IPC releases new book-to-bill ratios and IMS/PCB business report for July 2005

Flex ratio continues climb to 1.71, whist rigid drop, overall still positive at 1.16

IPC announced the findings from its monthly Printed Circuit Board (PCB) Statistical Program.

PCB Book-to-Bill Ratios
The North American rigid PCB industry book-to-bill ratio for July 2005 declined to 0.99, while the North American flexible circuit book-to-bill ratio continued to climb to 1.71.  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 July 2005 increased to 1.16.  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.

Rigid PCB Growth
Rigid PCB shipments are down 2.7 percent and bookings are down 11.9 percent in July 2005 from July 2004.  Year to date, rigid PCB shipments are down 5.9 percent and bookings are down 4.9 percent.  Rigid PCB shipments from the survey sample decreased 19.4 percent from the previous month and rigid bookings decreased 19.0 percent from the previous month.

Flexible Circuit Growth
Flexible circuit shipments are up 32.7 percent and bookings are up 53.3 percent in July 2005 from July 2004.  Year to date, flexible circuits shipments are up 25.6 percent and bookings are up 16.1 percent.  Compared to the previous month, flexible circuit shipments from the survey sample decreased 6.7 percent and flex bookings decreased 37.9 percent.

Total Industry Growth
For rigid PCBs and flexible circuits combined, industry sales billed (shipments) in

July 2005 increased 4.7 percent from July 2004, and orders booked increased 4.1 percent from July 2004.  Year to date, combined industry shipments are down 0.2 percent and bookings are up 0.1 percent.  Combined industry shipments for July 2005 are down 16.4 percent over the previous month, and bookings are down 27.0 percent over the previous month.

"July is historically a slower month than June for PCB sales," said IPC President Denny McGuirk.  "Yet the book-to-bill ratios for flexible circuits and combined PCBs continued to rise in July, due to the spike in flexible circuit bookings in June and the trend for flexible circuit bookings to outpace shipments substantially, which continued in July."  The book-to-bill ratio is based on a three-month rolling average.  "Rigid board business has been steady," McGuirk added, "but continues at a few percentage points behind last year's figures."

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 July 2005, 68 percent of total PCB shipments reported were domestically produced.  Domestic production accounted for 81 percent of rigid PCB and 32 percent of flexible circuit shipments in July.

Bare Circuits Versus Assembly
Flexible circuit sales typically include some value-added services, such as assembly, in addition to the bare flex circuits.  In July, the flexible circuit manufacturers in IPC's survey sample indicated that bare circuits accounted for about 44 percent of their shipment value reported for the month.

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.