01/21/2015 //
Custer Consulting Group has updated its world electronic equipment (Charts 1 & 2) and PCB (Charts 3 & 4) monthly shipment models. As noted below China/Taiwan had a strong year-end but European electronics output weakened in November.
Source: Custer Consulting Group
Taiwan-listed companies, many of which manufacture in China, recently released their December revenues:
Source: Custer Consulting Group based on company financials
Eurostat just release its November results:
Chart 25 summarizes the annualized (12/12) and 3-month (3/12) growth of the European electronic supply chain. A value of 100 indicates no growth versus the same period a year earlier.
Source: http://appsso.eurostat.ec.europa.eu
Worldwide semiconductor revenue is forecast to reach $358 billion in 2015, a 5.4% increase from 2014, but down from the previous quarter's forecast of 5.8% growth, according to Gartner, Inc. The market is being driven by strong growth in application-specific standard products (ASSPs) in smartphones, along with DRAM and NAND flash in ultramobiles and solid-state drives (SSDs).
"Semiconductor revenue growth in 2015 is expected to slow from the 7.9% growth experienced in 2014 as DRAM returns to more traditional price reductions and the industry burns off excess holiday inventory," said Jon Erensen, research director of Gartner. "DRAM pricing was unusually firm in 2014 due to short supply, which propelled DRAM to be the fastest-growing device type in 2014 with 31.7% revenue growth. DRAM supply and demand will be in line in 2015, driving bit pricing down a more traditional 16.8% and reducing annual DRAM revenue growth to 7.7%."
From an application point of view, smartphones, SSDs and ultramobiles will see the largest dollar increases. In 2015, compute applications will continue to be the largest market for semiconductors, followed by wireless and consumer applications. Combined, these three device categories represent more than two-thirds of total semiconductor revenue and have the most influence on the overall strength of the semiconductor market.
However, in 2015, the industrial electronics segment is expected to outperform overall semiconductor market growth and other electronic application categories with revenue growth of 9.1%. The growth will be driven mainly by LED lighting applications for industrial and residential purposes and smart city projects. In addition, the Internet of Things (IoT) will continue to drive very strong unit growth in 2015 and beyond.
Following industrial applications, wireless applications − driven mainly by mobile phones − will be the next biggest growth market for semiconductors in 2015. However, the 2015 revenue growth forecast for wireless applications, and specifically mobile phones, remains the same as the previous quarter's forecast.
"While mobile phone semiconductor sales will remain robust, driven by the accelerating shift to smartphones and 4G Long Term Evolution, there is concern that weak sell-through for other electronic equipment categories will result in higher inventory levels and drag down semiconductor sales in the first quarter of 2015," said Erensen.
Source: www.gartner.com
Dr. Hayao Nakahara reported that Chin Poon was the number one Taiwan-listed automotive PCB maker in 2014 with automotive PCB revenue exceeding $500 million. Following Chin Poon was Tripod, Nanya PCB, GBM, Unitech, etc. Japan retained the number one position in automotive PCB production in the world. Taiwan is second, but aggressively pursuing Japan for the top position. Japanese automotive PCB production grew in YEN, but not in USD in 2014, due to the rapid devaluation of the Japanese currency. Dr. Nakahara's assessment of automotive PCB production in 2014 was about $4.8 to $4.9 billion, about 8% of the total worldwide PCB production in 2014.
Source: H. Nakahara personal communication
Worldwide PC shipments totaled 83.7 million units in the fourth quarter of 2014, a 1% increase from the fourth quarter of 2013, according to preliminary results by Gartner, Inc. These results indicate a slow, but consistent improvement following more than two years of decline.
"The PC market is quietly stabilizing after the installed base reduction driven by users diversifying their device portfolios. Installed base PC displacement by tablets peaked in 2013 and the first half of 2014. Now that tablets have mostly penetrated some key markets, consumer spending is slowly shifting back to PCs," said Mikako Kitagawa, principal analyst at Gartner.
"However, there are regional variations. Mostly, mature regions show an ongoing trend of positive growth, but emerging markets remain weak," Kitagawa said. "The U.S. showed the highest growth in the fourth quarter of 2014. In EMEA, the Western Europe PC market also showed good consumer sales.
Source: www.gartner.com
Being home to Samsung and SK Hynix (number two and number six respectively, in 2013 semiconductor rankings), the market in Korea represents an enormous opportunity for the suppliers of equipment, materials, subsystems, and services needed for chip making. Over the past decade, the semiconductor industry in Korea has spent over $130 billion on equipment and materials. Currently, it is estimated that $14 billion to $15 billion will be spent on equipment and materials in 2015.
Korean companies have emerged as leaders in advancing device technology and in developing new and sophisticated packaging form factors. Of course, Samsung and SK Hynix are well established as leading manufacturers, and both contribute a significant share to the overall capex spend in the industry each year. As such the two companies are estimated to account for 70% of the worldwide DRAM market and 50% of the NAND flash market. Both are investing in advanced memory technology, 2x nm DRAM; 16nm NAND and 3D NAND. Major investments have also occurred in the LED sector as well by Samsung, LG Innotek, Seoul Semiconductor, Iljin LED, and Lumens. Installed LED fab capacity in Korea represents about 13% share of the global total (including five 6″ LED fab lines in production and a sixth one expected to ramp in 2015).
For packaging, both Samsung and SK hynix have developed and ramped production of small form factor and 3D packaging desired in high-performance mobile applications. Packaging subcontractors such as Amkor, STATS ChipPAC, Hana Microelectronics, Signetics, STS Semiconductor and Telecommunications, Nepes, and WinPAC are also key players in the assembly and packaging sector in Korea, as is ASE also with manufacturing in Korea. Both Amkor and STATS ChipPAC are constructing new plants in Incheon. STS Semiconductor introduced new 200mm and 300mm bumping lines this year for flip chip, WLCSP, and copper pillar/micro bump applications. Signetics also has recently increased its flip chip capacity.
Examining just one supply chain segment, materials are clearly an enabling technology in advancing device and packaging performance. The Korean industry clearly is a sizeable market for both fab and packaging materials, and it is expected to emerge at the second largest market for semiconductor materials in 2015. Materials spending in Korea has nearly tripled since 2003 as both fab and packaging investments have grown. Growth is forecast in both 2015 and 2016 for materials, though cost-down pressures will dampen the overall growth for packaging materials.
Source: www.semi.org
Worldwide IT spending is on pace to total $3.8 trillion in 2015, a 2.4% increase from 2014; however, this growth rate is down from earlier projections of 3.9%, according to the latest forecast by Gartner, Inc. The slower outlook for 2015 is largely attributed to the rising U.S. dollar as well as a modest reduction in growth expectations for devices, IT services and telecom services.
"The change in forecast is less dramatic than it might at first seem. The rising U.S. dollar is chiefly responsible for the change — in constant currency terms the downward revision is only 0.1%," said John-David Lovelock, research vice president at Gartner. "Stripping out the impact of exchange rate movements, the corresponding constant-currency growth figure is 3.7%, which compares with 3.8% in the previous quarter's forecast."
Source: www.gartner.com
Infonetics Research released selected findings from its 3Q'14 2G, 3G, LTE Mobile Infrastructure and Subscribers report.
3Q'14 Mobile Infrastructure Market Highlights
Source: www.infonetics.com
"We know that technology has the capability to change the world: from the Gutenberg printing press to the steam engine to the microchip," said Ian Weightman, vice president, research and operations, IHS Technology. "But how can we determine which technologies are likely to have the greatest potential to transform the future of the human race? What is the process to distinguish among the innovations that will have limited impact and those that will be remembered as milestones on the path of progress? How can you tell the difference between the VHS and Betamax of tomorrow's technologies?"
"To answer these questions, IHS Technology gathered its leading experts representing the technology supply chain from electronic components to finished products across applications markets ranging from consumer, media, and telecom; to industrial, medical, and power. These experts were asked to nominate and vote for their top 10 most impactful technologies over the next five years."
The top three technologies were: 3-D printing in third place; cloud computing/big data at number two; and the Internet of Everything coming out on top.
Manufacturing moves to next dimension with 3-D printing
Also called additive manufacturing, 3-D printing encourages design innovation by facilitating the creation of new structures and shapes, and allows limitless product complexity without additional production costs. It also greatly speeds up time to market by making the idea-to-prototype cycle much shorter.
Total revenue for the 3-D printing industry is forecast to grow by nearly 40% annually through 2020, when the aggregated market size is expected to exceed $35.0 billion, up from $5.6 billion in 2014.
Cloud computing/big data brings metamorphosis to computing and consumer markets
The cloud has become a ubiquitous description for on-demand provisioning of data, storage, computing power and services that are touching nearly every consumer and enterprise across the globe. Together with data analytics and mobile broadband, the cloud and big data are poised to reshape almost every facet of the consumer digital lifestyle experience and dramatically impact enterprise information technology (IT) strategies, while creating new opportunities and challenges for the various nodes in the entire information, communications and technology (ICT) value chain.
The cloud is transformational in the business landscape, changing the way enterprises interact with their suppliers, customers and developers.
The big data and data analytics segment is a separate but related transformational technology that harnesses the power of the cloud to analyze data for disparate sources to uncover hidden patterns, enable predictive analysis and achieve huge efficiencies in performance.
IHS forecasts that global enterprise IT spending on cloud-based architectures will double to approximately $230 billion in 2017, up from about $115 billion in 2012.
The Internet of Things becomes the Internet of Everything
The world is in the early stages of the Internet of Things (IoT)—a technological evolution that is based on the way that Internet-connected devices can be used to enhance communication, automate complex industrial processes and generate a wealth of information. To provide some context on the magnitude of this evolution, more than 80 billion Internet-connected devices are projected to be in use in 2024, up from less than 20 billion in 2014, as presented in the attached figure.
While the IoT concept is still relatively new, it is already transforming into a broader model: the Internet of Everything (IoE). The metamorphosis covers not just the number of devices but envisages a complete departure from the way these devices have used the Internet in the past.
Most of the connected devices in place today largely require direct human interaction and are used for the consumption of content and entertainment. The majority of the more than 80 billion future connections will be employed to monitor and control systems, machines and objects—including lights, thermostats, window locks and under-the-hood automotive electronics.
Other transformative technologies identified by IHS Technology analysts were:
Source: www.ihs.com
Market research firm Lucintel reports a global market for glass fiber in PCBs of almost 383,000 MT in 2013 and forecasts a compound annual growth rate (CAGR) of 4.5% that will reach nearly 500,000 MT by 2019. The growth will be fueled by the proliferation of mobile devices and digital control in appliances and cars, and new robotic applications in medical, defense and other manufacturing industries.
Source: www.lucintel.com
The global market for video surveillance equipment was $15.0 billion at year-end 2014, up from $13.5 billion in 2013. By 2018, world revenue will reach $23.6 billion.
"The year 2014 has been one of the most interesting—and disruptive—in recent memory for both the professional and consumer video surveillance industries," said Jon Cropley, principal analyst for video surveillance and security services for IHS.
"A sharp decline in the cost of semiconductor components has ushered in a new era of price competition and the competitive landscape has shifted, with merger-and-acquisition activity affecting some of the leading global product and software vendors."
Even so, the video surveillance industry can sustain this level of fragmented supply base and overall revenue growth for a number of reasons, such as brand recognition, subtle differences in end-user requirements among geographical locations and the continued differentiation of products, as with the use of embedded analytics, for example.
Source: www.ihs.com
U.S. Industrial product rose 4.9% y/y in December but declined 0.1% sequentially from November 2014.
More expensive exports due to the stronger U.S. dollar and weaker offshore markets will likely present future challenges.
Walt Custer is an industry analyst focused on the global electronics industry. Prior to forming Custer Consulting Group he was Vice President of Marketing and Sales for Morton Electronic Materials, a global supplier of specialty chemicals and process equipment for the PCB industry.
Custer has been a member of the IPC trade organization since 1975 where he received both the President's and the Raymond E. Pritchard Hall of Fame Awards. He is currently a member of the IPC Executive Market & Technology Steering Committee. Custer is also a Director of the EIPC European PCB trade organization.
He authors regular “Market Outlook” columns for Global SMT & Packaging magazine, the Journal of the HKPCA and the TTI MarketEYE website.