Weekly Global Update for September 10, 2014

U.S. July Electronics Shipments, Orders & Shipments

The U.S. “Factory Orders” report for July was released last week by the United States Census Bureau. This is more detailed than the “Durable Goods” report issued a week earlier.

• Electronic equipment orders dropped sequentially from June to July but remained above shipments (Chart 1).
• Electromedical, instrument and control and also communication equipment orders increased (Chart 2) but search & navigation, military and computer orders declined even more causing the drop in total orders (Chart 3).
• Vehicle sales increased significantly (Chart 4).
• Aircraft shipments also rose driven by the commercial sector (Chart 5).
• Defense capital goods (Chart 6) and military electronics (Chart 7) orders dropped.
• Electromedical, measurement and control equipment demand remained strong (Chart 8).
• Passive component orders continued to increase (Chart 9) as both their order and shipment growth rates strengthened (Chart 10).
• The PMI leading indicator points to continued passive component growth – but at a slower pace near term (Chart 11).

Chart 12 summarizes the annualized (12/12) and 3-month (3/12) growth of the domestic electronic supply chain. The 3/12 “leads” the 12/12.

Source: www.census.gov/manufacturing/m3/

August PMI Leading Indicators

Based on recent leading indicator data, world economic growth will continue near term at a modest pace.

• The JPMorgan Global Manufacturing PMI rose slightly to 52.6 in August (Chart 13).
• Improved PMI values in the U.S., Japan, S. Korea and Taiwan were offset by declines in China and Europe (Chart 14).
• On a 3/12 basis (June-August 2014/June-August 2013), PMI growth appears to have peaked in all regions (Chart 15).

Source: www.jpmorgan.com and www.markiteconomics.com

Personal Computing Unit Shipments Rising Despite Drop in Desktops and Notebooks (Chart 16)

Tablet and Internet/cloud system shipments forecast to drive total unit growth 12% in 2014.

With touch-screen tablet computers dominating growth across the entire personal computing market, total shipments of personal computing systems (desktops, notebooks, tablets, and Internet/cloud units) are forecast to rise 12% in 2014 to 585 million units compared to 521 million in 2013. A 9% increase to 639 million computers is forecast for 2015.

Standard PC shipments (desktops and notebooks) plunged 9% in 2013 from an all-time high of 345 million in 2012. The market for standard PCs continues to be sluggish in 2014, causing IC Insights to forecast a 5% decline for these systems to 298 million this year. A small increase of 1% to 302 million systems is now forecast for 2015.

IC Insights expects tablet shipments to grow 39% in 2014 to 281 million units, followed by a 16% increase in 2015 to 327 million. Shipments of Internet/cloud-computing “thin-client” units are also forecast to grow—increasing 22% in 2014 to about 6 million units worldwide followed by a 56% increase to nearly 10 million in 2015.

Clearly personal computing has forever changed with growth of tablets and other new platforms now superseding standard keyboard-based PCs. Tablets and Internet/cloud-computing platforms are not only making up for declines in PC unit sales but also maintaining historical growth patterns in personal computing systems during changing economic cycles.

Source: www.icinsights.com

Worldwide Robot Investment to Increase from $15 Billion in 2010 to $67 Billion by 2025 (Chart 17)

Too few corporate leaders are thinking about how the next generation of robotics will affect their workforce, operations, business models, and competitive position.

The rise of robotics is gaining traction much faster than most executives realize and will have a major impact on the competitiveness of companies and countries alike, according to new research by The Boston Consulting Group.

Spending on robots worldwide is expected to more than quadruple from just over $15 billion four years ago to about $67 billion by 2025 − a 10.4% compound annual growth rate since 2010, according to BCG's study. The findings appear in a new article, "The Rise of Robotics," published on bcgperspectives.com.

Increasingly flexible, responsive, sensing − even humanlike − today's state-of-the-art robots are beginning to replace labor in a wide range of industries. As prices come down and new performance thresholds are crossed, robots are migrating from industrial and military uses to commercial applications and the personal-service realm, BCG says.

"Already used to fight wars, remove dangerous land mines, and fill customer orders, robots can also clean, dance, and play the violin; assist with surgery and rehabilitation; bathe elderly patients; measure and deliver medication; offer companionship; and provide disaster relief, report the news, and drive cars," the authors note.

BCG studied the full spectrum of the global robotics market, which comprises four sectors: The personal segment − robots used for entertainment, cleaning, education, security, and household applications − is projected to grow the fastest, at a compound annual rate of 15.8%, ballooning from $1 billion in 2010 to $9.0 billion in 2025.

The commercial segment − robots used for medical and surgical purposes, agriculture, and construction, among other applications − is expected to grow at a compound growth rate of 11.8% from $3.2 billion to $17.0 billion, overtaking spending on military applications.

The industrial segment -- robots used in applications such as welding, assembly, painting, and material handling -- will continue to be the largest, growing at a compound growth rate of 10.1% from $5.8 billion to $24.4 billion.

The military segment − for unmanned aerial, ground, and underwater vehicles, among other applications − is projected to grow at a compound growth rate of 8.1% from 2010 to 2025 and will be second largest, at $16.5 billion.

It's interesting to note that 15 years ago, there was no significant market for personal robots and only a very small one − $1.1 billion in 2000 − for commercial applications. Increasingly, robotic applications are migrating from industrial and military uses to commercial and personal ones. In June, for example, BP received approval from the U.S. Federal Aviation Administration to use drones to monitor the company's oil operations in Alaska. Honda is investing in robots that will provide assistance to people with mobility problems, such as the elderly and disabled.

Driving this growth is a convergence of falling prices and performance improvements. The cost of high-quality robots and components is dropping rapidly, while CPUs are getting faster and application programming is getting easier. As robots become cheaper, smaller, and more energy efficient, they gain flexibility and finesse, increasing the breadth of potential applications.

"The fact that robotics and automation are crossing price, performance, and adoption thresholds is a clear sign that the robotic megatrend is growing in relevance and a tipping point may be near," said Alison Sander, head of BCG's Center for Sensing & Mining the Future and a coauthor of the article.

BostonConsulting Group
www.bcg.com

Worldwide Server Shipments Units up 1.3% y/y in 2Q’14; Revenue Increased 2.8% (Charts 18-21)

In the second quarter of 2014, worldwide server shipments grew 1.3% year-over-year, while revenue moved upward 2.8% from the second quarter of 2013, according to Gartner, Inc. "The second quarter of 2014 produced relatively weak growth on a global level, with mixed results by platform," said Jeffrey Hewitt, research vice president at Gartner. "All regions showed growth in both shipments and vendor revenue except for Eastern Europe, Japan and Latin America.”

Source: www.gartner.com

Notebook Panel Supply Expected to See 20% Shortage in 3Q’14

Panel makers have shifted production to higher profit products such as smartphone, tablet and Ultra HD TV panels as demand remains steady, while demand for notebook and monitor applications has fluctuated.

Notebook shipments are expected to increase slightly around 1-2% in 2014, which means that vendors may push newer products for release in the fourth quarter of the year or otherwise face possible shortages throughout the third quarter.

LCD monitor panels are also in short supply during the third quarter, including that for 19-, 21.5-, 24- and 27-inch units. Many market observers believe that supply may not increase until the fourth quarter.

Source: www.digitimes.com

Solid State versus Hard Disk Shipments for PC Applications (Chart 22)

Chart 22 gives IHS iSuppli’s recent forecast for solid state and conventional hard disks for personal computer applications.

Source: www.iSuppli.com

Metal Prices

Historical pricing for copper (Chart 23), gold (Chart 24), silver (Chart 25) and tin (Chart 26).

Sources:URLs as noted on charts

Exchange Rates vs U.S. Dollar (Charts 27-35)

Exchange rates vs U.S. Dollar (Charts 27-35)

Source: http://research.stlouisfed.org/fred2/series/TWEXBMTH