04/26/2017 //
Markit Economics just released its flash April PMI leading indicators for select countries. All were solidly in expansion territory (PMI>50) but the results were mixed Chart 1.
The U.S. PMI dropped slightly from 53.3 in March to 52.8 in April (Chart 2).
Chris Williamson, Chief Business Economist at IHS Markit commented
The Eurozone PMI continued to its highest point in six years (Chart 3) and Japan ticked up slightly (Chart 4).
Source: www.markiteconomics.com
JEITA released February Japanese domestic production data:
Source: www.jeita.or.jp
Taiwan Semiconductor Manufacturing Co. (TSMC), the largest foundry for customers in the smartphone business including Apple and MediaTek, says it is expecting an inventory correction in smartphones to continue through the first half of this year.
"Fabless days of inventory (DOI) are still high. Our second-quarter guidance reflects a severe inventory adjustment in the smartphone and PC markets," TSMC Co-CEO Mark Liu said at an event in Taipei to announce the company's first-quarter results. "Fabless DOI should return to normal around the end of the second quarter this year."
Source: www.eetimes.com
Intel pulled away from Samsung in 2016 chip market ranking
The worldwide semiconductor market in 2016, posted a growth of 2%, according to market analysis firm IHS Markit with Intel managing to increase its lead over number two Samsung.
For most of 2016 it was forecast it would be down or flat year but IHS Markit reckons a surge in the second half took global chip revenue to $352.4 billion, up from $345.6 billion in 2015.
Intel was able to gain market share versus Samsung due to acquisitions by Intel and the impact of weak memory prices on Samsung. Qualcomm in third place stumbled as the leading fabless chip company as it comes under pressure to moderate its royalty demands and the creation of Broadcom Ltd. threatened its ranking. The situation will change in 2017 with memory prices rising rapidly and Qualcomm due to absorb NXP and the prospect of more consolidation.
The DRAM and NAND flash memory market grew more than 30% collectively in the second half of 2016, IHS Markit commented. Semiconductors for automotive applications were also a driver of 2016 with a 9.7% expansion by year-end.
The year of 2016 was another one of consolidation and it began with the close of the biggest-ever acquisition in the semiconductor industry. Avago Technologies finalized its $37 billion acquisition of Broadcom Corp. to form Broadcom Limited, which jumped to rank fourth in terms of market share.
Among the top 20 semiconductor suppliers, On Semiconductor and Nvidia enjoyed the largest revenue growth, followed closely by MediaTek. ON and MediaTek achieved growth through multiple acquisitions, while nVidia saw demand for its GPU technology as it moves into automotive.
Source: www.ihs.com
By Walt Custer, Custer Consulting Group, and Dan Tracy, SEMI
SEMI’s equipment billings year-to-date through February show over a 90% gain compared to the same period in the previous year. Year-to-date worldwide billings have reached about $7.5 billion.
Leading indicators can be useful in forecasting future business activity. For world semiconductor equipment billings, both the Global Manufacturing PMI Index and a composite of Taiwan foundry sales are useful indicators.
Chart 14 compares Taiwan foundry shipments, SEMI worldwide equipment billings, and SIA global semiconductor shipments. A useful way to compare these time series is by using 3/12 growth rates. The 3/12 growth is the ratio of three months of data, compared to the same three months a year earlier.
Foundry shipments are more volatile but timewise coincident with semiconductor shipments. Both the 3/12 of foundry and semiconductors “lead” the 3/12 of SEMI equipment billings by about 6 months. In early 2017, foundry growth has slowed though it remains positive. However, both the Taiwan foundry and SIA data predict that SEMI equipment growth will slow by mid-year.
Chart 15 compares the Global PMI to semiconductor and SEMI equipment billings. To accentuate the peaks and troughs the Global PMI has been squared in the graph. Global PMI leads semiconductor shipments by about two months and SEMI equipment billings by almost eight months. The present 2017 business cycle upturn is not as dramatic as in 2010 and the PMI predicts slowing SEMI equipment growth mid-year.
SEMI members can access member-only market data and information at www.semi.org/en/free-market-data-semi-members. For more information on SEMI, visit www.semi.org and follow SEMI on LinkedIn and Twitter.
Custer Consulting Group (www.custerconsulting.com) provides market research, business analyses and forecasts for the electronic equipment and solar/photovoltaic supply chains including semiconductors, printed circuit boards & other passive components, photovoltaic cells & modules, EMS, ODM & related assembly activities and materials & process equipment.
Source: www.semi.org
Worldwide semiconductor wafer-level manufacturing equipment (WFE) revenue totaled $37.4 billion in 2016, an 11.3% increase from 2015, according to final results by Gartner, Inc. The top 10 vendors accounted for 79% of the market, up 2% from 2015.
"Spending on 3D NAND and leading-edge logic process drove growth in the market in 2016," said Takashi Ogawa, research vice president at Gartner. "This spending was driven by momentum for high-end services in data centers and requirements for faster processors and high-volume memory for mobile devices."
Applied Materials continued to lead the WFE market with 20.5% growth in 2016. The active investment in 3D device manufacturing provided significant momentum in Applied's etch revenue, specifically in the conductor etch segment. Screen Semiconductor Solutions experienced the highest growth in the market, with 41.5%. This was due to a combination of the appreciation of the Japanese Yen against the U.S. dollar, which elevated dollar-based sales estimates and the demand in premium smartphone and data center servers for big data analysis that drove investment in 3D-NAND capacity and leading-edge technology in foundries.
Source: www.gartner.com
Supply of LED chips produced by China- and Taiwan-based makers has been tight and the situation will remain until the third quarter of 2017 when major China makers ramp up their new production capacity, according to China-based LED packaging service providers. The tight supply partly stems from strong demand for LED lighting and fine pixel pitch displays.
Epistar, the largest Taiwan-based LED epitaxial wafer and chip maker, has strategically selected orders to cope with the tight supply and has seen orders for blue-light LED chips 30% over the corresponding production capacity, according to the company.
Orders for LED chips for 5mm-thick chip-scale packaging for backlighting of LCD TVs from South Korea- and China-based TV vendors are expected to increase soon, said Epistar, which also looks to potential growth in demand for infrared LED chips for iris recognition, range finding, VR (virtual reality), AR (augmented reality), smart wearable and surveillance devices.
China-based LED chip makers, including San'an Optoelectronics, Huaian Aucksun Optoelectronics Technology and HC SemiTek, are expanding production capacity by adding 200 MOCVD sets, with the additional tools to come into operation beginning August 2017, the sources said.
Source: www.digitimes.com
The supply of DRAM memory is likely to stay tight for a substantial period of time, according to Frank Huang, chairman for Taiwan-based pure-play foundry Powerchip Technology.
DRAM makers have not opened new lines for five years, said Huang, adding that industry leader Samsung Electronics is putting increased focus on its 10nm foundry and NAND flash offerings.
Technology is the key to the development of China's DRAM industry, and Micron Technology has started to pay attention to potential infringement of its existing patents, Huang identified. Patent issues could slow down the development of China's emerging DRAM companies including Yangtze River Storage Technology, Fujian Jin Hua Integrated Circuit and Hefei Chang Xin, Huang said.
Competition in the world's DRAM industry could become less competitive than that in the IC foundry industry, Huang indicated. It is more difficult for China to develop its local DRAM sector than to expand its presence in the foundry segment, Huang said.
Meanwhile, major DRAM firms are facing more challenges as technology enters the sub-20nm era, Huang indicated. Manufacturing costs will no longer be reduced through die shrinking in the sub-20nm era, while building a new fab is already not cost effective for the DRAM sector.
On the demand side, despite a shrinking PC market, booming server demand and upcoming 5G network wills consumer large amounts of DRAM chips, Huang noted. South Korea is expected to launch the world's first 5G network at the 2018 Winter Olympics in Pyeongchang, demonstrating the support of large memory capacity for a huge number of videos being uploaded at high speeds, Huang said.
Huang anticipated that in the long run, the global supply of DRAM memory will remain tight.
In addition, Powerchip's 12-inch fabs are all running at full capacity, according to Huang. The company operates three fabs for the manufacture of specialty memory, LCD driver ICs, power management chips and sensors on a contract basis.
Powerchip's P1 and P2 fabs are capable of producing a combined 60,000-70,000 wafers per month, with half of the capacity allocated for the manufacture of memory chips. Powerchip's P3 fab with monthly capacity of nearly 30,000 wafers is dedicated to producing DRAM products for Kingston Technology.
Powerchip is also teaming up with mobile-DRAM design specialist AP Memory Technology to enhance its design capability, Huang indicated. Powerchip pays AP Memory design and IP licensing fees.
Powerchip generated net profits of NT$6.57 billion (US$216 million) in 2016, down 36%, with EPS coming to NT$2.96. The company is confident its net profits will return to NT$10 billion in 2017, Huang said.
Source: www.digitimes.com
Gaming notebook shipments are expected to grow over 20% on year in 2017 from more than four million units shipped a year earlier thanks to price cuts by vendors and rising demand for virtual reality (VR) applications, according to industry sources.
Taiwan-based Micro-Star International (MSI) and Asustek Computer have been the top-2 players in the segment, indicated the sources.
MSI, which released over 50 gaming notebooks in 2016, is expected to see shipments of its gaming notebooks increase by 20% on year in 2017, the sources estimated. MSI shipped about 800,000-850,000 gaming notebooks in 2016, Digitimes reported earlier.
MSI's focus on delivering high-end gaming notebook models priced at over US$1,800 will also help the company further ramp up its revenues and profits in 2017, said the sources.
Source: www.digitimes.com
Industrial production increased 0.5% in March after moving up 0.1% in February. The increase in March was more than accounted for by a jump of 8.6% in the output of utilities—the largest in the history of the index—as the demand for heating returned to seasonal norms after being suppressed by unusually warm weather in February. Manufacturing output fell 0.4% in March, led by a large step-down in the production of motor vehicles and parts; factory output aside from motor vehicles and parts moved down 0.2%. The production at mines edged up 0.1%. For the first quarter as a whole, industrial production rose at an annual rate of 1.5%. At 104.1% of its 2012 average, total industrial production in March was 1.5% above its year-earlier level.
Capacity utilization for the industrial sector increased 0.4%age point in March to 76.1%, a rate that is 3.8%age points below its long-run (1972–2016) average.
Source: www.federalreserve.gov
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.