"Flash" May PMI Leading Indicators
Markit Economics just released its preliminary May Purchasing Managers Indices for select countries (Chart 1).
- The USA PMI (Chart 2) dropped slightly but still remained in expansion territory (PMI>50).
- Europe expanded faster (Chart 3) despite Germany’s PMI reduction.
- China’s PMI increased (Chart 4) but remained in contraction territory (PMI<50).
- Japan (Chart 5) moved into very modest growth territory (PMI=50.9).
Many other countries’ May PMIs will be released in early June. On balance it appears that slow global growth can be expected in the short term.
Global Electronic Supply Chain – 1Q’15 Sector Growth Update
Most electronics related companies have now reported their calendar 1Q’15 financial results. Some recent better-than-expected sales results increased our overall first quarter growth estimate.
- Chart 6 summarizes 1Q’15 growth by sector for the global electronics supply chain.
- The group of 161 OEMs in our electronic equipment manufacturing sample saw sales increase of 1.7% in 1Q’15 versus 1Q’14 (Chart 7). This was slower growth than the 4Q’14 expansion of 4.3% (Chart 8) – but better than prior estimates.
- Our current electronic equipment business cycle’s growth peaked in mid-2014 (Chart 9).
- Communication equipment (smartphones) was a major growth sector (Chart 10).
Source: Company Financial Reports with analysis by Custer Consulting Group
JEITA just released its March electronic production results:
- Japanese domestic electronic equipment production experienced its normal March seasonal upturn (Chart 11).
- Semiconductor shipments-to-Japan growth is now almost in balance with electronic equipment growth (Chart 12).
- Printed circuit production edged up slightly (Chart 13) as its 3/12 growth rate moved further into positive territory (Chart 14).
- Japan’s PMI leading indicator now points to further PCB growth ahead (Chart 15).
- Both electronic component and device growth remained positive despite easing from the February (Chart 16).
European Semiconductor Distribution Sales up 13.3% to Record 1.82 Billion Euro 1Q’15 (Charts 17 & 18)
Massive exchange rate effects drive double-digit upswing in major regions, except in Germany and Italy. UK, Iberia, Austria and Eastern Europe showed over-proportional increase. Opto, Programmable Logic and Analog lead the way. Price increases expected to compensate currency effects.
The European semiconductor distribution industry started very strong into 2015 and continued the positive trend from the last quarters of 2014. According to DMASS (Distributors' and Manufacturers' Association of Semiconductor Specialists), semiconductor distribution sales in Q1/CY15 grew by 13.3% to 1.82 billion euro, the highest recorded quarterly sales since the introduction of the euro in 2002.
The majority of the increase is due to a massive swing in the euro/US-dollar exchange rate, with the euro losing 17% of its value, compared to Q1/CY14. As a significant part of billings to European customers are done in US dollars, there is an artificial growth effect of ~50% of the total growth in Q1.
Georg Steinberger, chairman of DMASS, commented: "This is the opposite of what we have seen over previous years, when the euro became stronger and stronger. We estimate that ~50% of the growth is a pure currency effect, either by customers buying in US-dollars or by price increases that almost match the dollar/euro upswing. Nevertheless, even neglecting exchange rate effects, the distribution market enjoyed a stable sales growth. The downside certainly is a wave of price increases from overseas suppliers that occur all over the place to compensate exchange rate effects."
From a regional perspective, the growth leaders in Q1 were to be found in the Eastern Regions - Israel, Turkey, Eastern European countries - and the Nordic countries. While Israel and Turkey grew over 30%, Eastern Europe in total grew by 29% (exception Russia with minus 15%), Nordic by 23%. Of the major regions, UK (16.3%) and France (17.2%) grew above average, while Germany (5.8%) and Italy (8.4%) trailed the trend. In absolute numbers, Germany reported 544 million euro, Italy 171 million euro, UK 158 million euro and France 146 million euro.
Georg Steinberger: "Growth rates in the major markets are differently influenced by the currency effects: Nordic, UK, France and Eastern Europe either account more strongly in dollar or in local currency and therefore show higher increases. Germany, Italy and a few smaller markets have been more euro-focused, with the effect that their single-digit growth rates are more in line with a realistic market growth. At the end, the absolute numbers count, and DMASS considers 2015 to have started in a very healthy way."
Georg Steinberger: "As the currency effect really happens at the customer and regional level, the product growth rates are not really very reliable, as they are just the summary of what happens with customers or suppliers. But it would be safe to assume that the numbers contain a real growth in the magnitude as mentioned above - 5 to 6%."
Top 20 1Q’15 Semiconductor Suppliers
SK Hynix moves into top 5, MediaTek climbs into top 10, and Sharp and UMC move into the top 20 ranking.
The top-20 worldwide semiconductor (IC and O S D—optoelectronic, sensor, and discrete) sales ranking for 1Q’15 is shown in Chart 19. It includes seven suppliers headquartered in the U.S., four in Japan, three in Taiwan, three in Europe, two in South Korea, and one in Singapore, a relatively broad representation of geographic regions.
The top-20 ranking includes three pure-play foundries (TSMC, GlobalFoundries, and UMC) and four fabless companies. It is interesting to note that the top four semiconductor suppliers all have different business models. Intel is essentially a pure-play IDM, Samsung a vertically integrated IC supplier, TSMC a pure-play foundry, and Qualcomm a fabless company.
IC Insights includes foundries in the top 20 semiconductor supplier ranking since it has always viewed the ranking as a top supplier list, not a market share ranking, and realizes that in some cases the semiconductor sales are double counted. With many of our clients being vendors to the semiconductor industry (supplying equipment, chemicals, gases, etc.), excluding large IC manufacturers like the foundries would leave significant "holes" in the list of top semiconductor suppliers. As shown in the listing, the foundries and fabless companies are identified. In the April Update to The McClean Report, market share rankings of IC suppliers by product type were presented and foundries were excluded from these listings.
It should be noted that not all foundry sales should be excluded when attempting to create market share data. For example, although Samsung had a large amount of foundry sales in 1Q’15, some of its foundry sales were to Apple. Since Apple does not resell these devices, counting these foundry sales as Samsung IC sales does not introduce double counting.
Overall, the top-20 list (Chart 19) is provided as a guideline to identify which companies are the leading semiconductor suppliers, whether they are IDMs, fabless companies, or foundries.
In total, the top 20 semiconductor companies’ sales increased by 9% in 1Q’15/1Q’14 (6% excluding the foundries), three points greater than the total worldwide semiconductor industry growth rate. Although, in total, the top-20 1Q’15 semiconductor companies registered a 9% increase, there were six companies that displayed >20% 1Q’15/1Q’14 growth. Nine companies had sales of at least $2.0 billion in 1Q’15. As shown, it took just over $1.1 billion in quarterly sales just to make it into the 1Q’15 top-20 semiconductor supplier ranking.
North American SEMI Equipment Industry posted $1.57 billion in orders worldwide in April 2015 (3-month avg. basis) and a book/bill ratio of 1.04 (Charts 20 & 21)
The 3-month average of worldwide bookings in April 2015 was $1.57 billion, 12.9% higher than March 2015 and is 9.0% higher than the April 2014.
The 3-month average of worldwide billings in April 2015 was $1.51 billion, 19.3% higher than March 2015 and 7.6% higher than the April 2014.
"Both bookings and billings trends have improved, with the ratio remaining above parity over the past four months," said Denny McGuirk, president and CEO of SEMI. "Orders are higher than last year’s numbers, and current spending is on target with 2015 capex plans."
Worldwide Silicon Wafer Area Shipments Increased 11.6% y/y to 2,637 million square inches in 1Q’15 (Chart 22)
First Quarter 2015 Silicon Wafer Shipments Reach Record Levels
Worldwide silicon wafer area shipments increased during the first quarter 2015 when compared to fourth quarter 2014 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 2,637 million square inches during the most recent quarter, a 3.4% increase from the 2,550 million square inches shipped during the previous quarter, resulting in a new quarterly volume shipment record. New quarterly total area shipments are 11.6% higher than first quarter 2014 shipments.
"Total silicon shipment volumes for the first quarter of this year surpassed the record high reached in the third quarter of last year," said Ginji Yada, chairman of SEMI SMG and general manager, International Sales and Marketing Department of SUMCO Corporation. "Silicon shipments for the most recent quarter benefited from the strong market momentum the semiconductor market enjoyed last year."
Silicon wafers are the fundamental building material for semiconductors, which in turn, are vital components of virtually all electronics goods, including computers, telecommunications products, and consumer electronics. The highly engineered thin round disks are produced in various diameters (from one inch to 12 inches) and serve as the substrate material on which most semiconductor devices or "chips" are fabricated.
All data cited in this release is inclusive of polished silicon wafers, including virgin test wafers, epitaxial silicon wafers, as well as non-polished silicon wafers shipped by the wafer manufacturers to the end-users.