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Weekly Global Update for June 19, 2013

06.19.2013 // Walt D. Custer // Industry Conditions

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Taiwan/China Update

May consolidated sales were just released by Taiwan Stock Exchange listed companies, many of which have mainland China production facilities.

  • Electronic equipment (OEM) sales increased sequentially from April to May 2013 but were 1% below May 2012 (Chart 1).
  • ODM (Chart 2) and motherboard manufacturers (Chart 3) showed a similar sales pattern as the OEMs.
  • Display shipments declined (Chart 4)
  • Semiconductor shipments to SE Asia remained generally consistent with electronic equipment production on a 3/12 growth basis and will likely converge in a few months (Chart 5).
  • Taiwan wafer foundry shipments grew strongly (Chart 6). They often act as a leading indicator to global semiconductor shipments (Chart 7).
  • Package and Test (Chart 8), Memory (Chart 9), Passive component (Chart 10) all increased.
  • The Taiwan solar/photovoltaic supply chain continued its recovery from its late-2012 low point (Chart 11).
  • Printed circuit board sales increased from April to May (Chart 12) but rigid laminate (CCL) shipments declined (Chart 13).

SE Asia appears to be on the path of a weak seasonal recovery. 

Europe Update

Based on data through April the European electronic supply chain remained near “zero growth” with semiconductor capital equipment sales still declining (Chart 14).

Chart 15 summarizes the annualized (12/12) and 3-month (3/12) growth of the supply chain. A value of 100 indicates no growth and the 3/12 is a leading indicator. The improving 3/12 growth rates indicate the European electronics industry is on the path to a weak recovery.

Industrial production improved in most key European countries in April (Chart 16) however electronic equipment sales declined (Chart 17).

On an annualized (12/12) and 3-month (3/12) growth basis electronic equipment shipments are still in declining (Chart 18) but they appear to have passed their low point of this current business cycle. Note that although the 3/12 is improving it still shows a 2.7% February to April electronic equipment sales decline versus the same period in 2012.

Automotive (Chart 19) and aerospace (Chart 20) sales improved.

Instrument and control equipment shipments rose (Chart 21) but medical electronics declined slightly (Chart 22).

Components and boards (Chart 23) and wiring device (Chart 24) shipments weakened sequentially.

SEMI Reports First Quarter 2013 Worldwide Semiconductor Equipment Figures; Billings US$ 7.31 Billion (Charts 25-27)

SEMI reported that worldwide semiconductor manufacturing equipment billings reached US$ 7.31 billion in the first quarter of 2013. Billings were 8% higher than the fourth quarter of 2012 and 32% lower than the same quarter a year ago. The data is gathered jointly with the Semiconductor Equipment Association of Japan (SEAJ) from over 100 global equipment companies that provide data on a monthly basis.

Worldwide semiconductor equipment bookings were $7.78 billion in the first quarter of 2013. The figure is 23% lower than the same quarter a year ago and 14% higher than the bookings figure for the fourth quarter of 2012.

Source: www.semi.org

Worldwide WLAN Market Shows Continued Strong Performance in First Quarter of 2013 (Chart 28)

The combined consumer and enterprise worldwide wireless local area network (WLAN) market segments experienced year-over-year growth of 12.5% in the first quarter of 2013 (1Q’13). According to International Data Corporation (IDC) the enterprise segment continued to grow at a healthy rate of 19.3% over the same period last year. The first quarter of 2013 was the thirteenth consecutive quarter with annual growth greater than 15%. The consumer WLAN market also started the year 2013 on a relative high note, growing 6.2% year-over-year.

"The explosion of mobile devices and the uptake of enterprise mobility applications continue to be top of mind for enterprise IT in terms of driving WLAN infrastructure growth across a wide range of enterprise verticals and use cases," said Rohit Mehra, Vice President, Network Infrastructure, at IDC. "While this quarter saw some slowing of growth in Wi-Fi infrastructure rollouts for mobile offload applications, the longer term trend of cellular operators and managed service providers leveraging Wi-Fi stays intact and will continue to boost additional growth in the coming years."

From a geographic perspective, the enterprise WLAN market performed especially well in Asia/Pacific (excluding Japan) where it increased 36.7% year over year in 1Q’13. Within that region, Indonesia recorded the highest year-over-year growth rate of 550%, with total revenues reaching nearly $15 million in 1Q’13. The enterprise market was also fairly strong in Middle East and Africa (MEA), in Western Europe, and in the United States, up 25.1%, 20.0%, and 19.8% respectively on an annual basis. The performance in other major regions was considerably weaker as Central and Eastern Europe (CEE) was up low single digits and both Japan and Latin America actually saw low single-digit declines year-over-year.
"Although there was significant regional and country level variance in terms of WLAN market growth in 1Q’13, the worldwide outlook for enterprise, service provider, and consumer segments remains very positive as vendors and end-users start to prepare for the next technology upgrade cycle," said Petr Jirovsk, Senior Research Analyst, Worldwide Networking Trackers Group.

Key Enterprise WLAN Vendor Highlights

  • Cisco's 1Q’13 worldwide enterprise WLAN revenue grew a strong 23.4% year-over-year, reaching $510 million in the quarter. The North American market accounted for 48.8% of Cisco's worldwide enterprise WLAN revenue in 1Q’13. Cisco's worldwide market share stands at 52.9% in 1Q’13, its highest share since 4Q’10.
  • Aruba (excluding its OEM business) grew its enterprise revenue 8.5% year over year in 1Q’13, which was below the overall market. As a result, Aruba now holds 10.5% of the enterprise WLAN market, down from 11.5% in 1Q’12.
  • HP's overall enterprise WLAN revenue increased 12.4% year over year in 1Q’13, a notable improvement in annual growth compared to HP's results for the last few quarters. As a result, HP's market share increased slightly to 5.4% in 1Q’13, up from 5.1% in 1Q’12.
  • Ruckus grew a solid 24.0% year-over-year in 1Q’13, well above the overall market, although this does reflect noticeable deceleration of year-over-year growth for Ruckus compared to previous quarters.

Source: www.idc.com

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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.

Featured Contributor:
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.

Custer Consulting Group

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