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Based on incomplete company financial results global electronic equipment sales increased an estimated 3% in 1Q’12 (Chart 1). However, sales growth flattened compared to 4Q’11 (Chart 2) but remained in positive territory. Due to normal supply chain effects (inventory and order adjustments in a slowdown) semiconductor shipment growth was negative while equipment sales still increased modestly (Chart 3).
Chart 4 shows the annualized (12/12) and 3-month (3/12) growth of world electronic equipment shipments since 2001. Based on the incomplete 1Q’12 data it would appear that this current slowdown is moderate and will not cause negative end market growth.
As is normal in the first quarter of a slow-growth year, the ratio of inventories/sales has increased throughout the supply chain (Chart 5).
Chart 6 provides 1Q’12/1Q’11 growth for key sectors of the electronic supply chain. Some sectors do not have sufficient 1Q’12 company financial information available to create a reliable estimate. A 3/12 value of 1.2 indicates 20% growth compared to the same period a year earlier.
All these 1Q’12 estimates are still preliminary and will be refined as the balance of the companies in each of our sector databases reports their first quarter financial results.
Source: Custer Consulting Group based on composite company financials
The Semiconductor Industry Association (SIA) announced that worldwide sales of semiconductors were $23.3 billion for the month of March 2012, a 1.5% increase from the prior month when sales were $23.0 billion, and a decrease of 7.9% from March 2011 when sales were $25.3 billion. Sales in the first quarter of 2012 reached $69.9 billion, a decrease of 7.9% over last year's first quarter sales of $75.9 billion and a sequential decrease of 2.2% over the prior quarter. All monthly sales numbers represent a 3-month moving average.
"We are encouraged to see that sequential growth resumed across all regions, especially in Europe and Japan in March," said Brian Toohey, president, Semiconductor Industry Association. "We look for seasonal moderate growth to continue in the second quarter and build momentum as 2012 progresses.
However, while forecasts for global economic growth are improving, macroeconomic and geopolitical uncertainties remain."
Sales in Europe grew 3.8% in March, as Japan increased 1.2%.
In addition to improving macroeconomic conditions, and increasing semiconductor content across a wide range of applications, supply chain recovery related to the Thailand floods of 2011 will continue to drive an improved outlook.
The J.P. Morgan’s world purchasing managers’ index increased modestly in April (Chart 11) as most regions showed improvement. Europe was the exception where its PMI dropped significantly.
The U.S. electronic equipment book/bill ratio rose to 1.03 in March (Chart 12) as 3-month (3/12) order growth approached parity (Chart 13). However actual orders and shipments of electronic equipment weakened sequentially (Chart 14) from February to March. Chart 15 shows monthly electronic equipment orders by type.
Inventories are trending upward as the ratio of inventories/orders has edged back near 2009 levels (Chart 16).
Vehicle sales were sequentially flat (Chart 17) while aircraft shipments improved (Chart 18). Disturbingly, orders for electromedical, instrument and control equipment have softened (Chart 19) and military bookings dipped slightly (Chart 20).
Electronic component orders and shipments (excluding semiconductors) were flat (Chart 21) although their 3/12 order growth rate edged near parity (Chart 22).
Chart 23 summarizes the growth of the U.S. electronic supply chain in March. The 3-month (3/12) growth leads the annualized (12/12) growth.
Among the top five smartphone vendors, only Samsung Electronics and Apple saw their market share edge up in the first quarter, while Nokia, HTC and RIM saw their share drop sharply.
HTC managed to keep its fifth-rank title in the smartphone segment in the first quarter of 2012, but saw its shipments slide 23% on year to 6.9 million units and market share tumbled to 4.8% from 8.9%.
U.S. gross domestic product expanded at a 2.2% annual rate, the Commerce Department said in its advance estimate, moderating from the fourth quarter 3% rate.
Economic growth slowed in 1Q’12 as businesses cut back on investment and restocked inventories at a more moderate pace, but stronger demand for automobiles contributed to GDP growth.