1Q’13 Global Electronic Supply Chain Growth
First quarter financial data from companies throughout the electronic supply chain confirm that 2013 started out poorly.
- Composite sales of 115 large multinational OEMs declined 2.7% in 1Q’13 versus 1Q’12 (Chart 1) as their composite revenue “growth” has been negative for three sequential quarters (Chart 2).
- Inventories relative to sales increased throughout the supply chain in 1Q’13 (Chart 3) however this often occurs in the first quarter of a calendar year.
- Chart 4 summarizes 1Q’13/1Q’12 growth for key sectors of the global electronic supply chain. Only instrument and control, communication and data storage equipment and semiconductors had positive first quarter growth.
It should be noted that these 1Q’13 growth rates are still estimates. A number of large companies (HP, Dell, Applied Materials, Agilent and Medtronic) closed their financial quarters in April rather than March so their data are not yet included.
Source: Company financials with Custer Consulting Group analysis
Worldwide Semiconductor Photomask Market to Grow from $3.2 Billion in 2012 to $3.5 Billion in 2014 (Chart 5)
The worldwide semiconductor photomask market was $3.2 billion in 2012 and is forecast to reach $3.5 billion in 2014. After reaching a market peak in 2011, the photomask market contracted 4% in 2012. The mask market is expected to grow 3% and another 3% sequentially over the next two years. Key drivers in this market continue to be advanced technology feature sizes (less than 45nm) and increased manufacturing in Asia-Pacific. Taiwan remains the largest photomask regional market for the third year in a row and is expected to remain the largest market for the duration of the forecast.
Slight Decrease in 1Q’13 Silicon Wafer Shipments (Chart 6)
Worldwide silicon wafer area shipments decreased during the first quarter 2013 when compared to fourth quarter 2012 area shipments according to the SEMI Silicon Manufacturers Group (SMG) in its quarterly analysis of the silicon wafer industry.
Total silicon wafer area shipments were 2,128 million square inches during the most recent quarter, a 1.6% decrease from the 2,162 million square inches shipped during the previous quarter. New quarterly total area shipments are 4.8% higher than first quarter 2012 shipments.
"Total silicon shipment volumes experienced typical first quarter weakness, although volumes are up relative to the same quarter last year” said Byungseop (Brad) Hong, chairman of SEMI SMG and director of Global Marketing at LG Siltron. “Given current expectations for modest growth for the semiconductor industry this year, we are hopeful that the silicon industry will follow suit.”
SSD Shipments in PCs Will Rise to 227 Million Units in 2017, up more than 600% from 31 Million in 2012 (Chart 7)
Global shipments of solid state drives (SSD) in PCs are set to rise by a factor of seven by 2017, allowing them to claim more than one-third of the market for PC storage solutions by that time, IHS iSuppli said.
SSD shipments in PCs will rise to 227 million units in 2017, up more than 600% from 31 million in 2012, IHS predicted. Meanwhile, shipments of PC hard disk drives (HDD) will decline to 410 million in 2017, down 14% from 475 million in 2012.
The divergent outlook for the two products will allow SSDs to climb and claim 36% of the PC storage market in 2017, up from just 6% in 2012, HIS said. At the same time, HDDs will see their long-term dominance in PCs erode, with their share falling to 64% in 2017, down from a commanding 94% in 2012.
For SSDs, the major factors driving growth in 2013 will be ultrabooks and other ultrathin notebook PCs, especially as Intel's upcoming Haswell processors bring about a robust combination of performance and efficiency for the superthin computers, said Fang Zhang, analyst for storage systems at IHS, in a statement. "In the coming years, ultrabooks and ultrathins - combined with appealing touch-screen displays and convertible form factors - are likely to become more compelling as the machines attempt to lure consumers away from smartphones and tablets, boosting demand for SSDs used in these systems," Zhang continued.
The SSD space includes the cache SSD segment where NAND flash is used alongside a HDD, as well as a separate segment in which NAND flash is embedded on top of an HDD in an integrated, hybrid form factor.
Smart Mobile Device Shipments Exceeded 300 Million Units in 1Q’13 (Chart 8)
Total smart mobile device (notebook, tablet and smartphone) shipments for first-quarter 2013 hit 308.7 million units, according to Canalys' latest worldwide estimates. This represents on-year growth of 37.4%. In terms of OS vendors, the Open Handset Alliance continued to dominate, with Android the OS of choice on 59.5% of all smart mobile devices shipped. Of the other OS vendors, Apple's strength in the smartphone and tablet PC markets accounted for its 19.3% share, while Microsoft's 18.1% share reflected its relative strength in the PC market but continued challenger status in the smartphone space.
Of the three, the tablet market continues to grow the fastest. Worldwide, tablet shipments grew 106.1% on year to 41.9 million units. Although Apple continues to lead in the tablet space with a 46.4% share, it lost share to Android-based rivals for the third consecutive quarter.
"Spearheaded by Google and Amazon, the commoditization of the tablet market has happened far quicker than that of the wider PC market," said Canalys senior analyst, Tim Coulling. "Profit margins are being squeezed and vendors without a low cost structure will find it hard to compete. A solid range of must-have accessories and a software and services strategy are vital as vendors will increasingly need to make revenues around their devices."
Smartphone shipments came in at just over 216.3 million for the quarter, maintaining the strong growth (47.9%) that the market saw throughout 2012. Android handsets accounted for 75.6% of total smartphone shipments, and Samsung dominated once again, growing its volume by 64.3% on year, which helped its market share exceed 32%. In contrast, Apple saw modest annual growth (6.7%) in its smartphone shipments, the lowest level since the launch of the original iPhone back in 2007.
"Despite its slowing growth, Apple still shipped over 37 million iPhones," said Pete Cunningham, Canalys principal analyst. "But HTC and Samsung have raised the bar with their latest handsets and Apple needs to respond with its next iPhone. The iPhone user interface is now six years old and badly in need of a refresh. Hardware-wise, the biggest dilemma that Apple faces is what it does with the size of the display on the next iPhone. It cannot afford to ignore the trend for larger displays in premium smartphones. We expect an increase on the iPhone 5's 4-inch display but are not anticipating a phablet-style iPhone."
Huawei, LG and ZTE completed the top five smartphone vendors, all with less than 5% market share each. Once again, Huawei and ZTE benefited from their strength in their home market, with 84% and 71% of their shipments respectively in mainland China. LG's appearance among the leading vendors comes thanks to an overdue increased focus on its smartphone business at the expense of its feature phone business.
Notebook shipments totaled 50.5 million units, once again contracting during the quarter by 13.1% compared with the same period in 2012. The biggest decline was in Western Europe, where shipments fell by 25.2% on an annual basis. "While there are macroeconomic factors that contribute to this ongoing trend, the impact of tablets must not be understated," said Canalys Research analyst, Pin-Chen Tang. "The combination of ARM-based chipsets and Android has taken computing devices to new, lower price points. If Microsoft and Intel are serious about capitalizing on this exploding market, both will need to ensure that their OEMs can remain competitive on price."
Worldwide Tablet Market Surges Ahead on Strong First Quarter Sales (Chart 9)
Worldwide tablet shipments continue to surge, growing 142.4% year-over-year in the first quarter of 2013 (1Q’13), according to preliminary data from the International Data Corporation (IDC).
Tablet shipments totaled 49.2 million units in 1Q’13, surpassing that of the entire first half of 2012. With growth fueled by increased market demand for smaller screen devices, tablets have shown no sign of slowing down.
Apple outperformed IDCs most recent projections for the quarter, shipping 19.5 million units compared to a forecast of 18.7 million units. The company, which historically has experienced a steep drop off in first quarter shipments (following strong holiday sales in the fourth quarter), saw some smoothing of that seasonality this year. Number two vendor Samsung also performed above expectations and managed to grow its shipments over the fourth quarter as more of the company's smaller-sized tablets began to gain traction in the market. Samsung has also used its recent Android smartphone growth to help bring its tablet product line into new markets and channels, leveraging the opportunity to package and bundle. The strong performance of the two market leaders helped drive total shipments to an impressive 49.2 million units for the quarter.
"Sustained demand for the iPad mini and increasingly strong commercial shipments led to a better-than expected first quarter for Apple," said Tom Mainelli, Research Director, Tablets at IDC. "In addition, by moving the iPad launch to the fourth quarter of 2012, Apple seems to have avoided the typical first-quarter slowdown that traditionally occurred when consumers held off buying in January and February in anticipation of a new product launch in March."
Global Notebook Shipments to Increase Significantly in 2H’13, says Compal Chairman
While global notebook sales have so far been stagnant, shipments in the second half of 2013 are expected to see large growth from the first half mainly due to the launch of new models and promotions by Intel and Microsoft, chairman Ray Chen for Compal Electronics said at a May 9 investors’ conference.
Compal expects shipments of notebooks and tablets together to shrink by less than 10% on quarter in the second quarter, Chen indicated. Compal expects to ship 8-10 million tablets in 2013, with shipments to concentrate in the third and fourth quarters, Chen said.
Touch-screen models accounted for 4-5% of Compal's notebook shipments in the first quarter of 2013, and penetration is expected to rise to 9-10% in the second and further to 20% in the fourth, Chen said.