Benchmark President: Bright Spots Remain
For the June quarter, Benchmark saw sequential strength in industrial controls (up 13%), medical (up 7%) and telecommunications (up 4%). Computing fell 6% – out of step with typical seasonality – and test and instrumentation slid 12%.
However, the company also saw a trend to lower ASP solutions in the computing sector. “[We] saw some programs with robust demand in terms of units even though we saw lower revenue numbers,” Delly said in a July 24 conference call. More than 50% of the company’s sales come from computing.
“In the current environment you expect this trend to continue. We are maintaining our strong customer base and we have not lost business from our customers. What we do see is that some computing customers are trending a portion of their new solutions toward the low end.”
Based on past sales, Benchmark expected computing demand to be stronger in the second quarter. “We were surprised with weaker demand for the product we're serving in the computer sectors,” CEO Cary Fu added.
“Telecom, industrial controls and medical [are] continuing to see strong performance and growth opportunities,” Delly said. But the overall semiconductor test industry is down over 40% year-over-year, she added. “That one I don't think is healthy. I think that one definitely needs a shot in the arm.”
A new facility in China will come online late in the third quarter or early in the fourth, the company noted. Despite the murky macro economic environment, the company does not expect to shutter any plants. “We do not have any restructuring plans in place and don't see the need to adjust our footprint. I think we've got a very solid footprint,” Delly said.
Fu and Delly also addressed the migration of certain programs back to the US from Asia. While noting rising labor and logistic costs in Asia, demand for certain products is “definitely shifting” from the US to Asia, Fu said, citing semiconductor test equipment as an example. “You have been seeing two different forces in the marketplace. One is the product we serve in the US or Europe. If they're heavy, they're very expensive to move around. They tend to be moved back to either Asia or to the US as well as Europe.
But for product [where there is] increased demand in Asia, we still see those products stay in Asia.”
For other programs, there has been movement, Delly said. “You are seeing the decision being made for certain products to get closer to the end-customer base, because when they look at total cost of ownership, it makes sense to reduce freight and travel costs,” Delly said.
