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Weekly Global Update for April 2, 2014

04.02.2014 // Walt D. Custer // Industry Conditions

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U.S. Electronic Equipment Demand Remains Flat in February

The U.S. Department of Commerce just released its February 2014 “Durable Goods” report:

  • The Electronic equipment book/bill ratio dropped slightly below 1.0 (Chart 1) as the 3/12 growth rates for both orders and shipments hovered around “zero growth” territory (Chart 2).
  • Actual electronic equipment shipments have been flat since mid-2012 as orders have fluctuated mildly (Chart 3).
  • Electronic equipment inventories relative to orders remain near a 13-year high (Chart 4).
  • Defense capital goods orders recovered in February but have been generally trending downward since 2011 (Chart 5).
  • Aircraft shipments have been sequentially flat since late 2013 (Chart 6).
  • Communication (Chart 7) and computer (Chart 8) orders and shipments have been flat.
  • Growth of semiconductor shipments to North America has plateaued but remains far in excess of domestic electronic equipment growth (Chart 9).

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

Japan Continues its Mild Recovery

Based upon JEITA’s recent report of Japanese January 2014 domestic electronics production:

  • Although domestic Japanese electronic equipment production has been declining for many years (Charts 10 & 11) its 3-month (3/12) growth is positive and at its highest level since 2010 (Chart 12).
  • Electronic device shipments were up 11% on a 3-month growth basis while component growth remains nil (Chart 13).
  • PCB shipments have been declining sequentially (Chart 14) although their 3/12 growth (recent 3-months versus same 3-months a year earlier) has “recovered” to the zero growth line (Chart 15).
  • Japan’s PMI leading indicator points to further PCB growth (Chart 16) although the growth of the PMI has plateaued.
  • Semiconductor shipment growth to Japan is in balance with electronic equipment growth (Chart 17).

Source: www.jeita.or.jp

OLED Lighting Market Value to Reach US$10 Billion in 2020

LED and OLED lighting is expected to replace all types of conventional lighting products in 2020 and OLED’s lighting global market value will reach US$10 billion, said Panasonic R&D director, Takuya Komoda.

Production cost per 1,000 lumens for OLED lighting is 20 times that for LED lighting currently, but the gap will shrink to two times, as many vendors start producing OLED lighting, Komoda said at a recent Taiwan Solid State Lighting forum.

Source: www.digitimes.com

Electronic Chemicals and Materials Market Worth $59 Billion by 2019

The market for electronic chemicals and materials in terms of revenue is expected to reach $59 billion by 2019, growing at a CAGR of 6.3% from 2014 to 2019. Asia-Pacific dominated the Electronic Chemicals and Materials Market revenues in 2013. It is expected to retain its position by 2019, growing at a CAGR of 7.0% from 2014 to 2019. ROW is expected to be the fastest growing market at a CAGR of 6.5% from 2014 to 2019. Europe with CAGR of 4.0% and North America with CAGR of 2.8% will be experiencing a comparatively slower growth rate for the next five years, from 2014 to 2019, owing to rising consumption in Asia-Pacific region, where end-user markets of electronic chemicals and materials are growing aggressively.

Rest of World (ROW) and Asia-Pacific accounted for more than 78% of the electronic chemicals and materials revenues in 2013.

ROW is the second fastest growing market for electronic chemicals and materials in the next five years. Asia-Pacific is the largest, with major developments in China, Japan, Taiwan and South Korea. ROW and Asia-Pacific together accounted for 78% of the electronic chemicals and materials revenue in 2013. These two regions are expected to compete with each other to dominate the market by 2019, with advanced technological developments in electronic chemicals and materials for end-users. Asia-Pacific is expected to remain the major market by 2019, with high investments in emerging applications due to growing population and demand. Electronic chemicals and materials are well known high-purity chemicals such as photoresists, wet chemicals, acids, gases, and solvents, and electronic materials such as wafers and laminates. These electronic chemicals and materials are used in fabrication of electronic applications such as semiconductors, Integrated Circuits (IC) and Printed Circuit Boards (PCB’s).

Electronic chemicals and materials can be classified into eight types such as, Silicon wafer, PCB Laminate, Photoresist, Specialty Gases, CMP slurries, Wet chemicals, Low-K dielectrics, and others. Silicon wafers constitute the major global market in electronic chemicals and materials and are used widely as base materials for the manufacturing of semiconductors. PCB laminates are used widely for manufacturing of printed circuit boards. Low-K dielectrics are relatively recent application of semiconductors and Integrated Circuits (IC) and therefore, are expected to grow aggressively in the next five years.

For details on the report see www.marketsandmarkets.com

Worldwide Traditional PC, Tablet, Ultramobile and Mobile Phone Shipments on Pace to Grow 6.9% in 2014 (Charts 18-21)

Worldwide combined shipments of devices (PCs, tablets, ultramobiles and mobile phones) are projected to reach 2.5 billion units in 2014; a 6.9% increase from 2013, according to Gartner, Inc. Device shipments grew 4.8% in 2013. Sales of traditional PCs will continue to hamper the overall growth of devices, and substitution from PC to tablet will decline.

"Tablet substitution of notebooks will start to dissipate from this year onwards as consumers and businesses align the right device with the right usage pattern. As they do this, we will see where dedicated devices (such as tablets), or hybrid devices (detachable or convertible devices), fit in the overall portfolio of devices," said Ranjit Atwal, research director at Gartner.

As the overall device market starts to saturate, the increasing pressure on margins will continue, and vendors will look at different ways to cope with the ongoing issue of lower margins. While the trend of declining prices is inevitable, consumers increasingly value other features in a device — beyond just the price. For example, new tablet users look for smaller screens and greater portability, while current tablet users look for better connectivity in their tablet replacements.

Mobile phones, the largest segment of the overall device market, are expected to reach 1.9 billion units in 2014, a 4.9% increase from 2013. The growth in 2014 is projected to come from the lower end of the premium phone market and the higher end of the basic phone market. "While the lack of compelling hardware innovation marginally extended replacement cycles in 2013, we've witnessed an upgrade path in the emerging markets. Latin America, the Middle East and Africa, Asia/Pacific and Eastern Europe have all upgraded their phones, which will help to compensate for mature market weakness in the near term," said Annette Zimmermann, principal research analyst at Gartner.

In 2014, the worldwide tablet market is forecast to grow 38.6% as overall adoption continues to grow faster in markets outside North America. "The adoption of tablets has been largely concentrated in the U.S., with the dominance of Apple. Market dynamics in other regions are different, as the uptake of lower cost, smaller, non-branded tablets, becomes more apparent," said Atwal.

Worldwide shipments of traditional PCs are forecast to total 276.7 million units in 2014, a 6.6% decline from 2013. "The traditional PC category continues to decrease, with only about two-thirds of notebook and desktop replacements remaining within this category. The majority of the remaining one-third will move to ultramobiles, while others will not be replaced at all," said Atwal.

In the operating system (OS) market, iOS tablet growth has slowed in North America and Apple will need to reinvigorate its replacement cycle. Google’s objective is to increase Android’s footprint, and it is still on target to sell over one billion devices during 2014.

Source: www.gartner.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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