03/07/2018 //
February PMIs have been released. Although most are still solidly in expansion territory (PMI>50), many have weakened in the last two months.
It would appear that our accelerating global growth cycle may now be peaking. Manufacturing activity is still expanding but at a more moderate pace.
www.instituteforsupplymanagement.org
The U.S. Department of Commerce released is January “Durable Goods” report with preliminary data on domestic electronic supply chain shipments, orders and inventories:
WSTS has published the 2017 semiconductor market figures and re-calculated its fall 2017 Forecast using the actual figures of the fourth quarter 2017.
The Worldwide semiconductor market was up 21.6% in 2017 to US$412.2 billion, an all- time high. The year 2018 is forecasted to be strong with 9.5% growth to US$451 billion.
During 2018 the largest growth is expected across memory, optoelectronics, and logic with all products contributing to growth. All regions are forecasted to continue growth in 2018.
The worldwide wearables market continued its upward trajectory in both the fourth quarter (4Q’17) and full year 2017 with total shipment volumes reaching new records. Moreover, thanks to a surge in smartwatch shipment volumes, Apple moved past competitors Fitbit and Xiaomi to claim overall leadership for both the quarter and the year. According to data from International Data Corporation (IDC), total volumes for the quarter reached 37.9 million units, up 7.7% from the 35.2 million units shipped in the same quarter a year ago. For the full year, total wearable device shipments reached 115.4 million units, up 10.3% from the 104.6 million units shipped in 2016.
"The 10.3% year-over-year growth in 2017 is a marked decline from the 27.3% growth we saw in 2016," said Ramon T. Llamas, research director for IDC's Wearables team. "The slowdown is not due to a lack of interest – far from it. Instead, we saw numerous vendors, relying on older models, exit the market altogether. At the same time, the remaining vendors – including multiple start-ups – have not only replaced them, but with devices, features, and services that have helped make wearables more integral in people's lives. Going forward, the next generation of wearables will make the ones we saw as recently as 2016 look quaint."
Apple, meanwhile, suddenly finds itself atop the wearables market. "Interest in smartwatches continues to grow and Apple is well-positioned to capture demand," added Llamas. "User tastes have become more sophisticated over the past several quarters and Apple pounced on the demand for cellular connectivity and streaming multimedia. What will bear close observation is how Apple will iterate upon these and how the competition chooses to keep pace."
"Although prices for individual products have slowly declined, consumer preferences have shifted to more sophisticated devices and towards well recognized brands. It's due to this that the wearables market has seen healthy double-digit growth in average selling prices since 2016," said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers. "Combined with the potential to sell added software and services, wearables are proving to be an increasingly lucrative market for brands and service providers."
According to International Data Corporation (IDC) vendor revenue in the worldwide server market increased 26.4% year-over-year to $20.7 billion in the fourth quarter of 2017 (4Q’17). The server market continues to gain momentum, as traction for newer Purley- and EPYC-based offerings grows. While demand from cloud service providers has propped up overall market performance, other areas of the server market continue to show growth now as well.
Volume server revenue increased 21.9% to $15.8 billion, while midrange server revenue grew 48.5% to $1.9 billion. High-end systems grew 41.1% to $2.9 billion, driven by IBM's z14 launch last quarter. IDC expects continued long-term secular declines in high-end system revenue, with short periods of growth related to major platform refreshes.
"Hyperscalers remained a central driver of volume demand in the fourth quarter with leaders such as Amazon, Facebook, and Google continuing their datacenter expansions and updates," said Sanjay Medvitz, senior research analyst, Servers and Storage at IDC. "ODMs continue to be the primary beneficiaries from hyperscale server demand. Some OEMs are also finding growth in this area, but the competitive dynamic of this market has also driven many OEMs such as HPE to focus on the enterprise. For example, HPE/New H3C Group grew 38.6% and 114.6% in High-End and Midrange Enterprise Servers, respectively. Other highlights in the quarter include robust growth from Dell Inc., which continues to capitalize on expanded opportunities from its merger with EMC, and IBM, which experienced another successful quarter from its refreshed system z business."
According to International Data Corporation (IDC) global shipments of personal computing devices (PCDs) – composed of traditional PCs (desktop, notebooks and workstations) and tablets (slate and detachable) – declined 2.7% year over year in 2017. The results illustrate a year in which commercial PC renewal momentum remained as the main catalyst in a market that was also tempered by lackluster demand for legacy form factor devices and component shortages. Nevertheless, key metrics including commercial activity and notebook shipments all reached positive growth patterns due to some emerging region recovery and ongoing business PC refresh.
Within the PCD market, traditional PCs are forecast to contract at a compound annual growth rate (CAGR) of -0.9% over the 2017-2022 forecast, with volumes dropping from 259.4 million in 2017 to 248.3 million in 2022. However, when adding in detachable tablets such as the Microsoft Surface Pro, modest signs of growth are expected with a five-year CAGR of 0.1%. In the short term, 2018 is expected to see a year-over-year decline of 3.2% as consumer demand for slate tablets and legacy PC form factors remain weak. Commercial device replacements are expected to remain positive throughout the forecast period, though momentum slows after 2020 as mature markets largely end their transition to Windows 10. Commercial activity in emerging markets is expected to carry on longer, helping the overall commercial PCD market to achieve a CAGR of 0.7% between 2017 to 2022. After ending 2017 with modest growth, detachable tablets are also expected to improve in 2018 and 2019 due to ongoing commercial adoption.
"As the broader PCD market continues to evolve, challenges remain but there are plenty of positive signs, too," said Tom Mainelli, program vice president with IDC's Devices and AR/VR programs. "New form factors such as convertibles and detachables continue to show long-term growth opportunities in both consumer and commercial markets. Chromebooks remain a bright spot with an increasing number of consumers embracing the platform. And the gaming category continues to grow, driving both positive volumes and ASP trends."
"As expected the PCD market ended 2017 with a contraction," said Jay Chou, research manager with IDC's Quarterly Personal Computing Device Tracker. "But behind this number is a silver lining that shows the notebook segment posting its most positive growth since 2012, a point bolstered by the continued consumer migration to premium and ultraslim form factors."
Chart 24 is an updated list of 4Q’17 vs 4Q’16 growth rates by sector of the global electronic supply chain. Of the major OEMs only Dell had not yet reported as of this writing.
Passive Component Sales Up 16% in 4Q’17
The composite fourth quarter sales of 14 large passive component manufactures rose 16.2% in 4Q’17. Supply shortages persist (Chart 25).
Printed Circuit Board related Materials & Process Equipment – Strong 4Q’17 Growth
Process equipment sales rose 25% (Chart 26), materials revenues increased 17% (Chart 27) and flex and rigid laminate sales were up 12.5% (Chart 28) in 4Q’17 vs. 4Q’16 based on composite financials of these products’ suppliers. Growth has been the highest since 2010 (Chart 29).
Source: Company financial reports analyzed by Custer Consulting Group
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.