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Circuit Board Makers See Falling Prices

BY ANDREW SIMONS

It’s official. The printed circuit board business is slumping again.

Earlier this month, Orange County’s three publicly traded circuit board makers ,Santa Ana-based TTM Technologies Inc., Anaheim’s DDi Corp. and Multi-Fineline Electronix Inc., also of Anaheim , reported flat sales and warned of falling prices.

The news led some to conclude that the boom that drove up stocks of circuit board makers last year is over.

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Shares of Multi-Fineline plunged 30 percent on the news. They’ve gained back some ground but still are off by about 15 percent in the past few weeks. Shares of TTM and DDi are off by about 13 percent this month.

Circuit boards are a staple of OC’s technology sector. The county’s biggest contract electronics makers, many of which make circuit boards, employ more than 3,360 workers, according to a Business Journal survey last fall.

The boards house chips and make up the innards of computers, mobile phones and other electronics. They’re low-profit components made either in large batches or on short notice.

Board makers took a big hit in the tech downturn of 2000 but enjoyed a turnaround last year as electronics makers dramatically upped orders.

As demand for computers, networking gear and other products returned, companies turned to quick-turnaround board makers rather than signing long-term supply deals.

The spike in demand was enough to revive DDi, which filed for bankruptcy protection in 2003. TTM saw its shares surge by 50 percent in early 2004.

The strong market for circuit board stocks prompted Multi-Fineline to go public in late 2004. The company’s shares more than doubled in the ensuing months.

These days, demand for circuit boards is steady. But it’s not growing at the pace of a year ago. That’s left circuit board makers with too many factories , and falling prices for their products.

“There is some aggressive pricing,” said Scott Robertson, an analyst with Stanford Financial Group Co., a Houston-based investment bank.

Circuit board makers aren’t selling at a loss, according to Robertson. They’re selling at cost to gain customers in quick-turn work, or orders turned around in 24 hours or so.

The goal is to land quick-turn work and turn it into long-term business, he said.

“It’s a balance of how much margin are you willing to give away and how much you will keep,” Robertson said.

TTM and DDi make boards on short notice, usually for a computer or other electronics maker trying to fill an unanticipated spike in orders.

DDi plans to keep its focus on quick-turn work but is trying to leave room for what Chief Executive Bruce McMaster calls “longer lead time work.”

The company gets a majority of its sales from quick-turn work. DDi reported first-quarter sales of $45 million, which were off 7 percent from a year earlier. The company’s operating loss narrowed to $371,000 from $4.4 million a year ago.


Andrew Simons writes for the

Orange County Business Journal.

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