11/04/2015 //
Third quarter financial releases by publicly traded companies will continue into mid-November but we have enough information now to make an early estimate of third quarter electronic supply chain performance:
Be aware that these 3Q’15 consolidated estimates are preliminary and will likely change as more companies report their third quarter financials
Source: Company data analyzed by Custer Consulting Group
The U.S. Department Commerce just released its September Durable Goods report with shipments, orders and inventories for the electronic supply chain:
Source: www.census.gov/manufacturing/m3/
IPC announced the September findings from its monthly North American Printed Circuit Board (PCB) Statistical Program. Sales growth continued in September and the book-to-bill ratio fell back to a more normal but still positive 1.05.
Total North American PCB shipments increased 3.3% in September 2015 compared to September 2014. Year-to-date shipment growth finally reached positive territory at 0.3%, after struggling to overcome negative sales growth rates seen earlier this year. Compared to the previous month, PCB shipments were up 12.1%.
PCB bookings decreased 2.0% compared to September 2014, reducing year-to-date order growth to 5.2%. Orders were down 7.4% in September compared to the previous month.
“The North American PCB industry continues to see modest but positive sales growth, the result of strong order growth in most months of 2015. Orders contracted in September bringing the book-to-bill ratio down from a 5-year high in August to a more moderate level,” said Sharon Starr, IPC’s director of market research. “The book-to-bill ratio remains positive for the 12th consecutive month,” she added, “which is a strong indicator of positive sales growth in the fourth quarter of this year and into next year.”
Source: www.ipc.org
Many Vendors Get Serious About Moving from Slate Offerings to Detachables
The worldwide tablet market recorded lower shipments for the fourth straight quarter with 48.7 million units shipped in the third quarter of 2015, according to preliminary data from the International Data Corporation (IDC). Despite signs of a slight seasonal improvement, shipments were down 12.6% year-over-year, further highlighting the challenges the tablet market is facing.
At the close of 2014, IDC estimated the installed base of tablets to be 581.9 million globally, which was up 36% from 2013 but slowing quickly. With mature markets like North America, Western Europe, and Asia/Pacific well past 100 million active tablets per region, the opportunities for growth are getting fewer.
"We continue to get feedback that tablet users are holding onto devices upward of four years," said Ryan Reith, Program Director with IDC's Worldwide Quarterly Mobile Device Trackers. "We believe the traditional slate tablet has a place in the personal computing world. However, as the smartphone installed base continues to grow and the devices get bigger and more capable, the need for smaller form factor slate tablets becomes less clear. With shipment volumes slowing over four consecutive quarters, the market appears to be in transition."
In response to these challenges, the industry is seeing growing interest from vendors in new form factors, with detachable tablets becoming a clear focus for many. While detachable tablets have held just a single digit percentage of the overall tablet market, IDC expects this share to increase dramatically over the next 18 months. However, the shift toward detachables presents some new challenges. In particular, the mix of traditional PC OEMs that are evolving their portfolios to include detachables will face pressure from the traditional smartphone OEMs, many of which have become accustomed to delivering extremely low-cost products.
"The first generation of detachable tablets failed to gain much traction, as they represented a series of compromises in terms of both operating system and hardware that few consumers or businesses were willing to accept," said Tom Mainelli, Program Vice President, Devices and Displays at IDC. "The devices shipping now represent a clear evolution of both OS and hardware, and it's our expectation that both home and pro users will begin to embrace the form factor in larger numbers going forward."
Source: www.idc.com
According to preliminary results from the International Data Corporation, vendors shipped a total of 355.2 million smartphones worldwide in 3Q’15, up 6.8% from the 332.6 million units in 3Q’14, marking the second highest quarter of shipments on record. The 3Q’15 shipments were slightly below IDC's previous forecast of 363.8 million units, largely due to slightly lower than expected iPhone shipments, as well as Android flagship introductions from several top-tier OEMs with price points outside the consumer sweet spot.
"The vendor landscape and product offerings are really unique at the moment as many markets are seeing consumers become more aware of alternative buying options when it comes to paying for their smartphone," said Ryan Reith, Program Director with IDC's Worldwide Quarterly Mobile Phone Tracker. "In mature and subsidized markets, we now have a wide range of operators offering equipment installation plans (EIP), as well as early trade-in options. At the same time the number of unlocked/off-contract offerings has increased significantly and it's slowly starting to resonate with consumers. Within these markets these moves will put pressure directly on Android OEMs with offerings that are greater than $500."
"The third quarter placed a substantial emphasis on flagship devices as vendors tried to outclass each other in both features and design," said Anthony Scarsella, Research Manager, Mobile Phones. "New flagship models translated to fiercer competition at the high-end for most players as many will try to challenge both Samsung and Apple for a place among the elite. However, despite the glitz and glamour at the high-end, we still expect the bulk of volume and growth to once again sprout from low to mid-range handsets, particularly in emerging markets."
Source: www.idc.com
Global notebook shipments (not including detachable 2-in-1 products), are expected to drop 17.5% on year and 5.3% sequentially in the fourth quarter as most notebook vendors already completed their inventory preparation for the year-end holiday sales in the third quarter and are still conservative about overall demand in the fourth quarter, according to the latest Digitimes Research quarterly notebook report.
Taiwan's notebook shipments will see a smaller decline than that of global shipments, thanks to Asustek shipments.
U.S.-based vendors' combined share in global shipments will rise slightly from the previous quarter in the fourth quarter because Dell, which mainly focuses on the enterprise market and Apple, which dominates the consumer high-end segment, only see limited effects from weak sales in the mainstream consumer market.
Hewlett-Packard has remained conservative about its fourth-quarter shipments, as the company is still processing the split between its consumer and enterprise businesses. Lenovo reportedly is not pulling in orders from the upstream supply chain as aggressively as before in and that could relatively hurt its overall shipment performance and the goal is to remain the largest vendor worldwide.
Taiwan notebook makers' ranking in the fourth quarter will remain the same as the third quarter, but Pegatron will benefit from Asustek's increasing shipments, Digitimes Research figures showed.
Source: www.digitimes.com
U.S. economic growth (as measured by GDP) slowed in 3Q’15 as excess inventories limited new orders (Chart 19).
Industrial production growth varied significantly by country (Chart 20).
Source: www.bea.gov/national/
Walt will present his “Business Outlook for the Global Electronics Industry” at the Productronica tradeshow in Munich. Speaking times and locations are:
SMT Speakers Corner (Hall A1 stand 411)
Tuesday, November 10, 3:30 - 4:30 p.m.
Thursday, November 12, 3:30 - 4:30 p.m.
Innovation Forum (Hall B3 stand 451)
Wednesday, November 11, 3:30 - 4:30 p.m.
PCB & EMS Marketplace (Hall B1 stand 360)
Friday, November 13, 1:00 -1:45 p.m.
All attendees will receive his complete set of charts.
During the show you can contact Walt at the EIPC and co-exhibitors stand B1-529 or via his mobile phone +1 7074942495.
See you in Munich!
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.