4Q’17 Global Electronic Supply Chain Growth
2017 had a strong finish but exchange rates played a part in the growth.
Global electronic equipment revenue growth by quarter is given in Chart 1. Q4’17 had the highest US$ denominated quarterly growth rate of any quarter since 3Q’11. Since local currencies were converted to US$, the recent weakening dollar vs. other world currencies effectively amplified the US$ growth.
Our very preliminary first estimate of 4Q’17 world electronic supply chain growth by sector is given in Chart 2. This is based on a combination of company fourth quarter financial reports and Custer Consulting Group estimates. Global sales were converted to US dollars at fluctuating exchange.
We will update these estimates regularly through mid-March as the balance of the companies in our database report their fourth quarter financial results.
Note that this is still a very preliminary estimate!
Source: Custer Consulting Group
4Q’17 EMS and ODM Growth
Chart 3 compares 2017 versus 2016 revenues of the large EMS companies. Foxconn is included for comparison. With Foxconn this group’s 2017 US$ denominated revenue growth was +10.5%. Chart 4 shows these same companies without Foxconn as having 2017 growth of +6.9%.
Chart 5 shows the major Taiwan-listed ODM companies with their sales converted to US$ both at fluctuating and constant NT$/US$ exchange. At constant exchange they effectively grew at +9.1% in 2017 but at +15.7% when calculated at fluctuating exchange. Put another way, their 2017/2016 growth in NT$ was +9.1% but when these NT$ were converted to weakening US$ the 2017 dollar growth was +15.7%. A weaker 2017 dollar inflated their US$ denominated 2017 revenues and thus their growth by +6.6%.
Source: Company financials with 4Q’17 estimates by Custer for Benchmark and Venture Mfg.
PMI rose to its highest level since 2013 (Chart 6) indicating improving manufacturing activity.
JEITA released November domestic production for electronic equipment, components and devices by type:
- Electronic equipment production edge up slightly (Chart 7).
- Semiconductor shipments to Japan are now in balance with electronic equipment growth on a 3/12 basis (Chart 8).
- IC domestic production continues its strong growth (Chart 9).
- Passive component domestic production is also strong (Chart 10).
- PCB domestic production is relatively flat (Chart 11) as, in recent years, there has been a shift to Vietnam and other lower cost areas.
- Electronic component and device production growth is still positive but device growth is much less robust than in mid-2017 (Chart 12).
Flash January PMI Leading Indicators (Charts 13-15)
IHS Markit released its “flash” January Purchasing Managers Indices for select countries:
December U.S. Electronic Equipment Shipments and Orders
The U.S. Department of Commerce just released its December Durable Goods report. This is a preliminary and less complete version of its Factory Orders report to be released February 2, 2018.
- Electronic equipment book/bill dropped slightly but still remained well above 1.0 (Chart 16).
- Electronic equipment order and shipment growth continues to rise (Chart 17) and actual $ denominated orders and shipments remain strong (Chart 18).
- Defense capital goods orders and shipments strengthened (Chart 19).
- Aircraft shipments were down slightly from November (Chart 20).
North American PCB Shipments up 3.7% and Bookings up 33.9% y/y in December 2017 (Charts 21-23)
Positive year-over-year shipment and order growth continued in December. Due to a sharp increase in orders in December, the book-to-bill ratio climbed to 1.15.
Total North American PCB shipments in December 2017 were up 3.7% compared to the same month last year. Shipments ended 2017 down 1.8% compared to the prior year. Compared to the preceding month, December shipments increased 12.0%.
PCB bookings in December grew 33.9% year-over-year, resulting in annual 2017 order growth of 8.0% above the prior year. Bookings in December were up 29.1% compared to the previous month.
“Year-over-year sales growth for the North American PCB industry was positive for the fourth consecutive month,” said Sharon Starr, IPC’s director of market research. “Better still, strong bookings growth and 11 consecutive months of positive book-to-bill ratios support a rosy outlook for continued sales growth in 2018,” she added.
EIPC Winter Conference Lyon 2018
Thursday & Friday, February 1 & 2, 2018
3 Rue Henry Legay
"Future trends for successful positioning of Europe's place in the global supply chain"
- Keynote: Business, Technology and New Developments Custer Consulting, Yole, AT&S
- Session 1: Trends and capabilities in PCB fabrication Robert Bosch, Wurth, Dyconex, Ventec, TTM, Ericsson
- Session 2: Reliability, First EIE, PWB Interconnect Solutions, Gen3 Systems, Alstom
- Session 3: Process improvements, iNEMI, Xact PCB, Orbotech, Taiyo
- Session 4: European needs for New Technology, Product Safety and Training UL, Printed Electronics, CCI Eurolam, FED
Bonus program will be a guided tour at the Alstom facility, a global player fully focused on transport. As a promoter of sustainable mobility, Alstom develops and markets systems, equipment and services for the transport sector. Alstom offers a complete range of solutions (from high-speed trains to metros, tramways and e-buses), passenger solutions, customized services (maintenance, modernization), infrastructure, signaling and digital mobility solutions.
North America-based SEMI Equipment Billings up 27.7% in December (Chart 24)
North America-based manufacturers of semiconductor equipment posted $2.39 billion in billings worldwide in December 2017 (3-mon. avg. basis), according to SEMI. December billings were 16.3% higher than November 2017 and 27.7% higher than December 2016.
“December 2017 monthly billings for North American equipment manufacturers ended the year at the highest levels in this record-breaking year,” said Ajit Manocha, president and CEO of SEMI. “For 2017, total billings for North American equipment companies soared over 40% compared to 2016."
The SEMI Billings report uses 3-month moving averages of worldwide billings for North American-based semiconductor equipment manufacturers. Billings are in millions of U.S. dollars.
Worldwide Robotics and Drones Spending Forecast to Increase 22.1% in 2018
A new update to the International Data Corporation (IDC) Worldwide Semiannual Robotics and Drones Spending Guide forecasts worldwide spending on robotics and drones solutions will total $103.1 billion in 2018, an increase of 22.1% over 2017. By 2021, IDC expects this spending will more than double to $218.4 billion with a compound annual growth rate (CAGR) or 25.4%.
Robotics spending will reach $94 billion in 2018 and will account for more than 90% of all spending throughout the 2017-2021 forecast. Industrial robotic solutions will account for the largest share of robotics spending (more than 70%), followed by service robots and consumer robots. Discrete and process manufacturing will be the leading industries for robotics spending at more than $60 billion combined in 2018. The resource and healthcare industries will also make significant investments in robotics solutions this year. The retail and wholesale industries will see the fastest robotics spending growth over the forecast with CAGRs of 46.3% and 41.2%, respectively.
"Industrial robots are becoming more intelligent, human-friendly and easier to work with," said Dr. Jing Bing Zhang, research director, Robotics. "This has accelerated their rapid expansion in the manufacturing industry beyond automotive, especially in high-tech manufacturing that requires light-weight robots with higher precision, flexibility, mobility and collaborative capability. Vendors who are not able to meet such demands will see their market position quickly eroded."
"Growth in the service robotics market is being driven by a collision of robotic technology maturity, market readiness, and related technology maturity," said John Santagate, research director, Service Robotics. "Robots did not reach this point overnight; it has been a decades-long effort to bring robots to the point they are today. Over time, innovators have been building upon existing technology and layering new and emerging technology onto robotic devices. We have reached a point now where the mechanics of robots are mature and the addition of artificial intelligence, advanced vision systems, cloud applications, Internet of Things, and continued mechanical innovation has enabled safe, collaborative robots that are working with people rather than replacing people."
"While robotics has its roots in the manufacturing sector, we continue to see increasing acceptance and adoption of robots in several other industries, such as resources and transportation," said Jessica Goepfert, program director, Customer Insights and Analysis. "Organizations in these areas are attracted to the promise of greater efficiency and productivity.
But they are also turning to robotics to address other concerns such as skills shortages, workplace safety, and keeping up with the accelerating pace of business."
Worldwide drone spending will be $9 billion in 2018 and is expected to grow at a faster rate than the overall market with a five-year CAGR of 29.8%.
Enterprise drone solutions will deliver more than half of all drone spending throughout the forecast period with the balance coming from consumer drone solutions. Enterprise drones will increase its share of overall spending with a five-year CAGR of 36.6%. The utilities and construction industries will see the largest drone spending in 2018 ($912 million and $824 million, respectively), followed by the process and discrete manufacturing industries. The fastest growth in drone spending will come from the education (74.1% CAGR) and state/local government (70.5% CAGR) industries.
"Drones have become an indispensable tool, especially in industries such as oil and gas, agriculture, and telecommunications. In many instances, drones have helped reduce their employees' exposure to dangerous tasks such as cell tower or electrical grid inspection. Farmers have also utilized drones to help monitor their land for irrigation deficiencies. While there is a growing number of consumer drone enthusiasts, we expect that drones will soon become part of the connected-home providing home security, monitoring children at play, or delivering groceries," said William Stofega, program director, Mobile Device Technology and Trends.
"Drones have become a forefront solution for many tasks and applications that were once deemed too dangerous, dirty, dull, or dear. Technological advancements such as improved sensors, enhancements in collision avoidance systems, or innovations related to full automation or intelligent piloting, have propelled new interest and acknowledgement from many industries that drones are here to stay. Groundbreaking improvements in the technology has piqued interest by industries that operate in open or outdoor space, such as utilities, where inspection-related applications such as transformer substation inspection or power line, foliage, and telephone line inspection are key drivers of the industry. As policies change and governments work with vendors and end users to formulate regulation allowances, new opportunities and expanded use cases will come to light as their benefits are realized across all industries," said Stacey Soohoo, research manager, Customer Insights and Analysis.
China will be the largest geographic market for robotics, delivering more than 30% of all robotics spending throughout the forecast, followed by the rest of Asia/Pacific (excluding China and Japan), the United States, and Japan. The United States will be the largest geographic market for drone spending at $4.3 billion in 2018, followed by Western Europe, China, and the rest of Asia/Pacific (excluding China and Japan). However, exceptionally strong spending growth in China (55.5% CAGR) and Asia/Pacific (excluding China and Japan) (62.0% CAGR) will move these two markets ahead of Western Europe by 2021.
The Worldwide Semiannual Robotics and Drones Spending Guide quantifies the robotics and drone opportunities from a region, industry, use case, and technology perspective. Spending data is available for more than 60 use cases across 20 industries in eight regions. Data is also available for 17 robotics systems technologies and 16 drone systems technologies. Unlike any other research in the industry, the detailed segmentation and timely, global data is designed to help suppliers targeting the market to identify market opportunities and execute an effective strategy.