08/23/2017 //
Chart 1 gives our updated estimate of 2Q’17 vs. 2Q’16 growth by sector of the world electronic supply chain. Most but not all companies have now reported their second quarter financial results. We still await HP Inc., HP Enterprise, Dell Technologies and Medtronic plus data on second quarter server shipments.
Source: Company financial reports with analysis by Custer Consulting Group
As noted earlier the Eurozone Manufacturing PMI dipped slightly in July (Chart 2).
Sources: Eurostat, www.markiteconomics.com and SIA
The European semiconductor industry shows no signs of slowdown in Q2/2017. According to DMASS Ltd., semiconductor sales as reported by the members ended with another record of 2.19 billion euro, an increase of 17.3% over the corresponding quarter last year. For the first six months, DMASS reported over 4.3 billion euro of consolidated semiconductor sales, 14% more than the first half of 2016.
Georg Steinberger, chairman of DMASS: “As many market participants feel right now, the dynamic growth over the last nine months was unprecedented. The significant allocations in several product areas make it difficult to predict the rest of the year, but it would be safe to assume that double-digit growth will continue through 2017. DMASS Totals of 8 billion euro, an all-time record, are in range for the full year. What is surprising is the fact that the growth impact comes from almost all industry segments, driven by a higher electronics content across many applications.”
Regionally, Poland, Turkey, Russia and Israel lead the growth wave, with increases between 30 and 40%. The major regions trailed the overall growth – Germany as the biggest single market grew by 13.7% to 653 million euro, Italy by 13.4% to 207 million euro, the UK/Eire by 9.6% to 154 million euro and France by 8.5% to 151 million euro. Eastern Europe grew by 28.3% to 336 million euro and Nordic by 14.1% to 184 million euro.
Georg Steinberger: “If you look at the growth in Eastern Europe, it is mainly driven by production shifts from Northern and Central Europe. Positively surprising is the resilience of the Italian high-tech market against the domestic economic problems.”
At the product side, the growth is across the board, a sign for healthy market development. Other Logic (application-specific logic) and Memories have seen the highest growth rates, followed by Programmable Logic. All other product segments grew under-proportionally except single product categories like Analog Interface, Flash Memories or High-End-MCUs. Analog ICs as the biggest product group in DMASS grew 16.7% to 656 million euro (this represents 30% of DMASS Total). MOS Micro by 15.6% to 443 million euro, Power by 13.1% to 210 million euro, Opto by 10.2% to 223 million euro, Memories by 27.9% to 183 million euro and Programmable Logic by 27.1% to 155 million euro.
Georg Steinberger: “Standing out from the crowd are memory and logic products in general, application specific logic and DRAM particularly. Programmable Logic is experiencing higher growth despite channel shifts from distribution to direct, but this could be seasonal. However, even without these very particular growth spikes, the distribution market in Europe shows healthy double-digit growth.”
“Looking forward remains difficult”, said Steinberger: “Lovely to see 2-digit growth as record levels continue, but with the challenges ahead on the distribution channel – whether it is business model, margin pressure or regulatory influences – the outlook becomes teeth-grinding. I am sure distribution will master the aforementioned problems and turn them into interesting business propositions for customers.”
Source: www.dmass.com
WSTS has published the 2017 semiconductor market figures and re-calculated the Spring 2017 forecast using the actual figures of the second quarter 2017.
The Worldwide semiconductor market was up 1.1% in 2016 to US$338.9 billion, an all-time high. The year 2017 was forecast on last year to be strong with 11.5% growth to US$378 billion.
The updated forecast in the 2017 spring forecast meeting along with the actual 2017 second quarter result shows a much stronger growth of 17% to US$397 billion. The year 2018 is forecasted to be up another 4.3% to US$414 billion.
During 2017 the largest growth is expected across sensors, analog, and memory with all products contributing to growth. All regions are forecasted to return to growth in 2017 as well.
Source: www.wsts.org
Semi content expected to reach 28.1% this year, breaking previous high of 25.9% set in 2010.
In its upcoming Mid-Year Update to The McClean Report 2017 (to be released at the end of July), IC Insights forecasts that the 2017 global electronic systems market will grow by only 2% to $1,493 billion while the worldwide semiconductor market is expected to surge by 15% this year to $419.1 billion. Moreover, IC Insights forecasts that the total semiconductor market will exceed $500.0 billion four years from now in 2021. If the 2017 forecasts come to fruition, the average semiconductor content in an electronic system will reach 28.1%, an all-time record.
Historically, the driving force behind the higher average annual growth rate of the semiconductor industry as compared to the electronic systems market is the increasing value or content of semiconductors used in electronic systems. With global unit shipments of cellphones (0%), automobiles (2%), and PCs (-2%) forecast to be weak in 2017, the disparity between the slow growth in the electronic systems market and high growth of the semiconductor market is directly due to the increasing content of semiconductors in electronic systems.
While the trend of increasing semiconductor content has been evident for the past 30 years, the big jump in the average semiconductor content in electronic systems in 2017 is expected to be primarily due to the huge surge in DRAM and NAND flash ASPs and below average electronic system sales growth this year. After dipping slightly to 28.6% in 2020, the semiconductor content figure is expected to climb to 28.9% in 2021, an average yearly gain over the 2016-2021 time period of about 0.8 percentage points.
Of course, the trend of increasingly higher semiconductor value in electronic systems has a limit. Extrapolating an annual increase in the percent semiconductor figure indefinitely would, at some point in the future, result in the semiconductor content of an electronic system reaching 100%. Whatever the ultimate ceiling is, once it is reached, the average annual growth for the semiconductor industry will closely track that of the electronic systems market (i.e., about 4% per year). In IC Insights’ opinion, the “ceiling” is at least 30% but will not be reached within the forecast period.
Source: www.ICInsights.com
Although the lure of low-cost labor is tempting, offshoring production of printed circuit boards can lead a company into a host of problems. Firms can find themselves dealing with increased costs, regulatory hurdles and pitfalls relating to quality control.
Here are 10 reasons why:
Dennis Vetrano, sales and business development manager at Lockheed Martin, can be reached at dennis.vetrano@lmco.com.
Source: www.medicaldesignandoutsourcing.com
With Apple ready to launch its third-generation Apple Watch, Apple's overall smartwatch shipments are expected to rise to 4.5 million units in the fourth quarter and hit 15 million for the whole year 2017, according to sources from the upstream supply chain.
The sources expect the volume to rise to 20 million units in 2018.
Despite Apple Watch's strong performances, other vendors are seeing weakening demand for their wearable devices. Xiaomi and Fitbit are both seeing dropping sales for their smart bands, while smartwatch shipments from Samsung Electronics, LG Electronics, Huawei and Motorola remain weak.
Asustek Computer has already decided to depart from the market and Intel has been cutting personnel and R&D resources for its wearable platforms.
The sources pointed out that smartwatches' high prices; weak battery life, overlapping functionalities with smartphones, and not yet fully integrated ecosystem have prevented demand from reaching expected levels.
Although the first-generation Apple Watch only achieved shipments of less than five million units in 2015, the second-generation model has achieved rather strong sales since its release in September 2016.
With the third-generation device expected to feature updated apps and communication functionality, related shipments are expected to greatly boost Apple's overall smartwatch volumes.
The third-generation Apple Watch will be manufactured by Quanta Computer and Compal Electronics may join the supply chain in 2018, the sources said.
Foxconn did not have any orders for the Apple Watch, but its subsidiary Shunsin Technology has entered the supply chain providing system in packaging (SiP) services for the Apple Watch, the sources added.
Source: www.digitimes.com
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.