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Weekly Global Update for December 23, 2013

12.23.2013 // Walt D. Custer // Industry Conditions

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Flash December PMI Leading Indicator Results

Markit Economics just released its December “flash” PMI estimates for a few key countries. All countries except France were in “growth” territory with western Europe rising the most led by Germany (Chart 1).

Source: www.markiteconomics.com

Japan Update

October electronic equipment and device/component production data were just released by JEITA. In general demand has increased compared to the same time last year.

  • October electronic equipment production was up 2.6% vs. October 2012 but down 9.4% sequentially compared to September 2013 (Charts 2 & 3).
  • Growth of semiconductor shipments to Japan is leading electronic equipment production (Chart 4).
  • Domestic Japanese PCB production declined slightly from September to October (Chart 5) but on a 3/12 basis (Chart 6) printed circuit production is very near growth territory (3/12 >1).
  • Japan’s PMI leading indicator predicts further printed circuit growth (Chart 7).
  • Both component and device growth remained strong (3/12>1.0) but these growth rates weakened slightly from September to October (Chart 8).

North American Semiconductor Equipment Industry November 2013 Book/Bill Ratio 1.11 (Charts 9 & 10)

North America-based manufacturers of semiconductor equipment posted $1.24 billion in orders worldwide in November 2013 (3-month average basis) and a book-to-bill ratio of 1.11, according to SEMI. 

The 3-month average of worldwide bookings in November 2013 was $1.24 billion, 10.1% higher than October 2013 and 72.3% higher than the November 2012.

The 3-month average of worldwide billings in November 2013 was $1.11 billion, 4.0% higher than October and 22.4% higher than the November 2012.

“The continuing rise in equipment bookings clearly points to year-end order activity that is substantially stronger compared to one year ago,” said Denny McGuirk, president and CEO of SEMI.  "This trend supports the current outlook showing a rebound in equipment spending for 2014."

Source: www.semi.org

Worldwide Medical Electronics Sales will Grow 8% to $50.9 Billion in 2014 (Chart 11)

The global growth in medical electronics will see the table turn in the next three years after slowing since 2010 due to the weak global economy and efforts to curb healthcare costs in the U.S. and Europe, according to IC Insights. The latest report from the market research firm revealed that medical electronics sales will grow eight percent to about $50.9 billion in 2014 after rising just three percent in 2013 to an estimated $47.3 billion. Sales of semiconductors used in medical systems are also expected to gain strength in 2014, rising 12% to $4.9 billion after growing seven percent in 2013 to about $4.4 billion.

Between 2012 and 2017, worldwide sales of medical electronics are projected to rise by a CAGR of 7.3%, reaching $65.4 billion in the final forecast year of the report. The report also shows semiconductor sales for healthcare systems applications rising by a CAGR of 10.5% and reaching $6.8 billion in 2017.

In the years ahead, stronger growth in medical electronics will be fuelled by sales of less expensive diagnostic and imaging equipment in China and other developing country markets as well as the explosion of wireless mobile healthcare systems that monitor patients remotely and reduce the need for expensive stays in hospitals. The report forecasted wireless mobile medical systems and closely associated wearable fitness-tracking devices generating revenues of nearly $1.9 billion in 2014, which is a 53% increase from about $1.2 billion in 2013, when worldwide sales grew 27%.

Development trends in medical systems for hospitals, clinics and doctor offices are heading in two different directions as equipment makers respond to growing pressures for lower costs and increased availability of healthcare in poor and developing countries. One trend is to make new medical diagnostic systems smaller and less expensive so that equipment can be used in the rooms of hospital patients, more clinics and doctor offices versus the dedicated examination rooms in hospitals and imaging centers. Advancements in semiconductor sensors (many of them built with MEMS technology) wireless ICs and SoC designs are also enabling new types of mobile medical devices that monitor patients and the elderly at home and then relay information to doctors or hospitals via wireless connections to cellphones or the Internet.

The other trend highlighted in the report is the creation of more powerful and integrated systems, which are expensive but promise to lower healthcare costs by detecting cancer and diseases sooner while supporting less invasive surgery for quick recovery times and shorter stays in hospitals. Computer-assisted surgery systems, surgical robots and operating-room automation are among new technologies being pursued by some hospitals in developed-country markets.

Source: www.ICInsights.com

Worldwide Annual Electronic Waste to Rise from 48.9 Million Tons in 2012 to 65.4 Million Tons in 2017, with Most of the Growth in Developing Nations (Chart 12)

  • Electronic waste set to surge by 33% from 2012-17
  • Waste in 2017 weight of 200 Empire State Buildings - StEP
  • Better recycling, disposal needed to limit waste

China and other emerging economies have overtaken Western nations in dumping old electronic goods, from TVs to cellphones, and will lead a projected 33% surge in the amount of waste from 2012 to 2017, a U.N.-backed alliance said.

The report, the first to map electronic waste by country to promote recycling and safer disposal of often toxic parts, shows how the economic rise of developing nations is transforming the world economy even in terms of pollution.

"The e-waste problem requires attention globally," Ruediger Kuehr of the U.N. University and executive secretary of the Solving the E-Waste Problem (StEP) initiative, told Reuters. StEP is run by U.N. agencies, governments, NGOs and scientists.

The weight of electronic goods discarded every year worldwide would rise to 65.4 million tons from 2012 to 2017 from 48.9 million in 2012, with most of the growth in developing nations, StEP said.

Sources:
www.LiveScience.com
www.reuters.com

U.S. GDP Grew 4.1% in 3Q’13 (Chart 13)

The U.S. economy grew at its fastest pace in almost two years in the third quarter, the government said as it revised its estimates of business and consumer spending higher.

The broad revisions hinted at some underlying strength, which could help the economy better absorb the blow from an anticipated cutback in inventory accumulation this quarter.

A large build-up of inventories still accounted for much of the increase in GDP growth in the July-September quarter. That has left economists anticipating a slowdown in the pace of inventory accumulation, which would hurt fourth-quarter growth.

Source: www.reuters.com

U.S. Industrial Production Rose for 4th Straight Month in November (Chart 14)

U.S. manufacturing output rose for a fourth straight month in November as production increased almost across the board, in the latest suggestion the economy is gaining steam.

Production at the nation's factories advanced 0.6% last month, building on October's 0.5% gain, the Federal Reserve said.

While a 3.4% rebound in auto production accounted for a large portion of the increase, there also were gains in other industries such as fabricated metals, textiles, furniture and electrical equipment and appliances.

Source: www.reuters.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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