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Weekly Global Update for February 12, 2014

02.12.2014 // Walt D. Custer // Industry Conditions

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4Q’13 Sector Growth – Strong Finish in 2013

2013 closed on a positive note. Based on preliminary results the entire global electronic supply chain (with the exception of military, consumer and business equipment) had positive sales growth in 4Q’13 vs 4Q’12 (Chart 1).

Total global electronic equipment orders increased 6% in the last quarter compared to the same quarter in 2012 (Chart 2) as a composite if 141 large OEMs reported strong year-end sales and profits (Chart 3).

As revenues increased, the ratio of inventories/sales declined throughout the supply chain (Chart 4). "Excess inventories" should not inhibit early 2014 growth.

As a note of caution this 4Q’13 financial information is still incomplete as many companies have not yet reported their fourth quarter results. We’ll provide an update in a few weeks but so far it appears that 2013 closed strongly.

Source: Company financial reports with Custer Consulting Group analysis

January Leading Indicators Point to Continued Growth but at Slower Pace

Global PM leading indicators (Chart 5) were in "growth territory" (PMI >50) for most countries in January pointing to continued manufacturing expansion near term. China was the notable exception.

Although most countries are expanding, the rate of expansion is plateauing for many or declining for a few (China) per Chart 6. In Asia Japan’s growth is accelerating while Taiwan, South Korea and China are seeing slower growth (Chart 7).

Source: www.marketeconomics.com

U.S. December Electronic Equipment Shipments, Orders and Inventories

U.S. electronics orders were almost flat in December (Chart 8) as inventories climbed slightly for most electronic equipment types (Chart 9).

Automotive revenues (Chart 10) softened in December (severe winter weather) and military electronics orders plunged (Chart 11) but electromedical, instrument and control equipment demand continued to improve (Chart 12).

Chart 13 summarizes the growth of the U.S. electronic supply chain on both an annualized (12/12) and 3-month (3/12) growth basis. A value of 100 indicates no growth vs. the same period a year earlier. The 3/12 "leads" the 12/12.

Source: www.census.gov/indicator/www/m3

Semiconductor Industry Posts Record Sales in 2013 (Charts 14-16)

  • Worldwide semiconductor sales for 2013 reached $305.6 billion, the industry’s highest-ever annual total and an increase of 4.8% from the 2012 total of $291.6 billion.
  • Global sales for the month of December 2013 reached $26.6 billion, marking the strongest December on record, while December sales in the Americas increased 17.3% year-over-year.
  • Fourth quarter global sales of $79.9 billion were 7.7% higher than the total of $74.2 billion from the fourth quarter of 2012.

"The global semiconductor industry exceeded $300 billion in sales for the first time ever in 2013, spurred by consistent, steady growth across nearly all regions and product categories," said Brian Toohey, president and CEO, Semiconductor Industry Association. "The industry finished the year on a strong note with its best December on record, indicating that recent momentum is likely to carry over into 2014."

The industry saw strong demand in several product segments during 2013. Logic was the largest semiconductor category by sales, reaching $85.9 billion in 2013, a 5.2% increase compared to 2012. Memory at $67.0 billion and MOS micro-ICs at $58.7 billion rounded out the top three segments in terms of sales revenue. Memory was the fastest growing segment, increasing 17.6% in 2013. Within memory, DRAM performed particularly well, increasing by 33.3% year-over-year, while NAND flash experienced strong growth of 8.1%. Other positively performing product segments include optoelectronic products, which reached $27.6 billion in sales (5.3% annual increase) and analog, which reached $40.1 billion in sales (2.1% annual increase).

Source: www.sia-online.org

Global PC Shipments (including Tablets) rose 17.9% y/y in 4Q’13 Boosted by Tablet Sales (Chart 17)

Worldwide PC shipments grew 17.9% from a year ago in the fourth quarter of 2013, thanks to a surge in tablet shipments, according to Canalys. Tablets grew 65.2% on year to reach 76.3 million units, representing 48.3% of the total PC market in the fourth quarter of 2013.

If excluding tablets, PC shipments would have declined 6.9% in the fourth quarter with falls in all regions, Canalys indicated.

Apple remained the PC market leader in the fourth quarter of 2013, shipping 30.9 million units to take a 19.5% share of the market. Apple shipped 26 million iPads, which accounted for 84.3% of its total shipments in the quarter. Apple's share of the overall tablet market increased sequentially from 27.3% to 34.1%, with the launch of the iPad Air and iPad mini with Retina display providing a much needed boost.

Lenovo secured an 11.8% share in the fourth quarter, narrowly holding onto second place. Lenovo's PC shipments increased 25.5% from a year ago in the quarter, driven by growth outside of its core Chinese market, where its shipments declined. Lenovo's 11.7% decline in notebook shipments in China was offset by impressive growth in other regions, notably EMEA, where shipments grew 30.4%. Shipments in Latin America also grew strongly.

Samsung continued to grow strongly and took third place, shipping 18.2 million units. Tablets accounted for 79.7% of Samsung's PC shipments in the fourth quarter of 2013, some 14.5 million units, up 90.3% from a year earlier.

Source: www.canalys.com

Mobile Computers: Global Tablet Shipments to Reach 455 Million by 2017 (Chart 17)

Standard notebook PC shipments decline to 105 million; ultra-slim PC shipments to reach 57 million by 2017

Falling prices and advances in display technology will lead to higher shipments of tablet PCs, which will increasingly replace notebook PC shipments in 2014 and beyond. According to the NPD DisplaySearch Quarterly Mobile PC Shipment and Forecast Report, global tablet PC shipments will rise to 315 million in 2014, comprising more than 65% of the market. By 2017 tablet PC shipments will climb to 455 million, encompassing nearly 75% of the mobile PC market.

The worldwide tablet PC average selling price (ASP) is expected to fall from $311 in 2014 to $296 in 2017, which will help increase adoption, particularly in emerging regions where first-time PC buyer penetration rates are the highest. As new technologies and features hit the market, consumers will have more options to choose from, including AMOLED and other display technologies, a greater variety of screen sizes, and higher resolutions

"Momentum for the tablet PC market is in full swing as it has become the dominant mobile PC form factor," said Richard Shim, senior analyst at NPD DisplaySearch. "Competition is expected to increase as traditional notebook PC brands, including Lenovo, HP, and Dell update their product portfolios to emphasize tablet PCs. Increased competition will mean more attention on, and development of, various segments of the market, which will ultimately lead to greater choice and devices that better fit the needs of consumers."

Source: www.displaysearch.com

Computer Storage (combined shipment units of HDD, SDD, and ODD) in 2013 were 755 million units, down from 794 million units in 2012 (Chart 18)

Computer storage industry declines in 2013 despite robust growth of Solid-State Drives

A near-doubling of the market for solid-state drives in 2013 was unable to help the computer-related storage industry last year, which slid 5% in shipments because of continuing contractions in the hard-disk drive and optical disk drive segments, according to IHS Technology.

Combined shipments worldwide last year for the hard disk drives (HDD), solid-state drives (SSD) and optical disk drives (ODD) making up the computer storage market amounted to 755.0 million units, down from 794.0 million in 2012. While SSD shipments were up an outsize 82% to 57.0 million units, both the HDD and ODD segments proved to be a drag. The HDD segment fell 7% to 444.4 million units, and the ODD sector did worse with a 12% decline to 253.5 million units.

The forecast does not include shipment figures for non-PC-related drives used in sectors such as automotive, industrial, gaming, external storage, video surveillance and set-top box/DVR.

Source: www.iSuppli.com

North American PCB Sales End 2013 1.9% below 2012 (Charts 19 & 20)

IPC reported that N American PCB sales in 2013 ended the year at -1.9% compared to 2012. The book-to-bill ratio in December improved slightly, but remains below parity at 0.92.

Total North American PCB shipments increased 2.2% in December 2013 from December 2012. Year-to-date shipment growth, at -1.9%, is still negative compared to the same period in 2012, but has been steadily improving. December sales were up 6.6% over the prior month.

North American PCB bookings fell again in December to -8.0% year-over-year, which reduced the year's order growth to -1.1% below 2012. December bookings jumped 17.7% over the prior month.

"North American PCB sales in December continued their slow recovery, while orders have been volatile," said Sharon Starr, IPC's director of market research. "In the current cycle, the book-to-bill ratio appears to have hit its low point in November and is now beginning to climb again," she added.

Source: www.ipc.org

Top 13 Foundries Account for 91% of Total Foundry Sales in 2013 (Chart 21)

TSMC and five other foundries had more than $1.0 billion in revenue last year.

Source: www.ICinsights.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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