Weekly Global Update for September 16, 2015

China/Taiwan Update

August Sales for Taiwan-listed companies (many of which manufacture in China) were just released.

• Electronic equipment shipments increased only 1.1% in August 2015 versus August 2014. They are likely to rise a significant amount sequentially in September versus August due to normal seasonality (Chart 1).
• Motherboard (Chart 2) and ODM (Chart 3) monthly revenues also increased modestly in August 2015 versus August 2014
• Wafer foundry sales dropped (Chart 4), package & test revenues increased (Chart 5) and memory (Chart 6) and passive component (Chart 7) sales were flat.
• Solar/Photovoltaic revenues continued their improvement which began at the first of this year (Chart 8).
• A composite of 46 rigid and flex PCB makers saw sales continue to improve sequentially from July (Chart 9) and rigid CCL (laminate) followed rigid PCBs stronger demand (Chart 10).

Source: Monthly sales of Taiwan Stock Exchange listed companies with Custer Consulting Group analysis

Exchange Rate Impact on Dollar Denominated Global Electronic Equipment Growth

We have updated our global monthly electronic equipment sales model by region. Fixed exchange rate calculations are now converted at 2014 average values and we also have calculated these same sales at fluctuating exchange rates. Because the U.S. dollar has strengthened so much versus most global currencies we wanted to quantify the exchange rate impact on calculated electronic equipment growth rates.

Exchange rate fluctuations have a significant impact on world electronic equipment growth estimates. Chart 11 compares calculated growth using both fixed and fluctuating exchange. At fixed 2014 exchange 2Q’15/2Q’14 growth was +2.7% but at fluctuating exchange it was -2.8%. This shows how important it is to specify how multi-national consolidated growth rates are calculated especially in times of strongly fluctuating exchange rates.

Chart 12 and Chart 13 provide monthly electronic equipment shipments by region/major country. Chart 12 uses fixed average 2014 US$ exchange for all years. Chart 13 uses the historical (fluctuating by month) exchange rates.

Chart 14 compares summary electronic equipment world revenue monthly totals at both constant (Chart 12 data) and fluctuating (Chart 13 data).

Source: Regional monthly country sales and growth rates from U.S. Dept. of Commerce, Eurostat, JEITA, Taiwan/China composite per Chart 1 and S.Korean OEM sales composite, Also historical exchange rates and Electronic Outlook (Ed Henderson’s) 2014 total electronic equipment sales estimates by country.

These charts provide an excellent basis for comparing your company’s regional sales performance to regional benchmarks. If you need the raw data from these monthly regional sales charts on an ongoing basis contact walt@custerconsulting.com

Semiconductor Industry Spending Slows but Still Positive (Chart 15)

Fab equipment spending will increase by 5% in 2015 and 6.6% in 2016

Semiconductor industry analysts have revised revenue forecasts downward for 2015. At the beginning of year, expectations were 5 to 8% growth but this now appears unlikely. New predictions range from 0 to 3% growth, a significant slide downward. Slower than expected global GDP growth, weak PC sales, sagging DRAM prices, and currency effects all contribute to the downward adjustments

A slowdown (compared to previous years) in smartphone market growth and a contraction in the PC market have caused some manufacturers to re-evaluate and trim capital expenditure plans for the year.

New data from the SEMI World Fab Forecast support SEMI’s prediction that fab equipment spending for 2015 will increase by 5% and for 2016 by 6.6%. Some fab projects have been slowed down, or delayed until 2016.

Source: www.semi.org

Europe to Remain Largest Regional Market for Auto ICs, but Asia-Pacific Gaining Fast (Charts 16-20)

Asia-Pacific’s grip as the dominant market for IC sales is forecast to strengthen in 2015 with the region expected to account for 58.9% of the $295 billion IC market this year, based on analysis published in IC Insights’ mid-year Update to its IC Market Drivers 2015 report. The forecast market share represents an increase of 0.5 percentage points over the 58.4% share that the Asia-Pacific region captured in 2014. The Asia-Pacific region is particularly dominant with regard to IC market share in the computer and communications categories, and to a lesser extent in the consumer and industrial categories. Globally, the communications segment first surpassed the computer segment to become the largest end use market for ICs in 2013 and it is forecast to extend its market share lead to 2.7 points in 2015.

Europe is forecast to account for the largest share of the automotive IC market in 2015, but IC Insights expects the Asia-Pacific region will achieve top share of that segment in 2016 as China continues to account for a large and growing portion of new car shipments. That will leave only the Government/Military end use segment where Asia-Pacific does not have top IC market share – a condition that is forecast to hold through 2018.

IC Insights’ Update to the IC Market Drivers 2015 report forecasts total IC usage by system type through the year 2018. Highlights from the forecast data include the following items.

• The two largest end-use market segments in 2015 – computer and communications – are forecast to account for 73.9% of the total IC sales this year.
• From 2012-2018, the two highest growth end-use markets for ICs are forecast to be the industrial and communication segments, having CAGRs of 9.1% and 8.2%, respectively.
• The automotive IC market is forecast to have a CAGR of 6.1% from 2012-2018, yet automotive’ s share of the total IC market is forecast to remain below 8.0% throughout this time.
• In 2015, analog ICs are forecast to represent the greatest share of IC sales among automotive (43%) and industrial (50%) applications; logic devices are expected to account for the greatest share of IC sales within government (33%) and consumer (19%) systems, and MPUs (60%) are forecast to account for the greatest share of IC sales in the computer segment.

Source: www.ICInsights.com

IoT to generate a $43.5 Billion Semiconductor Business in 2019 (Chart 21)

By 2020, 25 billion "things" will be connected and that will impact all industries especially the semiconductor industry.

Dean Freeman, research VP at Gartner, forecasted the 2019 size of the IoT semiconductor market: $10 billion sensor market, $24.8 billion processing market, and $8.6 billion connectivity market ─ summing up to $43.5 billion semiconductor market in total.

Jim Hines, research director at Gartner, predicted a huge application for automotive IoT and forecasted that the automotive semiconductor market’s CAGR would be 5.5% from 2013 to 2019. This is almost double vehicle production unit CAGR over the same period at 3.0%. Hines commented that nearly $400 worth of semiconductor chips will be used in every car on average by 2019.

Source: www.semi.org

Worldwide Enterprise Storage Systems Factory Revenue Grew 2.1% y/y to $8.8 Billion During 2Q’15 (Charts 22 & 23)

Total worldwide enterprise storage systems factory revenue grew 2.1% year over year to $8.8 billion during 2Q’15, according to the International Data Corporation (IDC). Revenue growth was strongest within the group of original design manufacturers that sell directly to hyperscale datacenters. This portion of the market was up 25.8% year over year to $1 billion. Sales of server-based storage were up 10% during the quarter and accounted for $2.1 billion in revenue. External storage systems remained the largest market segment, but the $5.7 billion in sales represented a -3.9% year-over-year decline. Total capacity shipments were up 37%
year-over-year to 30.3 exabytes during the quarter.

"Companies are increasingly using new project initiatives and infrastructure refresh as an opportunity to deploy new storage technologies that are able to drive cost and complexity out of their existing storage resources," said Eric Sheppard, Research Director, IDC Storage. "This is pushing critical investment dollars toward technologies like cloud-based storage, integrated systems, software-defined storage, and flash-optimized storage systems at the expense of traditional external arrays."

Source: www.IDC.com

Global Copper Clad Laminate Market Grew 7.1% y/y to 760 Million Square Meters in 2014 (Chart 24)

2014 global CCL output had a year-on-year growth of 7.1% to 760 million square meters of which 520 million square meters (68.4% of the global total) were produced in China.

Glass-fabric-based CCL and paper-based CCL are two products that have the largest output in China, separately making up 61.4% and 16.5% of China's total CCL output in 2014.

The Chinese CCL market is highly concentrated. Kingboard Chemical ranked first with a market share of 29.3%, followed by Shengyi Technology (14.8%) and ITEQ Corporation (9.3%).

The CCL industry has entered a new round of growth in recent years, and two regions in Asia, China and Southeast Asia have become the fastest-growing ones. Relevant manufacturers have successively taken measures like capacity expansion and acquisitions to strengthen their CCL business.

Source: www.reportsnreports.com - Chisult Insight