research Sharon Starr at SharonStarr@ipc.org or 847-597-2817.