U.S. Durable Goods Orders Down in July

New orders for U.S. manufactured durable goods decreased $17.8 billion or 7.3% in July. This decrease followed a 3.9% June increase. Excluding transportation, new orders decreased 0.6%. Excluding defense, new orders decreased 6.7%. Transportation equipment led the decrease, down $16.7 billion or 19.4% to $69.7 billion. This was led by nondefense aircraft and parts, which decreased $14.5 billion.

U.S. electronic equipment and component orders declined 3.6% in July versus June 2013:

  • Electronic equipment book/bill dropped to 1.055 on a 3-month average basis and 1.01 for July alone (Chart 1).
  • July electronic equipment shipments grew while shipments declined (Chart 2).
  • Despite the July electronic equipment order decline 3/12 growth rates (May-July’13 vs. May-July’12) improved for both orders and shipments (Chart 3).
  • The ratio of electronic equipment inventories/orders increased due to lower orders (Chart 4).
  • Defense capital goods orders declined (Chart 5).
  • Aircraft defense and non-defense shipments held steady but non-defense orders plunged (not shown on Chart 6).
  • Communication equipment (Chart 7) and computer (Chart 8) orders weakened.


Electronic Components Growing Again in Germany

Electronic components are on the up again. After two quarters of recession, orders for manufacturers of electronic components (in-house manufacturers and electronic manufacturing services provider) have risen again in the second quarter of 2013. Compared to the first three months of 2013, the growth was 6.1%, reported the Central Association of PCB and Electronic Systems. The orders exceeded the same quarter in 2012 by almost ten percent.

Sales improved by 0.4% the previous quarter, despite the lower number of working days.

The share of exports in order intake increased significantly from 28.2% in the first quarter of 2013 to 32.7% in the second quarter. In terms of sales, the export share rose slightly to 31.6%.

The trend indicator book-to-bill ratio increased to 1.14. The mood in the company brightened considerably, so said the result of a survey ZVEI.

The headcount was stable with a reduction of 0.4%.

Source: www.zvei.org

World Server Unit Shipments Grew 4%, Revenue Decreased 3.8% in 2Q’13 (Charts 9-12)

In the second quarter 2013, worldwide server shipments grew 4% year-on-year, while revenue declined 3.8% from the second quarter of 2012, according to Gartner, Inc.

"The global server market remains in a relatively weak state overall," said Jeffrey Hewitt, research vice president at Gartner. "The only real regional bright spot was Asia/Pacific with growth of 10% and 21.7% year on year in terms of revenue and shipments. Canada was the only other region that grew in both revenue and units (6.3% in revenue and 2.7% in units) while Latin America was close to flat for revenue but increased by 1% in terms of shipments. The U.S. also grew in terms of shipments by 1.9% year-on-year but declined in revenue by 5.1%."

"x86 servers managed to produce an increase of 4.5% in units for the second quarter, and 2.1% in revenue. RISC/Itanium Unix servers continued to decline at 27.4% in units and 25.3% in vendor revenue compared to the same quarter last year. The ‘other’ CPU category, which is primarily mainframes, showed an increase of 6.9% in revenue," Hewitt said.

IBM had the lead in the worldwide server market based on revenue for the second quarter of 2013. The company posted worldwide server revenue of nearly $3.2 billion for a total share of 25.6%. The biggest revenue contribution was from its System z.

In server shipments, HP remained the worldwide leader in the second quarter of 2013 in spite of a year-on-year shipment decline of 13.6% for the quarter. HP’s worldwide server shipment share was 23.9% representing a 4.8% decrease in share from the same quarter in 2012.

Inspur also made it into the top five server position in the second quarter of 2013 primarily due to a significant high-performance computing (HPC) deal that it won in its native China during the quarter.

Source: www.gartner.com

World WLAN Market increased 10.8% & Enterprise WLAN Market Grew 14.8% y/y in 2Q’13 (Chart 13)

The combined consumer and enterprise worldwide wireless local area network (WLAN) market segments increased 10.8% year over year in the second quarter of 2013 (2Q’13). According to IDC the enterprise segment continued to grow at a very healthy rate and increased 14.8% over the same period last year. While the pace of the enterprise WLAN market growth is starting to slow from the 20%-plus year-over-year increases witnessed in the last several years, the enterprise WLAN market continues to be one of the fastest growing networking markets out there. The consumer WLAN market also performed well in 2Q’13 and increased 6.5% year-over-year, which was on par with the consumer WLAN results in 1Q’13.

"Across all verticals and geographies, enterprise IT continues to see an explosion of mobility applications running on more devices than ever, resulting in new investments in WLAN infrastructure," said Rohit Mehra, Vice President, Network Infrastructure. "While growth slowed slightly this quarter compared to previous quarters, the growing mobility needs of education, retail, healthcare, and other distributed enterprise segments will continue to fuel substantial growth in the overall enterprise WLAN market."

"Although regional and country-level WLAN growth trends varied widely in 2Q’13, the worldwide outlook for the enterprise, service provider, and consumer segments remains optimistic due to highly anticipated network upgrade cycles," said Petr Jirovsky, Senior Research Analyst, Worldwide Networking Trackers Group.

Source: www.idc.com

PC Outlook Further Lowered as Mature Markets Projected to Outgrow Emerging Markets in 2013 (Chart 14)

Worldwide PC shipments are now expected to fall by -9.7% in 2013, further deepening what is already the longest market contraction on record, according to the International Data Corporation (IDC) Worldwide Quarterly PC Tracker. The new forecast reflects not only a continued expansion of mobile device options at the expense of PCs, but also marked the cessation of emerging market growth that the industry had come to rely on in recent years. The market as a whole is expected to decline through at least 2014, with only single-digit modest growth from 2015 onward, and never regain the peak volumes last seen in 2011.

While the results of the second quarter were in line with forecast, a number of issues led IDC to further downgrade its PC outlook. Aside from stubbornly depressed consumer interest, 2013 also marks the first year where emerging regions are expected to contract at a steeper rate than mature regions. Leading this trend is China’s revised forecast, which calls for a double-digit decline in shipments this year compared to 2012, as channel sources report high levels of stagnant inventory and continued enthusiasm for tablets and smartphones. The repercussions of a slowing China, anxiety over the possible tapering of the U.S. quantitative easing program, and weak intrinsic PC demand are among a litany of factors that have rippled across portions of other formerly strong-growth areas, leading emerging markets as a whole to see declines through at least 2014.

"The days where one can assume tablet disruptions are purely a First World problem are over," said Jay Chou, Senior Research Analyst, Worldwide Quarterly PC Trackers at IDC. "Advances in PC hardware, such as improvements in the power efficiency of x86 processors remain encouraging, and Windows 8.1 is also expected to address a number of well-documented concerns. However, the current PC usage experience falls short of meeting changing usage patterns that are spreading through all regions, especially as tablet price and performance become ever more attractive."

Looking beyond 2014, IDC expects a slow rebound, driven in part by modest consumer refresh of systems whose lifecycle have dramatically lengthened in recent years, as well as businesses taking a first serious look beyond Windows 7. However, without an adequate mass of compelling applications, the PC market is poised to subsist primarily on lukewarm replacements in the future.

"The second quarter of 2013 was the third consecutive quarter where the U.S. market came through stronger than the worldwide market. This was largely due to some recovery in the overall economy and channel inventory replenishment," said Rajani Singh, Research Analyst, Client Computing. "Following the stronger than expected 2Q’13, we expect the second half of 2013 to restore some volume momentum driven largely by better channel involvement of top vendors and industry restructuring/alignment. We also anticipate operating system migration (Window XP to 7) will drive some volume in the commercial segment. Entry-level ultraslim systems and lower-priced convertibles will also be bright spots in an otherwise still troubled consumer market."

Source: www.idc.com

U.S. GDP Up 2.5% in 2Q’13 (Chart 15)

The U.S. gross domestic product grew at a 2.5% annual rate in 2Q’13 driven by higher exports, according to the Commerce Department. This strong growth suggests that the Federal Reserve will begin curtailing its economic stimulus programs.

Source: www.bea.gov/national/

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.

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