June PMI Leading Indicators "Flash Report"

Markit Economics released "flash" leading indicators for select countries (Chart 1). Relative to May the PMIs improved for Europe, Germany, France and China and declined for the USA and Japan. Values above 50 indicate an expansion in manufacturing activity.

Historical charts are provided for the USA (Chart 2), Eurozone (Chart 3), Japan (Chart 4) and China (Chart 5). Note that the USA chart includes estimates by both Markit Economics and The Institute for Supply Management.

Source: www.markiteconomics.com

U.S. May "Durable Goods Report" for Electronics Related Products

The U.S. Department of Commerce released preliminary May data for electronics related shipments, orders and inventories.

  • Electronic equipment book/bill declined slightly from April but still remained in expansionary territory with a 3-month average value of 1.04 (Chart 6)
  • 3/12 growth rates for electronic equipment orders and shipments increased from April (Chart 7) - remaining in growth territory (3/12>1).
  • Both orders and shipments for electronic equipment increased (Chart 8).
  • Ratio of electronic equipment inventories/orders declined (Chart 9).
  • Defense capital goods orders increased slightly (Chart 10).
  • Aircraft shipments held steady (Chart 11) although orders declined (Chart 12).
  • Communication equipment orders increased (Chart 13) but computer orders weakened (Chart 14).
  • Semiconductor shipments to the Americas continue to move into balance with electronic equipment shipments on a 3/12 growth basis (Chart 15)

Japan Update

April data for Japanese domestic electronic equipment, component & device production was recently released by JEITA.

  • Electronic equipment production plunged sequentially from March – a normal seasonal occurrence (Chart 16)
  • PCB production rose (Chart 17) as its 3/12 growth remained in positive territory (Chart 18)
  • Japan’s PMI leading indicator points to continued printed circuit growth for the near-term (Chart 19).
  • Electronic component and device production both continue to grow (3/12 >1) although their rates of growth (3/12) have declined a bit (Chart 20).
  • Semiconductor shipments to Japan are in balance with electronic equipment production on a 3/12 growth basis (Chart 21).

Source: www.jeita.or.jp/

Taiwan Notebook Vendors, ODMs Cautious about 2H’15 Outlook

Taiwan-based notebook vendors and ODMs are guardedly optimistic about the prospects of the notebook market for the second half of 2015 and are pinning their hopes on the release of Microsoft's Windows 10 operating system.

While there is traditional sales momentum in the second half driven by back-to-school demand and the year-end shopping season, prospects for the global economy still remain uncertain, pushing notebook vendors and ODMs to keep inventories at low levels.

Source: www.digitimes.com

Foxconn, Pegatron, Inventec among Top-10 Handset Manufacturers

Foxconn Electronics, Pegatron Technology and Inventec have been listed in the global top-10 handset manufacturers for the first quarter of 2015 by IDC. Other Taiwan-based makers including Compal Electronics, Arima Communications and Wistron were not in the top-10.

Samsung Electronics, LG Electronics and Flextronics International were also in the top-10, and the remaining four members were all China-based players, Huaqin Telecom Technology, Oppo, Coolpad and Wingtech.

Foxconn and Pegatron were listed mainly for their production of iPhone devices, while Inventec is a major production partner of Xiaomi Technology.

The data indicates that China-based handset ODMs are emerging as a major force in the global handset manufacturing space, according to sources in Taiwan's handset supply chain.

In addition to Huaqin and Wingtech, China-based ODMs Tinno Mobile Technology, Haipainoble and Longcheer are among the top-five handset ODMs in China.

China-based ODMs have been able to enjoy strong growth in recent years due to their increasing production for handset vendors in China as well as India, Russia, Latin America, Africa and Europe.


Worldwide PC monitor shipments decreased 12.0% y/y to 29 million units in 1Q’15 (Charts 22 & 23)

The total worldwide PC monitor market shipped more than 29 million units in the first quarter of 2015, a decrease of 12.0% compared to 1Q’14 and 1.5% less than forecast, according to IDC.

"Some improvement may come later in the forecast as new product campaigns spark a modest recovery in the consumer segment, aided by contributions from the SMB and SOHO segments."

"Although there were a few bright spots – Japan experienced a gain of 2.0% over the previous quarter after four consecutive quarters of decline – IDC expects the trend of declining PC monitor shipments to continue for the near term," said Phuong Hang, Director, Worldwide Trackers at IDC. "Some improvement may come later in the forecast as new product campaigns spark a modest recovery in the consumer segment, aided by contributions from the SMB and SOHO segments."

IDC expects a year-over-year decline of 3.4% in worldwide shipments to 28.8 million units in the second quarter of 2015. IDC anticipates around 120 million PC monitor units will be shipped for full year 2015. By 2019, worldwide shipments are expected to be less than 104 million units in 2015.

Source: www.idc.com

U.S. GDP Declines 0.2% in 1Q’15 (Chart 24)

The U.S. economy contracted in the first quarter but less than previously estimated as it struggled with bad weather, a strong dollar, spending cuts in the energy sector and disruptions at West Coast ports.

However, growth has since rebounded in the second quarter as the temporary drag from unusually heavy snowfalls and the ports dispute faded. Retailers reported strong sales in May and employers stepped up hiring. Housing is also strengthening.


Source: www.federalreserve.gov/releases/g17/table1_2.htm

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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