Global Electronic Equipment Shipments by Month by Major Country

  • Due to a combination of normal seasonality, Chinese New Year shutdowns, Apple reducing its iPhone orders and generally weak economic conditions, February was not a good month for electronic equipment production especially in China (Chart 1).
  • In addition to market weakness the strong dollar/weak non-dollar exchange rates depressed dollar-denominated growth substantially when calculated at fluctuating versus constant 2015 currency exchange. This impact in 4Q’15 versus 4Q’14 was about a 5.5% degradation in growth (Chart 2).
  • Chart 3 compares monthly dollar denominated global electronic equipment shipments calculated at constant versus fluctuation exchange rates.

Source: Custer Consulting Group based upon regional and company financial reports.

February U.S. Electronic Equipment Shipments and Orders

The February Durable Goods report was just released by the U.S. Department of Commerce:

  • The electronic equipment book/bill held relatively steady at 1.026 on a 3-month average basis (Chart 4).
  • Both electronic equipment orders and shipments declined (Chart 5) as their 3/12 growth rates edged down (Chart 6).
  • Defense capital goods orders dropped significantly (Chart 7).
  • Aircraft shipments weakened (Chart 8) and orders declined (Chart 9).
  • Communication (Chart 10) and computer (Chart 11) equipment orders and shipments were flat.
  • Semiconductor shipments to North America declined much more than electronic equipment growth on a 3/12 basis suggesting a combination of recent negative inventory and order corrections for semiconductors.


Japan Update

JEITA just released January domestic electronic equipment, device and component production for Japan:

  • Electronic equipment production declined 11.2% in January 2016 versus January 2015 and dropped 17.7% sequentially from December 2015 (Chart 13).
  • Component and device production growth (Chart 14) are now both negative (3/12 <1).
  • Passive component production has been declining since its September 2015 peak (Chart 15).
  • PCB shipments also declined (Chart 16) and the Japan PMI leading indicator points to continued weakness ahead, a least short term (Chart 17).


March “Flash” PMI Leading Indicators

Markit economics just released preliminary March PMI data for the U.S., Japan, the Eurozone, Germany and France.

  • Germany, France and Japan declined from February and the USA and Eurozone rose slightly (Chart 18).
  • The U.S. remains in growth territory (PMI >50) but not by much (Chart 19).
  • The Eurozone also continues to experience a modest expansion (Chart 20).
  • Japan dropped sharply into contraction (Chart 21).


Note: U.S.-based IHS will buy Markit Ltd to create a $13 billion London-based company in a so-called tax-inversion where a U.S. company is moving its headquarters overseas where corporate tax rates are lower.


Motherboard Makers to see 10% Sequential Drop in 2Q’16 Shipments

Mainly because Intel will defer the launch of its Kaby Lake platform from June to the third quarter, motherboard makers are expected to see their shipments in the second quarter decrease about 10% on quarter, according to Taiwan-based supply chain makers.


Smartphone Component Suppliers Have Stepped Up Their Production since February Due to Strong Demand from Chinese Brands (Chart 22)

Global smartphone demand has been stagnant since the fourth quarter of 2015. All branded vendors therefore have lowered their shipment targets, and the entire market spent about three months on channel inventory digest. Avril Wu, smartphone analyst for the global market research firm Trendforce, said the stock up of Chinese branded smartphones started to pick up in the middle of February, as the inventory adjustment period came to an end. At the same time, new devices unveiled at the Mobile World Congress generated additional demand. Moreover, mobile carriers in China have increased their subsidies for high-end 4G smartphones to boost both the market penetration of 4G technology and consumer purchases.

Based on TrendForce’s latest analysis, the global smartphone shipments will grow by just 5.7% annually in 2016. However, the combined shipments of Chinese brands will register a much larger annual growth of 15.6%. Chinese vendors will continue to be the main driver of smartphone shipment growth through this year as demand rises in the emerging markets such as India and the ASEAN countries.


HDD Makers at 67% Capacity; Shipments down 17% to 469 million units in 2015 and forecast to drop below 400 million units in 2019 (Chart 23)

HDD shipments dropped 17% in 2015 to 469 million units and will drop below 400 million units in 2019, according to The Information Network.

"The downturn in the PC market coupled with advances and lower prices of Solid State Devices (SSDs) has crippled the Hard Disk Drive industry to the extent that manufacturers as well as vendors in the supply chain were operating at only 67% of capacity at the end of 2015, noted Dr. Robert Castellano, president of The Information Network."

HDD shipments peaked at 651 million units in 2010, and shipments in 2015 were 72% of maximum. In 2019, shipments below 400 million units will represent only 60% of the maximum shipments from 2010.

The supply chain to the HDD manufacturers is also under pressure. For example, glass disk leader Hoya, with a capacity of 305 million disks, is operating at just above 60% capacity. Total glass disk capacity is 800 million disks, but only 360 million disks were incorporated in 2.5-inch HDDs in 2015.

In the HDD sector, all three manufacturers – Western Digital, Seagate, and Toshiba saw shipments drop at least 18% compared to 2014. Western Digital saw its lead over Seagate decrease to a share of 43.6% in 2015 from 44.2% in 2014.


Worldwide Purpose-built Backup Appliance Factory Revenues grew 4.1% y/y to $1.05 billion in 4Q’15 (Charts 24 & 25)

Total worldwide PBBA annual capacity increased 23.1% to 3.30 exabytes.

Worldwide purpose-built backup appliance (PBBA) factory revenues grew 4.1% year over year totaling $1.05 billion in the fourth quarter of 2015 (4Q’15), according to the International Data Corporation (IDC) Worldwide Quarterly Purpose-Built Backup Appliance Tracker. For the full year, factory revenue was up 2.5%, to $3.35 billion in 2015. Total PBBA open systems factory revenue increased 6.0% year-over-year in 4Q’15 with revenues totaling $958.2 million while the mainframe market experienced a decline of -12.8% for the same period. Total worldwide PBBA capacity shipped for 4Q’15 reached 1,160 petabytes, an increase of 25.6% year-over-year, while annual capacity was up 23.1% to 3.30 exabytes.

"Growth in the worldwide PBBA market remained strong in the fourth quarter, hitting the billion dollar mark for only the second time in any given quarter," said Liz Conner, Research Manager, Storage Systems. "Despite the continued commoditization of storage hardware, PBBA systems vendors are adapting, putting greater emphasis on backup and deduplication software, meeting recovery objectives, the ability to tier to the cloud, and increased ease of use. The results are a more flexible and agile product that is helping to meet a wider range of data protection needs."


U.S. GDP increased 1.4% in 4Q’15 vs. 4Q’14 (Chart 26)

Gross domestic product increased at a 1.4% annual rate instead of the previously reported 1.0%, the Commerce Department reported.

Walt D. Custer

Walt Custer

Walt Custer is an industry analyst focused on the global electronics industry. Prior to forming Custer Consulting Group he was Vice President of Marketing and Sales for Morton Electronic Materials, a global supplier of specialty chemicals and process equipment for the PCB industry.

Custer has been a member of the IPC trade organization since 1975 where he received both the President's and the Raymond E. Pritchard Hall of Fame Awards. He is currently a member of the IPC Executive Market & Technology Steering Committee. Custer is also a Director of the EIPC European PCB trade organization.

He authors regular “Market Outlook” columns for Global SMT & Packaging magazine, the Journal of the HKPCA and the TTI MarketEYE website.

View other posts from Walt D. Custer. View other posts from Walt D. Custer.
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