September “Flash” PMI Leading Indicators; Europe Surges

All of the countries/regions in Markit Economics “flash” PMI survey saw accelerated manufacturing growth in September (Chart 1).

Europe is doing especially well as its manufacturing PMI reached an 18-year high in September (Chart 2)

Source: www.marketeconomics.com

Japan Update

Japan’s September “flash” PMI was at a 4-month high (Chart 3).

JEITSA just released July Japanese domestic production data for electronic equipment, devices and components:

  • Electronic equipment production rose 1.2% in May-July 2017 vs. the same three months in 2016 (Chart 4).
  • Passive component production has rebounded to its highest level in 10 months (Char 5).
  • Printed circuit output is flat (Chart 6) as growth is nil on a 3/12 basis (Chart 7).
  • Device production is up 18% and component production up 4.3% on a 3/12 basis (Chart 8).
  • Semiconductor shipments to Japan far exceed electronic equipment production demand suggesting that a downward chip shipment correction is imminent, even allowing for higher memory chip demand and prices (Chart 9).
  • Domestic IC production has risen but discrete semiconductor sales are flat (Chart 10).

Source: www.jeita.or.jp/

Source: www.semiconductors.org

World PCB Production and Annual North American PCB Industry Reports Released (Charts 11 & 12)

World printed circuit board (PCB) production reached an estimated $58.2 billion in 2016, up 2.2% in real terms, while North American PCB production decreased a mere 0.1%, according to IPC's newly published World PCB Production Report for the Year 2016. The North American PCB market also continued its downward trend, but at a slowing rate of just -1.7% in 2016, based on data published this week in IPC's 2017 Annual Report on the North American PCB Industry.

The World PCB Production Report shows that more than half the world's PCBs based on value are now produced in China, but Taiwanese companies are the leading PCB producers, fabricating most of their PCBs off-shore. India emerged as having the fastest-growing PCB industry in Asia and has joined the top 10 PCB-producing countries in the world as of 2016.

The world report highlighted an abrupt change in the growth trends for rigid PCBs and flexible circuits. Rigid PCB production, which has slowed in recent years, was up slightly in 2016, while the previously growing flex segment decreased. The world PCB market overall is expected to continue experiencing modest growth in 2017.

Developed by a team of the world's leading PCB industry analysts, the World PCB Production Report is the definitive source of PCB production data. It includes estimates of the value of PCB production in eight product categories in each of the world's major PCB-producing countries and regions. The report also contains commentary on regional industry trends and historical data on PCB production worldwide, as well as a special report on high-speed data communications contributed by BPA Consulting, Ltd.

The 2017 Annual Report on the North American PCB Industry shows that the military and aerospace market continues to consume more than one-third of PCBs sold and this vertical market continues to grow as a percentage of total PCB sales in the region.

The North American report covers the size and growth of the region's PCB market by product type, the use of special technologies such as RF and embedded components, and other business metrics including revenue per employee, capacity utilization, inventory turns and lead times for rigid PCB and flexible circuit businesses. It is based on data collected in IPC's North American PCB Statistical Program, in which the sample of survey participants represent more than 50% of the region's PCB market.

World PCB Production Report for the Year 2016, priced at $475 for IPC members and $950 for nonmembers, and the 2017 Annual Report on the North American PCB Industry, at $450 for IPC members and $900 for nonmembers, are available for immediate download in IPC's online store. For information on IPC market research reports and services, visit www.ipc.org/market-research-reports and www.ipc.org/IndustryData, or contact IPC's market research team at marketresearch@ipc.org.

Source: www.ipc.org

World’s Largest PCB Producers in 2016

Thanks to Dr. Hayao Nakahara Chart 13 lists the 30 largest global PCB manufacturers ranked by their 2016 sales

Source: Dr. Hayao Nakahara, N.T. Information Ltd, nakanti@yahoo.com

South Korea's Electronics/ PCB Industry Market Conditions

South Korea is the only country which is supplying flex-rigid boards for OLED driver used by iPhone X, but alas, two of the three suppliers are making the boards in Vietnam. Therefore, it is not boosting domestic PCB output.

The country is in a difficult situation with North Korea and China. Lotte department group is withdrawing all of its stores in China. Hyundai and Kia sales have plummeted to 40% of its peak time sales in China. The one bright side of the South Korean electronics industry is its huge investment for NAND memory.

Source: Dr. Hayao Nakahara, N.T. Information Ltd, nakanti@yahoo.com

Worldwide Semiconductor Manufacturing Equipment Billings US$14.1 billion for 2Q’17 (Chart 14)

SEMI Reports Second Quarter 2017 Worldwide Semiconductor Equipment Figures; Record Quarterly Billings of $14.1 Billion

SEMI, the global industry association representing the electronics manufacturing supply chain, reported that worldwide semiconductor manufacturing equipment billings reached US$14.1 billion for the second quarter of 2017.

Quarterly billings of US$14.1 billion represent an all-time historic record for quarterly billings, exceeding the record level set in the first quarter of this year. Billings for the most recent quarter are 8% higher than the first quarter of 2017 and 35% higher than the same quarter a year ago. Sequential regional growth was mixed for the most recent quarter with the strongest growth exhibited by Korea. Korea maintained the largest market for semiconductor equipment for the year, followed by Taiwan and China. The data are gathered jointly with the Semiconductor Equipment Association of Japan (SEAJ) from over 95 global equipment companies that provide data on a monthly basis.

Source: www.semi.org

North American Semiconductor Equipment Manufacturers Billings Increased 27.7% y/y to $2.18 Billion in August 2017 (Chart 17)

North America-based manufacturers of semiconductor equipment posted $2.18 billion in billings worldwide in August 2017 (3-month average basis), according to the August Equipment Market Data Subscription (EMDS) Billings Report published today by SEMI.

SEMI reports that the 3-month average of worldwide billings of North American equipment manufacturers in August 2017 was $2.18 billion. The billings figure is 3.9% lower than the final July 2017 level of $2.27 billion, and is 27.7% higher than the August 2016 billings level of $1.71 billion.

“Equipment billings in August declined relative to July, signaling a pause in this year's extraordinary growth," said Ajit Manocha, president and CEO of SEMI. “Nonetheless monthly billings remain well above last year's monthly levels."

Source: www.semi.org

Samsung Raised its Memory Prices by 10-20% to Reflect Tight Supply

Taiwan-based Supreme Electronics, a major IC distributor for Samsung Electronics, is expected to report strong results for the second half of 2017 driven by rising memory prices and strong OLED panel demand, according to industry sources.

Samsung has raised its memory prices by 10-20% to reflect tight supply, while continuing to dominate the global market for OLED panels which will be increasingly adopted in smartphones. Supreme is benefiting from the surging demand for Samsung's components, the sources indicated.

Market watchers expect Supreme to post revenue growth of 5-10% sequentially in the third quarter, and generate record-high revenues in the fourth quarter.

Supreme has reported consolidated revenues of NT$30.96 billion (US$1.02 billion) for the second quarter of 2017, up 21% sequentially and 16.6% on year. The company's cumulative 2017 revenues through August came to NT$78.73 billion, rising 18% from a year earlier.

Supreme distributed Samsung products include DRAM and NAND flash memory chips, MCP solutions, and small- and medium-size LCD and OLED panels.

Supreme also distributes panel products for AU Optronics (AUO) and BOE.

Source: www.digitimes.com

DRAM Supply to Remain Tight in 2018

Global DRAM supply is forecast to grow by less than 20% next year, according to DRAMeXchange.

DRAMeXchange points out that the big three DRAM suppliers – Samsung, SK Hynix and Micron – have opted to slow down their capacity expansions and technology migrations. This is likely to keep prices at high levels as during this year’s second half.

While overall DRAM demand will remain high in 2018, new fabs being planned will not be ready for mass production until 2019 at the earliest.

Avril Wu, research director of DRAMeXchange, writes: “Constructing a 12-inch wafer fab will take a least a year, and additional time has to be set aside for equipment installation and trial production runs.”

The latest analysis of the three suppliers’ capacities finds that Samsung’s monthly wafer start volumes are hitting 390,000 pieces on average.

For Samsung, the only fab sites that currently have the extra space for further capacity expansion are Line 17 and a part of the Line 15 plant site. Samsung thus plans to build a second 12-inch wafer fab for making DRAM products in Pyeongtaek, South Korea. SK Hynix is also facing the problem of having insufficient capacity to fulfill its DRAM orders. In terms of capacity planning, SK Hynix has reassigned a part of its M10 fab’s capacity to foundry works instead of making DRAM products.

Due to its old age, M10 will incur higher wafer loss if SK Hynix tries to upgrade its DRAM production to the 18nm process. Fulfilling foundry orders makes more economic sense for this outdated facility.

SK Hynix’s M14 fab is expected to achieve a monthly wafer start volume of 80K pieces by the end of 2017.

A survey of Micron’s DRAM production capacity shows that both its plant in Hiroshima, Japan, and the plant owned by its Taiwanese subsidiary Micron Technology Taiwan (originally Inotera) are running at full capacity.

However, Micron has yet to reveal a plan for a new fab building. In the future, Micron may have to devise a growth strategy that takes account of its limited ability to increase its production capacity.

Source: www.dramexchange.com

Dell Sees Solid Year-Over-Year Growth in Worldwide PC Monitor Market in Second Quarter of 2017 (Charts 16 & 17)

Worldwide monitor shipments totaled 28.5 million units in 2Q’17, according to the International Data Corporation. While the shipment total represented a 6.4% decline over the prior year, some of the market softness can be attributed to a strong 2Q’16, presenting the most recently closed quarter with a challenging comparison. However, market consternations pervade. For starters, the 28.5 million units shipped also represent a sequential decline of 1.2%, the first sequential decline for a second calendar quarter since 2014. A sequential decline in a mid-quarter is typically the outcome of digestion of excess inventory, which is troubling given that 1Q’17 also opened in the red. Still, optimism abounds, particularly around replacements of old monitors approaching end of life. Strong back-to-school and holiday seasons should prop the market up, and as such, IDC has revised its forecast for the second half of 2017 from a decline of 2.8% to a decline of 1.7%.

"IDC expects the global monitor market will continue to decline at rates around 2% year over year from 2018 through 2020. However, the second quarter proved better than forecast overall, with Japan, Western Europe, and Central and Eastern Europe recording strong year-over-year growth," said Maura Fitzgerald, senior research analyst, Worldwide Trackers.

IDC currently forecasts 117 million PC monitor units will be shipped for full year 2017 and expects to see a year-over-year decline of 2.2% in worldwide shipments to 27.8 million units in the second quarter of 2018. By 2020, worldwide shipments are expected to be less than 112 million units as the adoption of mobile devices at lower price points is expected to continue.

Technology Highlights

  • Curved monitors continue to be on the rise, with 3.8% market share in 2Q’17. This represents year-over-year growth of 52.5%.
  • 21.5-inch wide and 19.5-inch wide monitors continue to dominate the worldwide market with 22.2% and 11.6% market share respectively in 2Q’17. Of the top 10 screen sizes, 23.8-inch wide and 27-inch wide saw the largest year-over-year growth, posting 75.1% and 19.5%, respectively, in 2Q’17.
  • Monitors with TV tuners are expected to have 4.4% market share in 2Q’18, up from 4.1% in 2Q’17, led by LG and Samsung with a combined market share of 99.0% in this category.

Source: www.idc.com

Worldwide Consumer and Enterprise WLAN Market Segments Grew 2.5% Y/Y to $2.37 Billion in 2Q’17

Enterprise WLAN Market Grew 9.4% Year-Over-Year in Q2 2017

The combined consumer and enterprise worldwide wireless local area network (WLAN) market segments grew 2.5% year over year in the second quarter of 2017 (2Q’17), finishing at $2.37 billion. According to results published in the International Data Corporation (IDC) the enterprise segment grew 9.4% year over year in 2Q’17 to reach $1.48 billion. In the enterprise segment, annualized growth in 2Q’17 was comparable to that of 2Q’16, when year-over-year growth also registered at 9.4%.

IDC believes that a steady stream of upgrades to the 802.11ac standard as part of the digital transformation (DX) of the enterprise contributed heavily to the 2Q’17 growth. The 802.11ac standard now accounts for 84.5% of dependent access point unit shipments and 92.1% of dependent access point revenues, up from 70.9% and 84.7% in 1Q’17. This significant sequential jump points to a continued trend of 802.11n obsolescence, which is expected to be nearly complete by the end of 2018.

Meanwhile, consumer WLAN market revenue decreased 7.2% on a year-over-year basis in 2Q’17, finishing at $892.3 million. In 2Q’17, the 802.11ac standard accounted for just 32.3% of shipments and 62.8% of revenue in the consumer category. 802.11ac was a bright spot in the consumer WLAN segment in 2Q’17, with revenues increasing 13.6% year-over-year and shipments increasing 36.2% over the same period.

"The enterprise WLAN market's 2Q’17 performance sends a strong message that this market is still in growth mode," said Nolan Greene, senior research analyst, Network Infrastructure at IDC. "WLAN is a critical enabler of end-to-end digital transformation strategies as wireless applications and devices continue to unlock new digital and business outcomes."

Source: www.idc.com

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.

View other posts from Walt D. Custer. View other posts from Walt D. Custer.
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