Weekly Global Update for July 18, 2012
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2012/2011 Global Electronic Equipment Shipment Growth Down 1% in June
Based on regional growth results global electronic equipment shipments were down an estimated 1% in June 2012 versus the same month in 2011 (Chart 1). Although a seasonal rebound is imminent real growth annualized has stalled.
Source: Custer Consulting Group
Taiwan/China June Results
Taiwan listed OEMs (many with production in China) reported sequentially flat electronic equipment sales in June (Chart 2) and the Taiwan ODM companies did little better (Chart 3) as their combined quarterly growth (2012 versus 2011) dropped from 17.5% in 1Q’12 to 2.5% in 2Q’12 (Chart 3). In contrast motherboard sales surged (Chart 4).
- Display shipments were sequentially flat (Chart 5).
- Solar/photovoltaic product shipments dipped slightly following five months of continued recovery (Chart 7).
- Taiwan wafer foundries reported sequentially flat June sales (Chart 8) as did package and test companies (Chart 9) and memory producers (Chart 10).
- Passive component sales slumped (Chart 11) as did printed circuit boards (Chart 12) and CCL (rigid laminate) – Chart 13.
Source: June financial reports of Taiwan-listed companies
Europe – Some Stability in May
European industrial production stabilized in May thanks to an increase in Germany (Chart 14). Electronic equipment production held flat (Chart 15). The 3/12 growth rate of European electronic equipment shipments has leveled off near the “zero growth” mark (Chart 16).
- Motor vehicle shipments have dropped (Chart 17) as have automotive electronics sales (Chart 18).
- Aerospace equipment sales continue to rise (Chart 19).
- Electronic instrument shipments were flat (Chart 20) and medical electronics sales declined (Chart 21).
- Component and board (Chart 22) and loaded board (Chart 23) production declined.
- Printed circuit board shipments declined to their long-term trend line (Chart 24).
Chart 25 summarizes the annualized (12/12) and 3-month (3/12) growth of the European electronic supply chain through May 2012.
Worldwide PC Shipments Declined 0.1% y/y to 87.5 million units in 2Q’12 (Charts 26-29)
Ultrabooks had Little Impact on Overall Shipments in the Quarter
Worldwide PC shipments totaled 87.5 million units in the second quarter of 2012, a decline of 0.1% from the second quarter of 2011, according to preliminary results by Gartner, Inc.
“In the second quarter of 2012, the PC market suffered through its seventh consecutive quarter of flat to single-digit growth,” said Mikako Kitagawa, principal analyst at Gartner. “Uncertainties in the economy in various regions, as well as consumer’s low interest in PC purchases, were some of the key influencers of slow PC shipment growth. Despite the high expectations for the thin and light notebook segment, Ultrabooks, shipment volume was small and little impact on overall shipment growth.”
“Consumers are less interested in spending on PCs as there are other technology product and services, such as the latest smartphones and media tablets that they are purchasing. This is more of a trend in the mature market as PCs are highly saturated in these markets,” Ms. Kitagawa said. “A big portion of R&D spending has been allocated to Ultrabook development, together with Intel’s massive investments to establish the market segment. Though Ultrabook was first introduced in the market in 2011, the major promotion kicked off toward the end of 2Q’12 with the IvyBridge, based Ultrabook release. This segment is still in an early adopter’s stage.”
Semiconductor Equipment Sales to reach $42.4 billion in 2012 (Charts 30 and 31)
SEMI projects semiconductor equipment sales will reach $42.4 billion in 2012 according to the mid-year edition of the SEMI Capital Equipment Forecast.
Driven by consumer demand for tablet, smartphone, and mobile devices, chipmakers continue to purchase manufacturing technology equipment. The forecast indicates that, following a 9% market increase in 2011, the equipment market will contract by 2.6% in 2012.
The year 2012 is likely to be the fourth highest spending year in history, with higher spending only in 2011 ($43.5 billion), 2007 ($42.8 billion) and 2000 ($47.7 billion). With $33.0 billion for 2012 forecast for wafer processing equipment, it will be the second highest spending year ever for this segment, surpassed only by the $34.3 billion spent in 2011.
"We expect 2012 to post one of the highest rates of global investment for semiconductor manufacturing equipment. Following a multi-year market expansion, sales will again exceed $42 billion — just one billion short of last year’s spending rate as the industry absorbs new capacity," said Denny McGuirk, president and CEO of SEMI. "We also forecast accelerated spending to exceed $46 billion in 2013.”
Wafer processing equipment, the largest product segment by dollar value, is expected to decrease 3.8% in 2012 to $33.0 billion. The forecast predicts that the market for both test ($3.8 billion) and assembly and packaging ($3.4 billion) equipment will remain essentially flat (increase of 0.2% and 0.9%, respectively).
Growth is forecast in only two regions in 2012 — Korea and Taiwan, which will become the largest two markets for equipment spending in 2012. In 2013, Korea and North America are expected to claim the top spots, with Taiwan slipping to third place in terms of equipment spending. The results are given in terms of market size in billions of U.S. dollars and percentage growth over the prior year:
Worldwide IT Spending on Pace to Surpass $3.6 Trillion in 2012 (Chart 32)
Public cloud services to grow from $109 Billion in 2012 to more than $200 Billion by 2016
Worldwide IT spending is on pace to reach $3.6 trillion in 2012, a 3% increase from 2011 spending of $3.5 trillion, according to the latest outlook by Gartner, Inc. Gartner's 2012 IT spending outlook has been revised up slightly from the 2.5% projection last quarter.
Gartner's global IT spending forecast is relied on by more than 75% of the Global 500 companies in their key technology decisions. The market segments are analyzed by more than 200 Gartner business and technology analysts who are located in all regions of the world.
"While the challenges facing global economic growth persist — the Eurozone crisis, weaker U.S. recovery, a slowdown in China — the outlook has at least stabilized," said Richard Gordon, research vice president at Gartner. "There has been little change in either business confidence or consumer sentiment in the past quarter, so the short-term outlook is for continued caution in IT spending."
However, there are some bright spots for IT providers. In contrast to the rather lackluster growth outlook for overall IT spending, Gartner expects enterprise spending on public cloud services to grow from $91 billion worldwide in 2011 to $109 billion in 2012. By 2016, enterprise public cloud services spending will reach $207 billion.
"Business process as a service (BPaaS) still accounts for the vast majority of cloud spending by enterprises, but other areas such as platform as a service (PaaS), software as a service (SaaS) and infrastructure as a service (IaaS) are growing faster," Mr. Gordon said.
Worldwide IT services spending is forecast to reach $864 billion in 2012, a 2.3% increase from 2011. Demand for consulting services is expected to remain high due to the complexity of environments for global business and technology leaders. Gartner analysts said consulting is becoming increasingly technology-based with the rise of analytics and big data, having deep implications on the future of consulting services.
The global telecom services market continues to be the largest IT spending market. Telecom services growth is expected to come not only from net connections, especially in emerging markets, but also in mature markets from the uptake of multiple connected devices, such as media tablets, gaming and other consumer electronics devices.
4G LTE Terminal Equipment to Reach 154 Million Units in 2016; LTE Smartphones to Reach 586 Million Units
Global shipments of 4G LTE (Long Term Evolution) terminal equipment is forecast to reach 154 million units in 2016, while that of LTE smartphones to hit 586 million units, according to Market Intelligence & Consulting Institute (MIC) of Taiwan's Institute for Information Industry.
MIC said that the number of global mobile-telecom subscribers reached 6 billion, in which the smartphone penetration was 14%, and that rapidly increasing demand for mobile data will drive the rapid development of 4G technology.
According to MIC, global shipments of LTE equipment were about eight million units, and the number is expected to soar to some 41 million units this year. In 2001, LTE smartphone shipments were 21 million units, and are expected to top to 64 million units.