China SME capex still under pressure

by SR on July 6, 2012

Hiwin Technologies total sales by month and year to June 2012

  • Conclusion: Hiwin’s ball screw sales in June 2012 showed continued weakness that suggests demand from industrial customers in Taiwan and mainland China remains weak. Overall, Hiwin’s sales fell 19.6% YoY to 1,012 million NT$. Overall sales rose 0.8% month-on-month. For the January-June 2012 period, total sales are now down 17.2% YoY. What is interesting is that linear motion guides (LMGs) and ball screws are continuing to diverge. LMGs are down 7.4% YoY for the January-June period (see below), while ball screws are down a whopping 34.6% YoY over the same period. This huge gap in performance leaves me scratching my head.

Hiwin Technologies linear motion guide (LMG) cumulative sales to June 2012

  • Semiconductor & LCD in Taiwan strong, China industrial weak? My tentative hypothesis is that the high-precision LMGs are used more in semiconductor and LCD production equipment and that relatively buyoyant capex in that area has been supporting demand. I discussed this with a friend who knows Hiwin better than I and who is more of a specialist in the sector. His theory is that the ball screws are sold mostly as component parts to small and medium-sized enterprises (SMEs) in Taiwan and mainland China. Thus, weakness in ball screws likely reflects and confirms the continued weakness in capex on the mainland. He also thinks that the LMGs would be more driven by SPE and LCD related demand. I think I need to dig a bit more on this one before we start drawing any firm conclusions, so I will wrap it here (it’s 6pm on a Friday evening) and go into more detail in a future post. I leave you with two charts. The one above that you’ve already seen shows sales for LMGs on a cumulative basis over the past few years – a running total if you will. The one below shows the same thing but for ball screw sales. There’s a large and still widening divergence there.

Hiwin Technologies ball screw cumulative sales to June 2012

Previous post:

Next post: