Global Market Summary
Business conditions remained weak through the first half of 2013 although normal seasonal growth is now underway.
- Regional electronic equipment shipment "growth" remained negative (3/12 < 1) for all areas although Taiwan/China improved in June (Chart 1).
- SE Asia (Taiwan/China) is experiencing its "normal" seasonal upturn although this year's seasonal growth is modest (Chart 2)
- On a world basis electronic equipment shipments were down an estimated 6% comparing June 2013 to June 2012 (Chart 3).
Printed Circuit boards
- PCB shipment growth remained negative for North America, Europe, Japan and Taiwan/China (Chart 4).
- Total world PCB shipments were down an estimated 8% in June 2013 versus June 2012. We have revised the total 2013 world PCB growth estimate to -3% for the regions note above (Chart 5). Although monthly PCB data for South Korea is not readily available, reportedly South Korean PCB shipment growth is exceeding the regions covered in our global model.
June sales for Taiwan listed companies (many with manufacturing in China) were just released.
- June 2013 electronic equipment sales were down 6% compared to June 2012 but up 2% sequentially from May 2013 (Chart 6).
- ODM sales rose slightly from May to June but were down 2% in 2Q'13 vs. 2Q'12 (Charts 7 & 8).
- Motherboard sales declined sequentially in June (Chart 9).
- Semiconductor shipment to SE Asia growth exceeded electronic equipment shipment growth in Taiwan/China suggesting possible over-ordering or inventory building of semiconductors (Chart 10). This growth rate difference is not great however and could be accounted for by stronger end market growth in South Korea
- Display shipments weakened sequentially (Chart 11).
- Taiwan wafer foundry growth increased significantly (Chart 12). Foundry sales are historically a leading indicator for global semiconductor shipments. Wafer foundry growth rates are historically greater than semiconductors and the global PMI leading indicator in the recovery phases of the business cycle (Chart 13).
- Memory sales increased (Chart 14) but Package and Test (Chart 15) and passive component (Chart 16) sales declined.
- Printed circuit board sales declined (Chart 17) as did CCL (rigid PCB laminate) (Chart 18).
- Taiwan-listed solar/photovoltaic suppliers have reported increasing sales since late last year (Chart 19).
May 2013 European data were just released by Eurostat:
- Electronic equipment shipments declined for the second straight month (Chart 20) as both their annualized (12/12) and 3-month (3/12) growth remains near -3% (Chart 21).
- Automotive (Chart 22) and aerospace (Chart 23) shipments increased.
- Instruments and control equipment (Chart 24) and medical electronics (Chart 25) declined.
- Wiring device shipments also declined (Chart 26).
- Semiconductor shipments to Europe are in balance with electronic equipment shipments on a 3/12 growth basis (Chart 27).
Chart 28 summarizes the annualized (12/12) and 3-month (3/12) growth of the European electronics supply chain. A value of 100 indicates zero growth versus the same period a year earlier. The 3/12 "leads" the 12/12.
21% Increase to $43.98 billion in Chip Equipment Spending for 2014 up from $36.29 billion projected for 2013 (Charts 29 & 30)
Mid-year Forecast for Chip Equipment Industry Shows Improving Outlook
SEMI forecasts semiconductor equipment sales will reach $43.98 billion in 2014, a 21% increase over estimated 2013 equipment spending, according to the mid-year edition of the SEMI Capital Equipment Forecast, released here today at the annual SEMICON West exposition.
Following two years of conservative capital investments by major chip manufacturers, semiconductor equipment spending is forecast to grow to $43.98 billion in 2014, up from $36.29 billion projected this year. Key drivers for equipment spending are significant NAND Flash fab investments by Samsung in China and Toshiba/Sandisk in Japan, and investments by Intel, including its fabs in Ireland. Most major regions of the world will see significant equipment spending increases. Front-end wafer processing equipment will grow 24% in 2014 to $35.59 billion, up from $28.70 billion in 2013. Test equipment and assembly and packaging equipment will also experience growth next year, rising to $3.18 billion (+6%) and $2.9 billion (+14%), respectively. The forecast indicates that next year will be the second largest spending year ever, surpassed only by $47.7 billion spent in 2000.
"Continued strong demand by consumers for smart phones and tablet computers is driving chip manufacturers to expand capacity for memory, logic and wireless devices," said Denny McGuirk, president and CEO of SEMI. "To meet the pent-up demand for capacity, particularly for leading-edge devices, we expect capital spending to increase throughout the remainder of this year and continue through 2014 – to post one of the highest rates of global investment for semiconductor manufacturing ever."
Growth is forecast in China (82%), Europe (79%), South Korea (31%), Japan (21%), North America (9%), and Taiwan (2%). Taiwan will continue to be the world's largest spender with $10.62 billion estimated for 2014, followed by North America at $8.75 billion and Korea with $8.74 billion. The following results are given in terms of market size in billions of U.S. dollars and percentage growth over the prior year:
Worldwide PC Shipments Declined 10.9% y/y to 76 million units in 2Q'13 (Charts 31-34)
PC Industry Continues to Shrink as the Installed Base Restructures to Accommodate Tablets as the Primary Consumption Device
Worldwide PC shipments dropped to 76 million units in the second quarter of 2013, a 10.9% decrease from the same period last year, according to preliminary results by Gartner, Inc. This marks the fifth consecutive quarter of declining shipments, which is the longest duration of decline in the PC market's history.
All regions showed a decline compared to a year ago. The fall in the Asia/Pacific PC market continued, showing five consecutive quarters of the shipment decline, while the EMEA PC market registered two consecutive quarters of double-digit decline.
"We are seeing the PC market reduction directly tied to the shrinking installed base of PCs, as inexpensive tablets displace the low-end machines used primarily for consumption in mature and developed markets," said Mikako Kitagawa, principal analyst at Gartner. "In emerging markets, inexpensive tablets have become the first computing device for many people, who at best are deferring the purchase of a PC. This is also accounting for the collapse of the mini notebook market."
HP and Lenovo's neck-and-neck competition continued. This time, Lenovo was back in the top position by only a small difference in share (see Table 1). Lenovo showed mixed regional results, as it experienced strong growth in the Americas and EMEA, while showing a major decline in Asia/Pacific. Weakness in China was most likely the contributor of Lenovo's shipment decline in the region as the majority of Lenovo's volume came from China.
While HP was slightly behind Lenovo, HP is a market leader in key regions including the U.S., EMEA and Latin America. Asia/Pacific has been a weakness the last three years for HP, but preliminary second quarter results suggest an improvement of their performance in the region.
Dell's shipments declined compared to a year ago, but its 2Q'13 results showed a smaller decline than the past several quarters. Dell showed good growth in the U.S. and Japan, but struggled to increase shipments in Asia/Pacific and EMEA. Both Acer and ASUS showed steep declines compared to the second quarter last year. The decline was partly affected by their strategies to exit the mini-notebook market.
"While Windows 8 has been blamed by some as the reason for the PC market's decline, we believe this is unfounded as it does not explain the sustained decline in PC shipments, nor does it explain Apple's market performance," Kitagawa said.
In the U.S. market, PC shipments totaled 15 million units in the second quarter of 2013, a 1.4% decline from the second quarter of 2012 (see Table 2). This decline was less than the past seven quarters, and the market grew 8.5% sequentially.
"Our preliminary results indicate that this reduced market decline was attributed to solid growth in the professional market," Kitagawa said. "Three of the major professional PC suppliers, HP, Dell and Lenovo, all registered better than U.S. average growth rate. The end of Windows XP support potentially drove the remaining PC refresh in the U.S. professional market."
Memory and Foundry Account For More than Half of Worldwide IC Capacity (Chart 35)
Logic, Micro, and Analog each represent about 10% of wafer fab capacity.
At the end of 2012, memory products and foundries accounted for a combined 54% of the IC industry's installed monthly capacity of 14,497K wafers (200mm-equivalent wafers), according to data in IC Insights' Global Wafer Capacity 2013 report. Logic represented 12.4%, Microcomponents (MPU, MCU, DSP) represented 10.3%, and Analog devices accounted for 9.6% of capacity. The "other" segment is comprised mainly of capacity used in the fabrication of optoelectronic, sensor, and discrete (O-S-D) devices as well as some R&D functions in fabs that are otherwise used primarily for the volume production of IC products.
Large-scale production of DRAM and flash memory helped drive installed capacity for all memory to 36.1% of installed capacity in December 2012, while the growing foundry segment represented 27.5% of capacity. In terms of sales, virtually all pure-play foundry business is in the fabrication of logic and mixed-signal ICs. Memory product wafers accounted for only about 1% of total pure-play foundry sales in 2012.
On a regional basis, capacity for analog products is fairly evenly distributed among Japan, Europe, and the Americas regions. In memory, capacity is held mainly by South Korea, Taiwan, and Japan. The largest portion of logic capacity is located in Japan, with the Americas, South Korea, and Europe holding smaller, but still sizeable, shares. The Americas region is tops in microcomponent capacity due mostly to high-volume MPU production from Intel. In foundry, Taiwan is by far the largest shareholder of capacity having about 48% of the world's capacity dedicated of foundry work. China also has a large amount of foundry capacity, with SMIC being responsible for most of that.