After a record January, Taiwan-listed electronics companies, many of which manufacture in China, reported significant drops in February sales.
A number of events likely contributed:
- Far fewer working days in February due to Lunar New Year factory shutdowns
- Inflated January production and shipments in anticipation of the February holiday shutdowns
- Downward adjustment in Apple iPhone X forecasted demand
- Normal seasonality and traditionally lower post-Christmas consumer products demand – including PCs and mobile phones
- OEM sales dropped 28 percent from December to January (normal seasonality) and then an additional 24 percent from January to February. This 101-company OEM group saw record high sales in December 2017 followed by a two-year low in February 2018 (Chart 1).
- ODM sales dropped in sync with OEM sales, with Foxconn/Hon Hai sales declining from 675 billion NT$ (US$22.9 billion) in December to 401 billion NT$ in January and to 278 billion NT$ in February.
- Chip foundry sales (historically a leading indicator for global semiconductor shipments) also registered a large January to February decline (Chart 2).
- Other electronics firms (package and test, passive components, printed circuit boards) saw the same type of February declines.
Walt Custer, Custer Consulting Group