Summary of Global Electronic Equipment Growth

Chart 1 shows the combined quarterly financial results of 160 global OEMs. Note that there was no revenue growth when comparing 4Q’14 to 4Q’13. For the same period net income declined 5% and inventory levels shrank 2%.

Chart 2 gives quarterly electronic equipment growth from Q1’2001 to Q4’2014. The “Dotcom” induced recession of 2001 and the first half of 2002 and the financial crisis of 2009 are evident.

Chart 3 has the annualized (12/12) and 3-month (3/12) growth rates of electronic equipment revenues (for the 160 OEMs in Chart 1). It appears that our most recent business cycle peaked in mid-2014.

Because we also capture quarterly inventories in total and by sector we can track ongoing changes in inventory levels or the ratio of inventories/revenues (Chart 4) on a quarterly basis. High inventory levels especially in times of weakening demand results in very slow sales recovery. This was very evident following the “Dotcom” induced recession of 2001 and early 2002.

Because the data in Charts 1-3 are composite results by electronic equipment sector it is possible to track the size and growth of each type of electronic equipment (Chart 5). Chart 6 summarizes the electronic equipment sector growth for 4Q’14 vs. 4Q’13. This information can be useful for target a company’s sales efforts on the higher growth sectors.

Electronic Equipment Growth by Sector

Computer Equipment

Chart 7 has the composite revenues of 13 computer manufactures. 4Q’14 sales declined 2.4% vs 4Q’2013. We retain the historical data of acquired companies (Compaq purchased by HP) in the historical results. Recently desktop computer sales have been hurt by media tablets and a number of “computer” companies (Apple and Lenovo are examples) have diversified into smartphones. As data are available we include the cell phone portion of these companies’ sales in the communication sector.

In 4Q’14 HP’s sales declined 5% (Chart 8) while iPhone driven Apple (Chart 9) and Lenovo (Chart 10) sales surged.

Datacom Equipment

Datacom or “Internet” equipment revenues grew 2.8% in 4Q’14 (Chart 11). Cisco (Chart 12) and Juniper (Chart 13) are examples.

Data Storage

This sector includes the HDD and solid state memory producing companies. Revenues increased 2.3% in the fourth quarter (Chart 14). Western Digital (Chart 15), Seagate (Chart 16) and Net App (Chart 17) are examples.

Business and Office Equipment

Revenue declined 9.6% for this relatively small sector (Chart 18). Xerox (Chart 19) and Lexmark (Chart 20) are examples.

Communication Equipment

This large sector (Chart 21) is driven by mobile phones. Revenue grew 11%. The cell phone sales of Apple and Lenovo are capture in this sector. Besides the mobile phone producers such companies as Alcatel-Lucent (Chart 22) and Motorola Solutions (Chart 23) are included.

Semiconductor Fab, Test and Measurement Equipment

This highly volatile sector (Chart 24) grew in double digits for the first three quarters of 2014 however sales declined 3.7% in 4Q’14 versus 4Q’13. Applied Materials (Chart 25) has the largest sales in this sector. Its revenues were up 8% 4Q’14. Teradyne (Chart 26) and ASML Holdings (Chart 27) are examples.

Consumer Electronics

Consumer electronics (Chart 28) sales are very seasonal and have been shrinking since 2009. Member companies include a portion of Canon (Chart 29), Nikon (Chart 30) and Panasonic (Chart 31).

Automotive

Automotive equipment sales (Chart 32) declined 0.5% in the fourth quarter after growing earlier in 2014. Bosch Chart 33 - which is privately held and does not report quarterly financials, Continental (Chart 34) and TRW Automotive (Chart 35) are examples.

Medical Equipment

Medical equipment (Chart 36) revenues increased 3.4% in 4Q’14. Medtronic (Chart 37) is the largest contributor to this sector.

Instrument and Control Equipment

This sector’s sales declined 3.7% in 4Q’14 (Chart 38). Examples include ABB (Chart 39), Emerson Electric (Chart 40), Perkin Elmer (Chart 41), Teledyne (Chart 42) and Thermo Fisher Scientific (Chart 43).

Military and Aerospace

Sales increased 1.8% in the fourth quarter (Chart 44). Boeing sales are reported in total (Chart 45), commercial (Chart 46) and military (Chart 47). Similarly EADS (Airbus) reports total (Chart 48), commercial (Chart 49) ad military (Chart 50) revenues.

Other examples are General Dynamics (Chart 51), Harris (Chart 52), Lockheed Martin (Chart 53), Northrop Grumman (Chart 54) and Raytheon (Chart 55).

Summary and Data Availability

Custer Consulting Group tracks the quarterly revenues over 600 companies to generate financial composites and resulting growth rates for revenues, net income and inventories. This data is available on a constantly updated basis. Contact us for more details.

Walt D. Custer


Walt Custer

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.

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