Weekly Global Update for August 19, 2015

Electronic Supply Chain 2Q’15 Growth Update

Chart 1 updates our 2Q’15 growth estimates for the global electronic supply chain. Most but not all major companies have now reported. Negative growth was caused both by weak demand and currency exchange rate effects (weaker non-dollar currencies converted to U.S. dollars).

Source: Company financial reports consolidated by Custer Consulting Group

Taiwan/China Update

Based on country specific PMI leading indicators, growth has slowed and is mostly negative for key Asia countries (Chart 2).

July monthly sales were just released by Taiwan-listed electronics companies, many of which manufacture in China:

• OEM revenues were up 4.3% in July 2015 vs. July 2014 but down 9.3% sequentially from June (Chart 3).
• ODM sales in July 2015 rose 6.4% vs. July 2014 but declined 7.8% sequentially from June 2015 (Charts 4 & 5).
• Printed circuit sales increased (Chart 6) as did “CCL” laminate (Chart 7) – in line with July OEM performance.
• Display sales dropped (Chart 8).
• Wafer foundry revenues improved (Chart 9) but package & test (Chart 10), memory (Chart 11) and solar/photovoltaic (Chart 12) sales weakened.

Source: Company financial reports and Markit Economics PMI data.

Europe Update

Eurostat just released June European electronic supply chain data:

• Most sectors of the European electronic supply grew in 2Q’15 vs. 2Q’14 (Chart 13)
• Electronic equipment sales reached their highest level since 2008 (Chart 14) as their 3-month (3/12) and annualized (12/12) growth is near +5% (Chart 15).
• Automobile production declined sequentially from May (Chart 16) but aerospace output rose to near an all-time high (Chart 17).
• Instrument and control equipment revenues (Chart 18) dipped and medical electronics sales were little changed from May (Chart 19).
• Electronic assembly activity slowed slightly from May (Chart 20), component and board production jumped (Chart 21) but wiring device sales softened slightly (Chart 22).
• Custer Consulting Group’s PCB leading indicator points to better European PCB growth ahead (Chart 23).

Source: Eurostat

Global Printed Circuit Board Production

Thanks to our colleague Dr Hayao Nakahara Chart 24 lists the top 25 largest bare PCB makers in 2014. Naka has carefully researched the world’s PCB producers and Chart 2 covers the first 25 of his 2014 Top 99 ranking.

Source: N.T. Information Ltd

Based on Custer Consulting Group’s tracking of PCB shipments by region, monthly sales although seasonal are flat versus 2014 (Chart 25). On a consolidated basis our world model now projects only 0.4% global PCB growth in 2015 (Chart 26).

Source: Regional PCB data consolidated by Custer Consulting Group

India's PCB Industry – Dr. Hayao Nakahara's comments

Naka wrote:

“India seems to have about 130 PCB makers – some say 250, if “mom & pop” shops are included. None of them are producing PCB for cellphones, some of which require build-up multilayer boards. All PCBs for cellphone assembly are imported from China, practically speaking.

When will India be self-sufficient for this volume business? Despite Prime Minister Modi's push for "Manufacture in India", at this moment there is no big PCB investment in sight. The majority of PCB manufacturing equipment in India is second-hand and not suitable for fabricating cellphone PCBs. The biggest problem I see in India for large scale PCB investment is the lack of infrastructure.

I will visit India on August 13th and stay for two weeks to see if my unkind remarks regarding the Indian PCB industry still hold.”

H. Nakahara, N.T. Information Ltd.

Taiwan's Handset Supply Chain Suppliers Expected to Enjoy Brisk Sales in August-September

Suppliers in Taiwan's handset supply chain are expected to see their sales rebound in August to September as smartphone vendors including Apple, Samsung Electronics, Sony Mobile Communications and Microsoft Mobile are set to release new models for the latter half of the year.

Sales for most makers in the handset supply chain were flat in the second quarter, affected by a slow growth in the smartphone market as well as off-peak season effects.

Source: www.digitimes.com

World Silicon Wafer Area Shipments increased 4.4% y/y in 2Q’15 (Chart 27)

Total silicon wafer area shipments were 2,702 million square inches during the most recent quarter, a 2.5% increase from the 2,637 million square inches shipped during the previous quarter resulting in a new quarterly volume shipment record. New quarterly total area shipments were 4.4% higher than second quarter 2014 shipments. First half 2015 shipments were 7.8% higher than the first half of 2014.

"For two consecutive quarters strong silicon shipment growth has been recorded by the Silicon Manufacturers Group,” said Ginji Yada, chairman of SEMI SMG and general manager, International Sales & Marketing Department of SUMCO Corporation. “Continued growth off of the record level shipped in the first quarter produced another record level of shipments in the most recent quarter.”

Source: www.semi.org

Worldwide Personal and Entry-level Storage Shipments declined 9.7% y/y to 15.1 million Units in 2Q’15 (Charts 28 & 29)

Worldwide personal and entry-level storage (PELS) shipments declined by 9.7% year-over-year and 13.8% sequentially, finishing 2Q’15 with 15.1 million units, according to the International Data Corporation (IDC). Shipment values declined along with unit shipments, down 16.1% from a year ago to $1.2 billion.

"The personal and entry-level storage market has been showing seasonality since 2013, indicating that it has become a mature market and is no longer immune to macro trends," said Jingwen Li, Research Analyst, Storage Systems. "Competition from cloud offerings and shift of media consumption preferences within mature markets are negatively impacting demand within the personal storage space, making high growth emerging markets more critical than ever."

Source: www.idc.com

U.S. & Global Industrial Production

U.S. industrial output grew at its fastest pace in eight months in July thanks to strong auto production (Chart 30).

Globally Industrial production varies significantly by region (Chart 31)