Weekly Global Update for December 29, 2014

Japan Update

JEITA just released Japanese October production of electronic equipment, components and devices.

• Electronic equipment production dropped almost 13% in October 2014 vs, October 2013 (Charts 1 & 2).
• Semiconductor shipment growth to Japan is in excess of electronic equipment demand on a 3/12 growth basis suggesting that some chip inventory building is occurring (Chart 3).
• PCB production has rebounded modestly since early 2014 (Chart 4).
• Despite the recent printed circuit production upturn PCB shipments are flat vs. a year ago (3/12 basis) and the PMI leading indicator points to a slowdown (beyond normal seasonality) in the near term (Chart 5).
• Electronic component and device production is experiencing positive growth versus the same time in 2013 (Chart 6).

Source: www.jeita.or.jp

Markit Economics Flash PMI Indicators for December (Chart 7)

Markit released this month’s flash PMI indicators (a bit earlier than in prior months).

• The U.S. remained in a growth mode but its rate of expansion continued to slow.
• China shifted to a contraction (PMI < 50).
• Japan reported a very modest growth increase.
• Europe improved as an increase in Germany was partially offset but a further contraction in France (see next item below).

Source: www.markiteconomics.com

Eurozone Flash Purchasing Managers' Index 51.7 in December vs. 51.1 in November (Chart 8)

Eurozone businesses are ending 2014 in slightly better shape than thought but growth remains weak and firms are still cutting prices to encourage trade.

Markit's Composite Flash Purchasing Managers' Index rose to 51.7 from a 16-month low of 51.1.

"Overall, it's a very disappointing picture of a weak euro area. It's not any cause for celebration. If it is stabilizing, it is at a very weak rate of growth," said Chris Williamson, chief economist at Markit.

Weak growth and deepening concern that plunging oil prices may send the euro zone into a deflationary spiral will push the ECB to buy sovereign debt early next year, a Reuters poll recently found.

Source: www.markiteconomics.com

South Korea's Smartphone Exports Down 28.6% November

Smartphone exports by South Korean companies, including Samsung Electronics, sank almost 30% last month due to fiercer competition with Chinese rivals and iPhone maker Apple, government data showed.

Exports in the information and communications technology (ICT) sector increased 3.6% from a year earlier to 15 billion US dollars in November, according to the Ministry of Trade, Industry and Energy.

Despite the overall gain, smartphone exports tumbled 28.6% to 1.1 billion dollars in November compared with the same period of last year. Feature phone shipments were 10 million dollars last month, down 41.1% from a year ago.

The sluggish exports came amid harsher competition with Chinese rivals in the low-end products and the launch of Apple's new flagship models.

Mobile phone imports, including smartphones and feature phones, surged 44.3% to 780 million dollars last month due to demand for Apple's newly-launched iPhone 6.

Helped by the strong smartphone imports, the overall imports in the ICT sector expanded 9.4% to 7.46 billion dollars in November.

Semiconductor exports jumped 15.9% to 5.77 billion dollars in November, keeping a double-digit growth for two months in a row.

Shipments of display panels reduced 1.8% to 2.38 billion dollars in November due to weak demand from China, and digital TV exports also plunged 23.1% last month.

Source: http://www.xinhuanet.com/english

Global Storage Market to Grow from US$38 Billion in 2014 to US$42 Billion in 2015

The global storage market, including HDD and enterprise SSD devices, is expected to grow from US$36 billion in 2013 to US$38 billion in 2014 and further to US$42 billion in 2015, according to an estimate by Western Digital.

www.digitimes.com

Worldwide PC Monitor Market Aided by Touch Screen Shipment Growth in 3Q’14 (Charts 9 & 10)

Worldwide PC monitor shipments totaled 33.4 million units in 3Q’14, a year-over-year decline of 5.1%. IDC expects worldwide shipments to remain flat with 33.5 million units forecast to ship in the last quarter of 2014.

"We found modest year-over-year shipment growth for 3Q’14 in Western Europe and the U.S. – 4.4% and 4.5%, respectively – two of the largest regions for PC monitor unit shipments. IDC expects shipments in the U.S. to have another quarter of single-digit growth in the fourth quarter of 2014," said Phuong Hang, Program Director, Worldwide PC Monitor Tracker at IDC.

Technology Highlights

• Monitors with a 16:9 aspect ratio dominated the market with 83.8% share, followed by 16:10 monitors.
• Shipments of touch screen monitors continued to see double-digit growth across all eight regional markets in 3Q’14. Western Europe was the largest market in terms of touch screen units shipped, followed by the U.S. and Asia/Pacific (excluding Japan).

Source: www.idc.com

Smartphones Sales Grew 20% in Third Quarter of 2014 (Charts 11-15)

• Sales of smartphones in emerging markets exhibited the highest growth ever, while Western Europe continued to decline
• Samsung lost market share while top three Chinese manufacturers combined smartphone market share grew by four percentage points

Worldwide sales of mobile phones to end users were flat in the third quarter of 2014, according to Gartner, Inc. However, sales of smartphones to end users grew 20.3% to reach 301 million units.

"Sales of feature phones declined 25% in the third quarter of 2014 because the difference in price between feature phones and low-cost Android smartphones is reducing further," said Roberta Cozza, research director at Gartner. In the third quarter of 2014, smartphones accounted for 66% of the total mobile phone market, and Gartner estimates that by 2018, nine out of 10 phones will be smartphones.

"Over the holidays we expect record sales of the iPhone 6 and iPhone 6 Plus, but we should not underestimate the Chinese vendors and local brands," said Annette Zimmermann, research director at Gartner. "Chinese players will continue to look at expanding in overseas emerging markets. In Europe prepaid country markets and attractive lost-cost LTE phones will also offer key opportunities for these brands." Gartner expects sales of smartphones to reach 1.2 billion units in 2014.

Source: www.gartner.com

Currency Exchange Rates vs. US $

The dollar has strengthened recently vs. most foreign currencies.

• Russia stands out as the ruble has plunged dramatically in value versus all major currencies as Russia’s oil-driven economy is struggling due to a huge drop in petroleum prices (Chart 16). Its trade partners are feeling the pain also as Russia’s orders for imported goods have declined due to the much lower buying power of the ruble.
• The Euro (Chart 17), Canadian dollar (Chart 18), Japanese yen (Chart 19), Taiwan NT $ (Chart 20) and S. Korean won (Chart 21) have all weakened versus the dollar.