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.
Statements of fact and or opinions expressed in MarketEYE by its contributors are the responsibility of the authors alone and do not imply an opinion of the officers or the representatives of TTI, Inc.
Here are the November 2011 results of Taiwan-listed electronics companies, many of which manufacture in China.
Source: Custer Consulting Group based upon company financials
Taiwan's PCB production value is set to decrease 4% sequentially to NT$129.8 billion in the fourth quarter of 2011, due to a slowdown in orders, predicted the Industrial Economics and Knowledge Center (IEK) of the Industrial Technology Research Institute (ITRI).
For all of 2011, Taiwan's PCB production value will grow by a mere 0.2% to NT$502.8 billion, IEK said. In 2010, the industry enjoyed a robust 21.6% rise.
If denominated in US dollars, Taiwan's PCB production value in 2011 is forecast to register a larger 7.9% increase to US$17.1 billion, following the growth of 27% reached in 2010, IEK indicated.
Driven by strong demand for small-form-factor electronics products, Taiwan's PCB production value is projected to increase 8.4% to NT$545 billion in 2012, according to IEK.
Here are results from the U.S. Department and Commerce’s recent “Factory Orders” report.
Source: Custer Consulting Group and www.census.gov/manufacturing/m3/
The current SEMI Year-end Consensus Forecast anticipates growth of 4.7% for this year (to $41.8 billion) and a moderate decline of 10.8% for 2012 for worldwide sales of new semiconductor manufacturing equipment.
Wafer processing equipment, the largest product segment by dollar value, is expected to increase 9.3% in 2011 to set a record at $32.7 billion. The forecast predicts that the market for assembly and packaging equipment will decline by 12.5% to $3.4 billion in 2011. The market for semiconductor test equipment is forecasted to decline by 10.3%, reaching $3.7 billion this year.
Growth is expected for four regions in 2011; Europe (66.9% increase over 2010), North America (53.0%), Japan (31.2%), and China (2.3%). Forecasted spending increases in 2011 will be particularly dramatic in North America and Europe owing to Intel’s and GlobalFoundries’ aggressive CAPEX plans.
Additional projects driving the North American market include IBM Microelectronics investments in Building 323, while Micron/IM Flash Lehi and Manassas fabs and Samsung’s Austin’s fabs are all equipping this year. These investments will make the new equipment market in North America the largest with $8.8 billion, followed by Taiwan ($8.1 billion), South Korea ($8.0 billion), and Japan ($5.8 billion). Taiwan, South Korea, and Rest of World experienced negative growth rates in 2011.
In 2012, only South Korea is expected to have positive growth (7.5%). In 2013, the market is expected to rebound for all regions except South Korea, due to high growth in 2012.
The following results are given in terms of market size in billions of U.S. dollars.
Last year’s record fab equipment spending plays out into increased production capacity for 2012 and 2013— where we estimate growth at 6% and 7%, respectively. Note that the increase in capacity is coming primarily from technological upgrades, not new fabs.
Japan still remains the largest chip manufacturing region in terms of capacity with about 23% of the worldwide total. The majority of that capacity is for logic at 37%, followed closely by memory at 34%.
By 2013, we expect that memory will dominate worldwide fab capacity at 38%, compared to 19% in 2000. This is primarily at the expense of MPU/Logic capacity. Foundry capacity is only expected to increase by 7% — to total 32% of global fab capacity, by 2013.
By Jan Vardaman (TechSearch International) and Dan Tracy (SEMI)
Following a record year in terms of semiconductor sales and unit shipments, 2011 turned into a lower growth year than initially expected with several challenges emerging for the packaging material suppliers. First, there was the Tohuku earthquake and tsunami in March that severely disrupted the packaging materials supply chain. Numerous key suppliers lost production capability for several weeks and longer. While the supply chain recovered by the second quarter, a slowing global economy reduced the outlook for the semiconductor industry growth for the year. Finally, higher raw material costs, such as pricing for gold, silver, tin, and copper metal, put the squeeze on supplier’s margins as customers pushed for lower cost material solutions for their packaging needs.
Packaging technology continues to be an important industry segment enabling growth in electronics that are increasing in functionality in a mobile form factor. Important growth areas in packaging include chipscale packaging (CSP)— both laminate and leadframe based, stacked-die and other 3-D packaging form factors, wafer-level packaging (WLP), power device packaging, LED packaging, and other system-in-package (SiP) type technologies. The outlook for advanced packaging continues to remain strong, and this includes ball grid array (BGA), CSP (including leadframe-based), flip chip, and WLP packages. And it will be new materials that will enable packaging technologies to deliver solutions in terms of meeting demanding performance and reliability requirements.
In total, the semiconductor packaging materials covered in this investigation are forecasted to grow from $22.2 billion in 2011 on a global basis to $24.6 billion in 2015, excluding thermal interface materials. Steady unit growth is expected through 2013 for key segments of the packaging materials market.
Unit growth rates from the segments highlighted in the table for 2010 through 2013 range from a compound annual growth rate (CAGR) of 5.7% for total leadframes to 25% for the total underfill market:
Advancements and changes continue in the semiconductor packaging materials market to meet performance and reliability requirements. Materials will provide solutions for the industry as devices fabricated with advance silicon technologies are introduced to the market. Materials will enable shrinkage to finer lines and spaces in the package; improved reliability and warpage control in packages; handling of thinner die and packages; fabrication of embedded electronic components; and more.
All of the information in this article was derived from a recently completed market research study, Global Semiconductor Packaging Materials Outlook—2011-2012 Edition, produced by SEMI and TechSearch International. To order a copy contact Dr. Dan P. Tracy, research development director, Industry Research and Statistics, SEMI via email at firstname.lastname@example.org, or telephone 1.408.943.7987 or facsimile 1.408.943.7915.
PC ODMs Quanta Computer, Compal Electronics, Wistron and Inventec, have asked component makers to increase supply volumes by 40-50% larger than normal levels to meet expected peak demand for PCs in China prior to the 2012 Lunar New Year in late January, according to the makers.
The raised orders are much higher than 20-25% increases to meet Lunar New Year peak demand in past years due to worries about labor shortages in China, the sources pointed out. Labor shortages usually happen before the Lunar New Year but are particularly severe this year not only occurring in coastal areas but also in inner regions, the sources indicated.
While component supplies will increase, whether shipments of PCs will increase or not hinges on vendors' order volumes, the sources cited ODMs as indicating.
Worldwide external controller-based (ECB) disk storage revenue totaled $5.1 billion in the third quarter of 2011, a 10.4% increase from revenue of $4.6 billion in the third quarter of 2010, according to Gartner, Inc. Although the worldwide ECB disk storage market showed positive revenue growth for the seventh quarter in a row, the market did show signs of slowing down.
"The third-quarter, year-over-year worldwide growth rate was the smallest percentage increase in the past seven quarters," said Roger Cox, research vice president at Gartner. "The North American region, which grew 6.7% in the third quarter, appears to be finally laboring under the weight of an extremely sluggish economy. Moreover, the prolonged debate and uncertainty around the debt ceiling as the quarter came to an end also had a negative influence on third-quarter revenue."
Although the Asia/Pacific and Latin American regions produced the largest year-over-year revenue gains at 23% and 15.3%, respectively, the EMEA region continued to achieve results that defied its economic woes. These three regions in particular benefit from the conversion of direct attached storage (DAS) infrastructures to fabric attached storage (FAS) infrastructures associated with the transition to a virtualized server environment, as well as the ongoing movement from tape to disk in order to modernize inefficient backup/recovery methodologies.
Led by EMC, the branded sales of four vendors, including IBM, HP and Hitachi/Hitachi Data Systems, gained market share in the third quarter of 2011 (see Table 1). EMC's strength remained its broad ECB market coverage. EMC was the leading vendor in the block-access and Special Purpose Disk Active Archiving System (PDAAS) segments. Propelled by the Isilon acquisition and the new VNX series, EMC garnered for the first time the top position in the network-attached storage (NAS) segment.
Worldwide external disk storage systems factory revenues posted year-over-year growth of 10.8%, totaling just under $5.8 billion, in the third quarter of 2011 (3Q11), according to the International Data Corporation (IDC) Worldwide Quarterly Disk Storage Systems Tracker. For the quarter, the total disk storage systems market grew to $7.6 billion in revenues, representing 8.5% growth from the prior year's third quarter. Total disk storage systems capacity shipped reach 5,429 petabytes, growing 30.7% year over year.
"The third quarter of 2011 was a strong quarter for Enterprise Storage, posting solid growth in factory revenue and signaling a return to 'business as normal'," said Liz Conner, senior research analyst, Storage Systems. "The trend of increased spending during the economic recovery period, specifically on high-end systems, has started to draw to a close. As IDC predicted, year-over-year growth has started to slow and is now approaching pre-economic crisis levels."
Total External Disk Storage Systems
EMC maintained its lead in the external disk storage systems market with 28.6% revenue share in the third quarter, followed by IBM and NetApp tied* for second with 12.7% and 12.1% market share respectively. HP ended the quarter in fourth position, with 11.3%. Hitachi and Dell finished in a tie* for fifth with 8.8% and 8.0% market share respectively.
Open Networked Disk Storage Systems
The total open networked disk storage market (NAS Combined with Open / iSCSI SAN) grew 12.3% year over year in the third quarter to just shy of $4.9 billion in revenues. EMC continues to maintain its leadership in the total open networked storage market with 31.3% revenue share, followed by NetApp with a 14.4% revenue share.
In the Open SAN market, which grew 16.1% year over year, EMC was the leading vendor with 25.3% revenue share, followed by IBM in second and HP in third with 15.4% and 14.0% share, respectively.
The NAS market grew 3.5% year over year, led by EMC with 46.7% revenue share and followed by NetApp with 30.9% share. The iSCSI SAN market continues to show strong growth, posting 19.5% revenue growth compared to the prior year's quarter. Dell led the market with 30.3% revenue share, followed by EMC in second with 19.2% and HP in third with 14.0% market share.
"Strong growth in the midrange segment (price bands 6 & 7, $50K-149.99K) helped the overall growth in the third quarter of 2011" said Amita Potnis, senior research analyst, Storage Systems. "The trend to buy modular systems offering enterprise level functionality, such as scale-out architectures, tiering, data deduplication, etc. continues."