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Weekly Global Update for November 6, 2013

11.06.2013 // Walt D. Custer // Industry Conditions

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3Q’13 Global Electronic Equipment Growth by Sector

Here is preliminary 3Q’13 revenue growth by the global electronic equipment sectors. Based upon the consolidated revenues, net income and inventory of 139 OEMs:

  • Total electronic equipment sales grew 1.7% in 3Q’13 versus 3Q’12 (Chart 1) as positive growth returned (Chart 2).
  • Inventory levels versus sales increased for OEMs, EMS companies and component distributors but declined for semiconductor manufacturers (Chart 3).
  • Growth by electronic equipment and component sector is given in Chart 4. Most groups reported increase 3Q’13 versus 3Q’12 sales.
  • A group of large EMS companies reported a 14% 3Q’13 sales decline (Chart 5) but this was driven by Foxconn (Chart 6). Excluding Foxconn EMS sales growth were slightly positive (Chart 7).

Source: Custer Consulting Group based upon company financial reports

Global Semiconductor Shipments Increase 8.7% in 3Q’13 versus 3Q’12

Semiconductor shipments continued to improve in the third quarter rising 24.5% to North America, 6.4% to Europe, 9.9% to Asia (excluding Japan) but dropping 12.9% to Japan. Globally chip sales rose 8.7% in the third quarter (Chart 8).

  • Chip shipments reach a record high on a 3-month average basis (Chart 9).
  • The current global semiconductor business cycle is well into positive territory although the growth rate is not as strong as in 2010 (Chart 10).
  • All regions saw increased sales for September (Chart 11) with North America and Southeast Asia especially strong.
  • North America’s robust growth is a bit “strange” (Chart 12) considering that this chip growth far exceeds U.S. electronic equipment growth (Chart 13).

Source: www.sia-online.org

Worldwide Tablet Shipments Grew 7.0% q/q and 36.7% Year-over-Year to 47.6 Million Units in 3Q’13 (Chart 14)

Android Growth Drives another Strong Quarter for the Worldwide Tablet Market, according to IDC.

Worldwide tablet shipments grew to 47.6 million units in 3Q’13 according to International Data Corporation (IDC). While slightly below the firm's forecast, the number still represents 7.0% growth over the previous quarter and 36.7% growth compared to the third quarter of 2012. Android products once again drove much of the shipment growth in the market as iOS growth stalled and Windows tablets continued to struggle to win over consumers.

Source: www.idc.com

Worldwide Video Game Market to Total $93 Billion in 2013 (Chart 15)

  • Sales of existing console hardware are forecast to grow from $15.9 billion today to $22.7 billion in 2015
  • Upcoming video game console releases to help push that segment to $55 billion in 2015

The worldwide video game marketplace, which includes video game console hardware and software, online, mobile and PC games, will reach $93 billion in 2013, up from $79 billion in 2012, according to Gartner, Inc. Driven by strong mobile gaming and video game console and software sales, the market is forecast to reach $111 billion by 2015.

Mobile games are the fastest-growing segment of the market, with revenue set to nearly double between 2013 and 2015 from $13.2 billion to $22 billion.

"As mobile devices (smartphones and tablets) continue to grow, the mobile game category will show the biggest growth due to the entertainment value provided by games compared with other app categories," said Brian Blau, research director at Gartner. "This growth is fueled by healthy premium mobile device sales globally and a desire by consumers to play games on these multifunction devices that are capable of displaying increasingly sophisticated game content."

"Sony and Microsoft are releasing their game consoles in November and pent-up demand for these new consoles has caused a temporary reduction in game console hardware sales during 2013, but growth will resume during 2014 and sales of existing console hardware are forecast to grow from $15.9 billion today to $22.7 billion in 2015," said Blau. "In stark contrast, dedicated game handheld devices and traditional PC games will play a smaller role in the game market and cease to be important game platforms."

Online and PC games remain popular but this segment is limited in overall size. Gartner expects that traditional PCs will not be replaced by newer PCs in households, but by tablets. This will lead to a progressive reduction in the installed base for PC games as game players adopt other device types as their primary computing platforms. PC and online games will remain popular, but compared with game consoles and mobile games, it is PC games that will take a backseat as game players make a choice of convenience and popularity.

Source: www.gartner.com

Worldwide mobile phone (inclusive of smartphones) shipments grew 5.7% 467.9 million units in 3Q’13 (Charts 16-19)

Record Smartphone Shipments Grow Market 38.8% in 3Q’13, Making Way for Strong Holiday Quarter

The worldwide smartphone market grew 38.8% year over year in 3Q’13, according to the International Data Corporation (IDC). Vendors shipped a total of 258.4 million smartphones in 3Q’13, establishing a new record for units shipped in a single quarter by more than 9.0%. The previous high was 237.0 million units shipped in the second quarter of 2013.

In the worldwide mobile phone market (inclusive of smartphones), vendors shipped 467.9 million units in 3Q’13 compared to the 442.7 million units shipped in 3Q’12, representing 5.7% year-over-year growth. Third quarter shipments were up 7.0% when compared to the 437.4 million units shipped in 2Q’13.

"The third quarter was up substantially over the previous quarter, which was also a record quarter for shipments, showing the real momentum of the smartphone market," said Ryan Reith, Program Director with IDC's Worldwide Quarterly Mobile Phone Tracker. "Price points have declined significantly, driven largely by low-cost Android solutions. This has helped China to become one of the fastest growing smartphone markets in the world, accounting for more than one third of all shipments last quarter. We expect this trend to continue going forward."

The Android smartphone platform has created vast opportunities for new vendors to get into the smartphone space and, in turn, has produced new competitive pressures at the top of the market. Smartphone shipments from vendors outside of the top 5 grew from 33.7% of the market in 3Q’12 to 41.3% in 3Q’13. Vendors from outside the top 5 continue to control nearly half the worldwide smartphone market in terms of shipments.

"Beyond Samsung and Apple at the top of the rankings is a tight race of vendors trying to break out from the pack," says Ramon Llamas, Research Manager with IDC's Mobile Phone team. "In 3Q’13, Chinese vendors Huawei and Lenovo moved past LG, and not far behind are two more Chinese companies, Coolpad and ZTE. Any of these vendors could change position again next quarter. But in addition to having close shipment volumes, they all have one key ingredient in common: Android. This has been a huge factor in their success, but it also speaks to the challenges of differentiation on the world's most popular platform."

"Looking ahead, we anticipate strong momentum going into the fourth quarter, and another record quarter and year in the worldwide smartphone market," added Llamas. "With already strong growth in 3Q’13 and multiple vendors launching flagship models, the market will be poised to reach one billion units for the year. It's a significant milestone considering the market shipped just half a billion units in 2011. Moving forward, what remains to be seen is how the various companies and platforms will stay differentiated and relevant in the increasingly competitive market."

Source: www.idc.com

Global Surface Mount Technology Equipment Market Projected to reach US$5.3 billion by 2018

Driven by recovery in electronics and semiconductor industries, new product innovations, and growing need to upgrade older production lines.

According to Global Industry Analysts the SMT equipment market continues to derive demand from major downstream industry segments including telecommunications, computing and consumer appliances, which are the most prolific users of PCBs. However, the market in recent years has been gaining significant opportunities in other industries such as automotive electronics, medical device electronics, defense and aerospace electronic equipment, and industrial equipment among others. With end-use markets for SMT equipment shifting focus from defect detection to defect prevention, SMT equipment manufacturers are turning toward diversification of product offerings. Growing demand for high-quality SMT equipment from contract and OEM manufacturers is poised to benefit the market. In addition, rising demand for light emitting diodes (LED) technology is fuelling demand for SMT equipment. Driven by growing popularity of LEDs, SMT equipment manufacturers are ramping up their production capacity to address demand from commercial and consumer electronics sectors.

SMT placement equipment represents the largest product segment within the SMT equipment market. Growth in the segment is attributed to the burgeoning momentum and thriving product innovation in the electronics market. Though product miniaturization is the most significant factor contributing to the resurgence and subsequent buoyancy in the SMT placement equipment segment, the need for higher accuracy placement equipment, improved speed and flexibility also play vital roles in driving growth. In the SMT Inspection Systems market, Automatic X-Ray Inspection (AXI) Equipment and Automatic Optical Inspection (AOI) Equipment are expected to gain traction over next few years. AXI equipment is expected to gain from the integration of computer tomography and intuitive programming. AOI equipment is projected to benefit from machine vision-based algorithms that feature easy programming capability, flexibility, and enhanced ability to detect faults and with few false call rates.

Major players in the market include ASM Assembly Systems GmbH & Co. KG, Assembléon Netherlands BV, Conceptronic, CyberOptics Corporation, Fuji Machine Manufacturing Co. Ltd., Heller Industries Inc., Juki Automation Systems Inc., Koh Young Technology Inc., Panasonic Corporation, Saki Corporation, and Universal Instruments among others.

The report provides market estimates and projections in US Dollars for all major geographic markets including the U.S., Canada, Europe, Asia-Pacific, Latin America and Rest of World. Product markets analyzed in the study include Screen Print Equipment (Manual, Semiautomatic, and Automatic), Placement Equipment (High-Speed, Medium-Speed, and Low-Speed), Soldering Equipment (Reflow Oven, and Wave Oven), Cleaning Equipment, Inspection Equipment (Optical, X-Ray, and Laser), and Repair and Rework Equipment (Manual, and Semiautomatic).

For more details see:

www.strategyr.com/Surface_Mount_Technology_SMT_Equipment_Market_Report.asp

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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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