Weekly Global Update for June 17, 2015

Taiwan/China Update – Seasonal Revenue Downturn Across all Products in May

May monthly revenues for Taiwan-listed companies were just released. Many of these firms actually manufacture in China.

• OEM revenues rose up 1.4% in May 2015 compared to May 2014 but were down 6.5% compared to April 2015 (Chart 1).
• ODM (Chart 2) and display (Chart 3) sales behaved similarly.
• Semiconductor shipments to Asia/Pacific are slowing at the same rate as electronic equipment but they are “in balance” on a 3/12 growth rate basis (Chart 4).
• Wafer foundry (Chart 5), memory (Chart 6) and passive component (Chart 7) revenues declined in May versus April but package and test (Chart 8) and solar/photovoltaic (Chart 9) sales improved modestly.
• Printed circuit board (Chart 10) and rigid laminate (Chart 11) revenues also declined as Custer Consulting Group’s Asia/Pacific PCB leading indicator (Chart 12) points to continued PCB weakness (excluding seasonal effects) short term.

Source: Company financials with Custer Consulting Group analysis

Europe Update - Improving Electronics Demand

Europe’s electronic demand was improving through April based upon Eurostat’s recent monthly data report.

• Electronic equipment production for the EU27 countries has been generally improving since early 2013 with a notable upturn in April (Chart 13).
• Electronic equipment growth (Chart 14) is at about +5% on both an annualized (12/12) and 3-month (3/12) basis. The 3/12 may be struggling a bit of late and bears watching.
• Both automotive (Chart 15) and aerospace (Chart 16) revenues dipped in April.
• Instrument sales improved (Chart 17) and medical equipment demand surged (Chart 18).
• Electronic assembly weakened (Chart 19) but PCB production increased (Chart 20).
• Europe’s PMI leading indicator points to accelerating growth ahead (Chart 21). Hopefully Greek financial woes won’t derail the EU recovery.
• Chart 22 summarizes European growth by electronics sector for February April 2015 versus the same months in 2014.

Source: Eurostat with Custer Consulting Group analysis

Worldwide Semiconductor Manufacturing Equipment Billings increased 6% y/y to US$9.52 billion & Bookings fell 2% y/y to $9.66 billion in 1Q’15 (Charts 23 & 24)

SEMI reported that worldwide semiconductor manufacturing equipment billings reached US$9.52 billion in the first quarter of 2015, 7% higher than the fourth quarter of 2014 and 6% lower than the same quarter a year ago.

Worldwide semiconductor equipment bookings were $9.66 billion in 1Q’15, 2% lower than the same quarter a year ago and 3% lower than 4Q’14.

Source: www.semi.org

PC Inventory Issue Growing Serious in Europe

First-tier PC vendors reportedly are seeing serious inventory issues in Europe and may try to digest the inventory by offering price cuts. At the same time, some channel retailers are reacting to the news by boycotting the vendors and avoiding having inventory dumped on them, according to sources from the upstream supply chain.

Soure: www.digitimes.com

Wearable Market Remained Strong in 1Q’15 Despite the Pending Debut of Apple Watch (Charts 25-27)

The worldwide wearable device market (commonly referred to as wearables) recorded its eighth consecutive quarter of steady growth in the first quarter of 2015 (1Q’15). According to IDC vendors shipped a total of 11.4 million wearables in 1Q’15, a 200% increase from the 3.8 million wearables shipped in 1Q’14.

"Bucking the post-holiday decline normally associated with the first quarter is a strong sign for the wearables market," said Ramon Llamas, research manager, Wearables. "It demonstrates growing end-user interest and the vendors' ability to deliver a diversity of devices and experiences. In addition, demand from emerging markets is on the rise and vendors are eager to meet these new opportunities.

"What remains to be seen is how Apple's arrival will change the landscape," added Llamas. "The Apple Watch will likely become the device that other wearables will be measured against, fairly or not. This will force the competition to up their game in order to stay on the leading edge of the market."

"As with any young market, price erosion has been quite drastic," said Jitesh Ubrani, senior research analyst, Worldwide Mobile Device Trackers. "We now see over 40% of the devices priced under $100, and that's one reason why the top five vendors have been able to grow their dominance from two thirds of the market in the first quarter of last year to three quarters this quarter. Despite this price erosion, Apple's entrance with a product priced at the high end of the spectrum will test consumers' willingness to pay a premium for a brand or product that is the center of attention."

Source: www.idc.com

SSDs Exceed 30% Market Penetration in Notebooks (Chart 28)

DRAMeXchange, a division of TrendForce, reported that prices for solid-state drive (SSD) products are declining at an accelerated pace as the production of NAND flash migrates to the 15/16nm manufacturing processes and incorporates the 3D-NAND flash technology.

The average contract price for 128GB Client-SSDs made by original equipment manufacturers (OEMs) has dropped to US$50 in the second quarter, while 256GB Client-SSDs have seen their average contract price lowered to nearly US$90. In the third quarter, the ratio of 3D-NAND flash products in shipments will start to increase and the market penetration of notebook SSDs will speed up.

According to DRAMeXchange’s projection, notebook SSDs’ market penetration will be over 30% for 2015 and surpass 50% by 2017.

Source: www.DRAMeXchange.com