Weekly Global Update for October 29, 2014

October Flash PMI Leading Indicators

October "flash Purchasing Managers Indices" were just released for a few key countries (Chart 1). These PMIs are leading indicators of regional manufacturing activity. Although the USA’s expected growth rate softened a bit from September to October (but still remained very positive), Europe (Chart 2), China (Chart 3) and Japan (Chart 4) all improved

Final PMIs will be released in the first few days of November for all countries covered by Markit Economics.

Source: www.markiteconomics.com

Japan Update

JEITA just released Japanese August domestic production data for electronic equipment and components.

• Electronic equipment production weakened slightly from July to August. Normal seasonality was evident (Charts 5 & 6) however August 2014 was down 16% compared to August 2013.
• Domestic Japanese electronic equipment production and semiconductor shipments have both been declining on a 3/12 growth basis (Chart 7).
• Electronic component and device growth remains in low single digits (Chart 8).
• PCB production weakened slightly from July to August (Chart 9) and was down 3.5% for June to August 2014 versus the same period in 2013 (Chart 10).
• Looking forward, the Japan PMI leading indicator points to flat demand near-term (Chart 11).

Source: www.jeita.or.jp/

North American Semiconductor Equipment Industry September 2014 B/B Ratio 0.94 (Charts 12 & 13)

North America-based manufacturers of semiconductor equipment posted $1.17 billion in orders worldwide in September 2014 (3-month average basis) and a book-to-bill ratio of 0.94, according to SEMI.

The 3-month average of worldwide bookings in September 2014 was $1.17 billion, 12.9% lower than August 2014 and 18.1% higher than the September 2013.

The 3-month average of worldwide billings in September 2014 was $1.25 billion, 3.3% lower than August 2014 and 22.5% higher than September 2013.

"Following 11 months of above parity book-to-bill ratios, the 3-month average ratio declined in September," said Denny McGuirk, president and CEO of SEMI. "While order activity moderated, equipment spending this year is expected to be robust and remain on pace for double-digit year-over-year growth."

Source: www.semi.org

Automotive Semiconductor Suppliers- Mergers Reshape Top 10

• Qualcomm buying CSR
• Infineon buys International Rectifier
• On Semiconductor buys Aptina

"While these three M&A deals differ in their specific goals and benefits, all have the same strategic objective: expanding market share in the lucrative business for semiconductors used in automobiles," said Ahad Buksh, analyst for automotive semiconductors at IHS. "The automotive supply is adding new infotainment, communications and driver-assist functionality at a rapid pace, causing related semiconductor revenue to rise 5% to reach $26 billion in 2013. Suppliers are buying up competitors to gain scale in the market, to add key capabilities and to capitalize on established customer relationships."

Chart 14 presents the IHS ranking of the world’s top 10 suppliers of automotive semiconductors in 2013, showing the impact from the recent acquisitions.

All of these 10 companies increasingly are investing in automotive, having identified the area as a strategic field of expansion. At the same time, most of these companies are divesting from other markets, such as wireless and consumer electronics.

Source: www.ihs.com

Internet of Things

A few months ago IDC published an interesting forecast for IoT device shipments for 2014 and 2020 (Chart 15). The volumes are huge!