Weekly Global Update for May 22, 2013

Global Industrial Production Growth Varies by Region

World industrial output was weak in early to mid-2013:

• All of the western European countries and much of SE Asia had negative growth (Chart 1)
• U.S. industrial production growth has gradually slowed this year and declined in April (Chart 2).
• Europe saw an increase for the EU27, Germany, France and the UK but declined in Italy in March (Chart 3).

World Electronic Equipment Production (including recent data updates)

Our global electronic equipment database has just been revised to reflect some key changes:

• Europe: Electronic equipment production increased for the EU27 countries in March (Chart 4). Chart 5 summarizes first quarter 2013 European electronic equipment and component growth by product type.
• Taiwan/China electronics production was down sharply in the first four months of 2013.
• Taiwan stock exchange listed companies now report their sales on a consolidated basis (includes subsidiaries) so their monthly sales are higher compared to non-consolidated results (Chart 6). However they were down sharply when comparing the same periods and financial reporting for early 2012 versus 2013.
• We have converted our entire Taiwan/China company sales data base to consolidated sales for future reporting.
• U.S. electronic equipment orders declined in March (Chart 7). The U.S. Department of Census just issued a historical revision of monthly electronic equipment and component shipments, orders and inventories.

The just revised European, Taiwan/China and U.S. data are now all incorporated and available in our Business Outlook chart set. Contact walt@custerconsulting.com with any questions.

World Electronic Equipment Production by Region (based on recent regional updates as noted above)

• Chart 8 has updated 3/12 (3-month) growth rates for electronic equipment by region. All areas are negative but note the recent sharp decline in Japan and SE Asia.
• Chart 9 converts the growth rates in Chart 8 to monthly US$ shipments.
• Chart 10 sums Chart 9 to give total global monthly electronic equipment shipments.

Global PCB Shipments

• Chart 11 provides updated printed circuit monthly 3/12 growth by region.
• Chart 12 shows regional and total PCB shipments by month in U.S. dollars.

Data for the above electronic equipment and PCB shipments by region by month are available. Contact us for details.

European Component Distribution; Q1’13 Down -5% vs. Q1’12 but 16% higher than Q4’12 Stronger recovery in Nordic and Eastern Countries (Charts 13 & 14)

The European Semiconductor Distribution Market currently looks at a sequential recovery. Although Q1/CY13 ended 5% lower than the comparable quarter last year, the sequential development is extremely promising - plus 16% compared to Q4/CY12. Q1 ended with sales of 1.48 Billion Euro, according to DMASS (Distributors' and Manufacturers' Association of Semiconductor Specialists).

Georg Steinberger, chairman of DMASS, commented on the results: "I am sure that many market participants are relieved that the worst is obviously behind us. However, the 5% decline against Q1/CY12 clearly shows that there is still some risk in the market, particularly through price pressure and production shifts. At least, the booking situation has slightly improved, so that another year of decline does not seem too probable."

Among the major regions, the differences in growth/decline have been quite impressive - between 1% growth in the Nordic and Eastern Region and a decline of over 9% in Germany. More specifically, in the Q1/Q1 comparison Germany ended at 478 Million Euro (-9.3%), Italy at 139 Million Euro (-7.7%), UK at 123 Million Euro (-3%), France at 108 Million Euro (-6%), Eastern Europe at 160 Million Euro (+1.2%) and Nordic at 153 Million Euro (+0.8%). These regions account for ~80% of DMASS total.

Georg Steinberger: "Arguably, at Q1 a comparison of regional shifts does not make a lot sense, however the over-proportional German weakness over the last few quarters seems to have come to a halt finally."

Source: www.dmass.com

Asia/Pacific Led Worldwide Mobile Phone Sales to Growth in First Quarter of 2013 (Charts 15 & 16)

• Sales of Mobile Phones in all Regions Except Asia/Pacific Declined in the First Quarter of 2013
• Slowdown in Feature Phone Upgrade Cycle Could Strain Mobile Phone Market in 2013

Worldwide mobile phone sales to end users totaled nearly 426 million units in the first quarter of 2013, a slight increase of 0.7% from the same period last year, according to Gartner, Inc.

Worldwide smartphone sales totaled 210 million units in the first quarter of 2013, up 42.9% from the first quarter of 2012. The Asia/Pacific region was the only region to show growth in mobile phone sales this quarter, with a 6.4% increase year-on-year.

"More than 226 million mobile phones were sold to end users in Asia/Pacific in the first quarter of 2013, which helped the region increase its share of global mobile phones to 53.1% year-on-year," said Anshul Gupta, principal research analyst at Gartner. "In addition, China saw its mobile phone sales increase 7.5% in the first quarter of 2013, and its sales represented 25.7% of global mobile phone sales, up nearly 2 percentage points year-on-year.

"The Chinese and local manufacturers have been exemplary at addressing the demands of buyers by offering affordable devices with optimum features such as 2.5G (EDGE) instead of 3G in a smartphone. In the smartphone market, local and Chinese manufacturers are making faster inroads as they account for 29% share in the first quarter of 2013, up from 13.2% a year ago."

In the first quarter of 2013, sales of mobile phones in the EMEA region declined 3.6%. The North America and Latin America’s mobile phone market fell 9.5 and 3.8%, respectively, while Japan saw its mobile phone sales drop 7.3%.

Source: www.gartner.com

Taiwan Notebook Vendors Pessimistic about 3Q’13 Outlook

Notebook vendors originally thought that Microsoft would launch Windows Blue in September 2013 and the new operating system could pair with Intel's Haswell platform, to be unveiled in early June, to boost global demand in the third quarter. But because Microsoft will launch Windows Blue in late 2013, the vendors are pessimistic about the global notebook market in the third quarter, according to sources from notebook players.

Since smartphones and tablets are often sufficient for surfing the Internet and entertainment, consumers are in no rush to upgrade their PC device.

Source: www.digitimes.com

Fujitsu May Increase Domestic in-house Production due to Yen Depreciation

Fujitsu is considering increasing the proportion of domestic in-house production because the depreciation of the Japanese yen means production costs in Japan have decreased.

Source: www.digitimes.com

U.S. Industrial Production has Largest Decline in Eight Months (Chart 2)

Output at U.S. factories, mines and utilities fell 0.5% in April.

"Things are definitely slowing," said Scott Brown, chief economist at Raymond James & Associates. "Manufacturing will bounce around the next couple of months. In the U.S., we'll have a dampening effect from the sequestration and a negative effect from the payroll tax. The weakness in the rest of the world doesn't help."