July Semiconductor Shipments up 9.9% Globally

SIA just released July semiconductors shipments to each region:

  • Total global chip shipments were up 9.9% on a 3-month average basis (May to July 2014 vs. May to July 2013) (Chart 1). For the month of July alone they increased 8.2%.
  • For this current business cycle the growth rate appears to have peaked but still remains solidly in expansion territory (3/12 >1) (Chart 2).
  • On a 3-month average $ basis world semiconductor shipments reached an all-time high in July (Chart 3) however for the month of July alone there was a normal, mild seasonal decline (Chart 4).
  • Custer Consulting Group’s semiconductor shipment leading indicator points to continued expansion ahead (Chart 5).
  • Asia/Pacific consumed 58% of the world’s semiconductors in July with North America second at 19.5% (Chart 6).

Source: www.sia-online.org and www.wsts.org

U.S. Update – Modest Growth in July Electronic Equipment Orders and Shipments

U.S. July Durable Goods data were just released:

  • Domestic electronic equipment orders remained slightly above shipments (Chart 7) as their 3-month average book/bill ratio declined to 1.035 (Chart 8).
  • Shipment growth increased but order "growth" dipped to near the "no growth" line (3/12=1) (Chart 9).
  • Communication equipment orders improved (Chart 10) but defense capital goods orders weakened (Chart 11).
  • Aircraft shipments remained strong (Chart 12) driven by their non-defense portion.

Source: www.census.gov/indicator/www/m3

Japan Update – Seasonal Upturn but Downward Trend

JEITA released Japan’s June 2014 electronic equipment, device and component results:

  • Electronic equipment sales improved marginally from May to June (Chart 13) but the June seasonal upturn was typical (Chart 14). The long term trend remains negative.
  • Printed circuit shipments were sequentially nearly flat (Chart 15) as their growth rate remained slightly in negative territory (Chart 16).
  • Japan’s PMI leading indicator points to minimal short term PCB growth ahead (Chart 17).
  • Device growth is slowing and component growth remains in low single digits (Chart 18).

Source: www.jeita.or.jp/

North American PCB Orders Seasonally Weaker in July (Charts 19-21)

Slump in Sales and Orders is Typical for July

Total North American PCB shipments decreased 2.3% in July 2014 from July 2013, leaving year-to-date shipment growth flat at -0.6%. Compared to the previous month, PCB shipments were down 13.0%.

PCB bookings decreased by 6.3% compared to July 2013, putting the year-to-date order growth rate at -6.1%. Order growth declined 14.4% in July compared to the previous month.

The North American PCB book-to-bill ratio remained at parity at 1.00 in July.

"July is typically a slow month for the PCB industry and this year is no exception," said Sharon Starr, IPC's director of market research. "The PCB book-to-bill ratio has been hovering around 1.00 since February, which explains the flat year-to-date sales growth we are seeing," she added.


World Printed Circuit Shipments on Target for 3% Growth in 2014

  • Custer Consulting Group’s global PCB shipment model now points to 3% growth this year (Chart 22).
  • China/Taiwan of course dominates world PCB sales (Chart 23).
  • Custer Consulting Group’s PCB leading indicator points to stronger PCB demand ahead (Chart 24).

Source: Regional data with Custer Consulting Group analysis

Worldwide Tablet plus 2-in-1 Forecast for 2014 Lowered to 6.5% y/y Growth and 233 Million Units (Chart 25)

Following a second consecutive quarter of softer than expected demand, International Data Corporation lowered its worldwide tablet plus 2-in-1 forecast for 2014 to 233.1 million units. The new forecast represents a 6.5% year-over-year growth rate, which is well below the 12.1% growth rate previously forecast.

"When we look at the global picture, it would be easy to say that the tablet market is slowing down," said Jean Philippe Bouchard, Research Director for Tablets. "But, when we start digging into the regional dynamics, we realize that there is still a good appetite for this product category. While mature markets like North America and Western Europe will combine for flat unit growth in 2014, the remaining regional markets will generate 12% unit growth over the same period."

IDC anticipates that price pressure on tablets with smaller screen sizes (less than 8 inches) and evolving tablet usage in emerging markets will fuel that unit growth.

Tablet plus 2-in-1 Year-on-Year Growth

Region 2013 Actual 2014 Forecast 2018 Forecast
North America + Western Europe 25% 0% 4%
Rest of World 88% 12% 5%

Source: www.idc.com

PC Outlook Improves, although Shipments Expected to Fall by 3.7% in 2014 (Chart 26)

Worldwide PC shipments are expected to fall by 3.7% in 2014, an improvement from the previous forecast of -6%, according to the International Data Corporation (IDC). PC shipments in emerging regions remain constrained by ongoing competition from alternative devices and a number of economic/political challenges. However, commercial demand and even a rekindling of consumer interest in mature markets helped to boost results for the first half of 2014 as well as the outlook for the rest of the year.

PC shipments in mature regions are now projected to grow by 5.6% in 2014 – the highest since 2010 – with both consumer and commercial segments showing positive growth. On the other hand, the outlook for emerging market has been lowered slightly to reflect reduced stability and economic conditions in Asia/Pacific, Latin America, and Central Europe, the Middle East and Africa (CEMA).

Source: www.idc.com

Smartphones Shipments to Increase 23.8% y/y to more than 1.25 Billion Units in 2014 (Charts 27 & 28)

Smartphone Outlook Remains Strong for 2014, Up 23.8%, Despite Slowing Growth in Mature Markets

According to International Data Corporation more than 1.25 billion smartphones will be shipped worldwide in 2014, a 23.8% increase from the 1.01 billion units shipped in 2013. Looking ahead, total volumes are forecast to reach 1.8 billion units in 2018, resulting in a 12.7% compound annual growth rate (CAGR) for the 2013–2018 forecast period.

Emerging markets have accounted for more than 50% annual smartphone shipments dating back to 2011, so it is no question that they have been crucial to the growth of the overall market. However, up until 2014, mature markets have consistently delivered double-digit year-on-year growth. In 2014, IDC expects mature markets will slow to just 4.9% growth with emerging markets continuing to soar at 32.4%, pushing the total market up 23.8%.

Source: www.idc.com

Worldwide Large Format Printer Shipments Expanded 5.3% y/y to more than 77,000 Units (Charts 29-31)

According to International Data Corporation the large format printer (LFP) market recorded year-over-year growth of 5.3% in the second quarter of 2014 with more than 77,000 units shipped. Shipment value, however, declined slightly to $786 million in the quarter with year-over-year growth of -0.5%. The growth in unit shipments was driven by solid results for the top three vendors: HP, Canon, and Epson.

"IDC expects the aqueous color inkjet market to grow at a single digit rate over the next two years. The technical segment of the large format printer market is the real driver of growth opportunity. The gains in the technical segment can be attributed to improved speeds and image quality," said Phuong Hang, Program Director, Worldwide Large Format Printer Tracker.

Source: www.idc.com

High Resolution Smartphone LCDs: 73% will ship to Apple and Chinese Brands (Chart 32)

Demand for high-resolution displays for iPhones and other smartphones spurs LTPS LCD capacity expansion in China, as well as oxide TFT LCD production

Apple and Chinese brands are expected to purchase nearly three-quarters (73%) of all high resolution LCDs using LTPS (low temperature polysilicon) and oxide TFT technologies for smartphones. LTPS and oxide TFT LCDs will comprise 26% of all mobile phone panel shipments this year, an increase of eight percentage points from 2013, while a-Si (amorphous silicon) LCD is expected to continue losing share. Overall, 467 million LTPS and 42 million oxide LCD panels are forecast to ship this year.

"Apple is expected to debut the new iPhone 6 this September, which will create additional demand for LTPS LCDs," said Hiroshi Hayase, vice president of NPD DisplaySearch. "In fact, Apple’s iPhone and China’s emerging smartphone brands are the most important forces driving the rise in LTPS and oxide LCD shipments."

Apple’s iPhones use only LTPS LCDs, making the company the largest user of this high resolution form of TFT LCD. The company is expected to purchase 96 million iPhone 5 panels and 98 million iPhone 6 panels in 2014, accounting for 37% of all LTPS and oxide smartphone LCDs.

In addition to Apple’s use of LTPS LCDs, Chinese brands have expanded the manufacturing of full high-definition (FHD) resolution smartphones, which has also helped to increase LTPS LCD volumes. Xiaomi, Huawei, Oppo, Lenovo, BBK, and other Chinese brands make up 36% of all LTPS and oxide LCD panel shipments.

On the supply side, Sharp has begun to ship oxide LCDs for smartphones to the Chinese market, particularly to brands like Xiaomi. JDI, through its subsidiary Taiwan Display Inc. (TDI), has become fully operational in Taiwan and is now targeting the Chinese market. Taiwanese panel makers AUO and Innolux are also expanding LTPS LCD shipments. Furthermore, Tianma, a newcomer to LTPS LCD in China, has finally achieved a qualified LTPS LCD yield rate at its Gen 5.5 line in Xiamen, China.

"Due to the booming market for LTPS LCD in China, we expect panel makers to continue expanding LTPS capacities. However, the capacities of JDI, Sharp, LG Display and other leading suppliers only serve Apple." Hayase said. "NPD DisplaySearch tracks new LTPS LCD investments in China, including AUO’s Gen 6 in Kunshan, BOE’s Gen 6 in Ordos, BOE’s Gen 6 in Chengdu, China Star’s Gen 6 in Wuhan, Tianma’s Gen 5.5 in Xiamen, and Foxconn’s Gen 6 in Chengdu. By the end of 2016, there will be at least six Gen 6 LTPS fabs and one Gen 5.5 LTPS fab running in China."

Source: www.displaysearch.com

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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