Weekly Global Update for January 29, 2020

January “Flash” PMI Leading Indicators

IHSMarkit has released January Flash Purchasing Managers Indices for select countries. With the exception of the U.S., all countries included in the indices saw improvements in their manufacturing activity (chart 1); PMI values greater than 50 indicate a manufacturing expansion.

• U.S. ISM PMI dropped after rising in December (chart 2)
• Eurozone PMI improved, although it remained well within contraction territory (chart 3) Germany (chart 4) and France (chart 5) saw increases in January manufacturing activity
• Japan (chart 6) saw a modest PMI improvement, while still remaining in slight manufacturing contraction

Source: www.markiteconomics.com

IMF Revises Global Growth Projections Downward (Chart 7)

Global growth is projected to rise from an estimated 2.9 percent in 2019 to 3.3 percent in 2020 and 3.4 percent for 2021 — a downward revision of 0.1 percentage point for 2019 and 2020, and 0.2 point for 2021 compared to those in the October World Economic Outlook (WEO).

The downward revision primarily reflects negative surprises to economic activity in a few emerging market economies, notably India, which led to a reassessment of growth prospects over the next two years. In a few cases, this reassessment also reflects the impact of increased social unrest.

On the positive side, market sentiment has been boosted by tentative signs that manufacturing activity and global trade are bottoming out; a broad-based shift toward accommodative monetary policy; intermittent favorable news on U.S.-China trade negotiations; and diminished fears of a no-deal Brexit, leading to some retreat from the risk-off environment that had set in at the time of the October WEO. However, few signs of turning points are yet visible in global macroeconomic data.

(Read more at the link below.)

Source: www.imf.org

Gartner: Global PC, Tablet & Mobile Shipments to Increase 0.9% in 2020 (Chart 8)

Worldwide shipments of devices — PCs, tablets and mobile phones — will total 2.16 billion units in 2020, an increase of 0.9 percent from 2019, according to Gartner, Inc.

In 2019, global shipments of devices totaled 2.15 billion units. “2020 will witness a slight market recovery,” said Ranjit Atwal, research senior director at Gartner. “Increased availability of 5G handsets will boost mobile phone replacements, which will lead global device shipments to return to growth in 2020.”

The worldwide mobile phone market is on course to grow by 1.7 percent in 2020. Shipments of smartphones were weak in 2019, recording a 2 percent decline year-over-year, but are expected to grow in 2020, particularly in Greater China and emerging markets in Asia/Pacific.

Gartner estimates that 5G models will account for 12 of mobile phone shipments in 2020, and that will reach 43 percent by 2022.

“From 2020, Gartner expects an increase in 5G phone adoption as prices decrease, 5G service coverage increases and users have better experiences with 5G phones. The market will experience a further increase in 2023, when 5G handsets will account for over 50 percent of the mobile phones shipped,” said Atwal.

Global PC Market to Decline in 2020 and Beyond

Even after experiencing a return to growth in 2019, PC shipments are still forecast to decline in 2020 and beyond. Through 2020, this market will be affected by the end of the migration to Windows 10.

After three years of growth in the professional PC market, replacement levels will decrease. However, there will be opportunities for professional PC replacements through 2020. The Chinese government launched the locally manufactured “secure and reliable PC” initiative, which stalled in 2019, but such initiatives should gain momentum in 2020.

In addition, there is a “long tail” of upgrades from small and midsize businesses across emerging regions as they react to Microsoft’s withdrawal of support for Windows 7 on 14 January 2020. Gartner estimates that one billion PCs will have migrated to Windows 10 through 2020 — around 80% of all PCs in use.

“The PC market’s future is unpredictable because there will not be a Windows 11. Instead, Windows 10 will be upgraded systematically through regular updates,” said Atwal “As a result, peaks in PC hardware upgrade cycles driven by an entire Windows OS upgrade will end.”

Source: www.gartner.com

IC Substrate Sector Seeing Rapid Advancement

Driven by 5G and AI applications, the IC substrate sector is experiencing the fastest wave of tech advancement in 20 years, raising the entry threshold for newcomers and boosting market shares for makers in the leader group, according to industry sources in a Digitimes report.

Rapid updates in high-frequency, high-speed PCB materials are the main reason behind the fast tech progress and growing difficulty associated with production of higher-end IC substrates. Besides upgrades in layer counts and circuit density and aperture, new materials prescriptions and parameters as well as diverse materials solutions necessitate the establishment of new production lines as the old ones can hardly fit, the sources said.

This would bar newcomers from entering the higher-end IC substrates increasingly demanded for 5G and AI chips applications, with the market to be increasingly dominated by the world’s top-10 makers, which together command 70-80 percent of global supply of midrange and high-tier IC substrates.

Industry sources said it takes time for PCB makers to develop a presence in the IC substrate market, as they have to get across the basic learning curve, invest heavily to set up capacity, and win trust from clients in terms of yield rates and shipment stability.

Newcomers can start with only lower-level BT substrates carrying lower prices, as production of higher-end BT substrates and advanced ABF substrates are mostly handled by leading suppliers including Taiwan’s Zhen Ding Technology, Unimicron and Nan Ya PCB.

Source: www.digitimes.com

North American Semiconductor Equipment Billings Grew in December (Chart 9)

North America-based manufacturers of semiconductor equipment posted $2.49 billion in billings worldwide in December 2019 (3-month average basis), according to SEMI. Billings were 17.5 percent higher than November 2019 and 17.8 percent higher than December 2018.

“Monthly billings of North American equipment manufacturers reached a level not seen since June 2018,” said Ajit Manocha, president and CEO of SEMI. “The December surge in equipment billings reaffirms the strength of leading-edge logic and foundry investments.”

Source: www.semi.org

U.S. Industrial Production Down 0.3% in December (Chart 10)

The U.S. Federal Reserve Board reported that domestic industrial production declined 0.3 percent in December.

Source: www.federalreserve.gov