First Quarter 2014 “Final” Growth by Electronics Sector
With all the major companies in our sample now having reported their first quarter financials global electronic equipment “OEM” sales were up 2.6% in 1Q’14 vs. 1Q’13 (Chart 1) as the electronics “recovery” continued for three successive quarters (Chart 2). First quarter 2014 growth was not as robust as the 6.1% increase in the final quarter of 2013.
Growth by sector of the supply chain is given in Chart 3. Note the downward revision in computer equipment growth due to Hewlett Packard not meeting its projected 1Q’14 sales estimate.
Based on the lower recent Japanese PCB sales results we have revised our PCB global growth estimate for total 2014 from +4.9% to +4.5% (Chart 4).
Source: Custer Consulting Group
Global Growth Continues but Expectations Vary by Country (Chart 5)
Markit Economics “Flash” PMI leading indicator results for May show accelerating near-term growth in the U.S.and a less robust expansion in Europe. China and Japan are contracting but at a slower pace than in April while France appears headed for a greater slowing.
Complete global and country specific May PMI data will be available in early June.
Japanese domestic electronic equipment shipments were up 7.6% in March 2014 vs. March 2013 (Chart 6) with all major product groups showing sequentially improved revenues (Chart 7). Since Japan raised its sales tax April 1 it is likely that many electronics purchases were made in March to avoid the added tax.
Both semiconductor and electronic equipment growth in Japan appears to have peaked (Chart 8) and the recent plunge in the Japanese PMI (Chart 9) portends a significant short term slowdown.
Japanese PCB shipments improved slightly in March (Chart 10) but the large PMI drop points to PCB declines ahead (Chart 11).
North America-based Semiconductor Equipment Manufacturers had $1.44 billion in Orders Worldwide in April 2014 and Book/Bill of 1.03 (Charts 12 & 13)
North America-based manufacturers of semiconductor equipment posted $1.44 billion in orders worldwide in April 2014 (3-month average basis) and a book-to-bill ratio of 1.03, according SEMI.
The 3-month average of worldwide bookings in April 2014 was $1.44 billion, 10.8% higher March 2014 and 22.5% higher than April 2013.
The 3-month average of worldwide billings in April 2014 was $1.40 billion, 14.1% higher than March 2014 l and is 28.7% higher than April 2013.
“Sales of semiconductor manufacturing equipment from North American producers continue to demonstrate strong sequential and year-over-year growth,” said Denny McGuirk, president and CEO of SEMI. “The data through the first quarter reflects momentum in memory, foundry, and back-end spending.”
HDI Any-layer Board Production Lines to Run at Full Capacity through June
The production lines for HDI and any-layer boards at Taiwan's major PCB makers, including Unimicron Technology, Compeq Manufacturing, Tripod Technology and Unitech Printed Circuit Board, are likely to run at full capacity through June due to strong demand from the smartphone sector, according to industry sources.
Most makers' production lines for HDI and any-layer boards have been operating at 80-90% of their capacity since April thanks to the roll-outs of new smartphones by vendors including Sony Mobile Communications, HTC, Asustek Computer, Xiaomi Technology, ZTE, Huawei, Lenovo and Oppo indicated the sources.
Viewing that Apple normally introduces its new products in the second half of a year, production of parts and components for Apple's new devices will reach its peak in June and beyond, forcing other handset vendors to scramble capacity for HDI and any-layer boards, said the sources.
Despite current tight supply in the market, HDI board suppliers are conservative about further ramping up their capacity, particularly on concerns of shipment transparency at China-based handset vendors, noted the sources.
Compeq will stick to its plans to kick off commercial operation of its new plant in Chongqing, China in the second half of 2014, while Unitech will use a portion of its capex budget for 2014 to expand its capacity for HDI boards.
Unimicron and Wus Printed Circuit will focus on removing production bottlenecks to improve its production efficiency, said the sources.
Worldwide Optoelectronics, Sensors/Actuators, and Discretes Revenues reached $58.6 billion in 2013 (Chart 14)
Weak Japanese yen hits major optoelectronics and discretes companies in Japan and lowers overall O-S-D dollar sales growth in 2013.
The 30 largest O-S-D suppliers accounted for 66% of the total $58.6 billion in worldwide revenues generated by optoelectronics, sensor/actuator devices, and discretes in 2013, based on IC Insights’ estimates and company reports. ICInsight’s new 2014 O-S-D Report says worldwide optoelectronics sales grew 5% in 2013 to $29.2 billion, while the sensors/actuators segment was uncharacteristically flat with no growth last year at $8.7 billion, and the discretes market dropped 5% to $20.7 billion.
In 2013, the top 10 suppliers accounted for 34% of combined O-S-D sales, but it is also worth noting that these companies collectively lost market share in 2013 with the sum of their revenues dropping 2%. Suppliers ranked 11-30th in IC Insights’ new report saw combined dollar sales grow 2% in 2013, while the rest of the smaller O-S-D companies collectively gained market share last year with a 2% increase in combined sales.
Worldwide silicon wafer area shipments increased during the first quarter 2014 when compared to fourth quarter 2013 area shipments according to the SEMI Silicon Manufacturers Group (SMG) in its quarterly analysis of the silicon wafer industry.
Total silicon wafer area shipments were 2,364 million square inches during the most recent quarter, a 7.1% increase from the 2,208 million square inches shipped during the previous quarter. New quarterly total area shipments are 11.1% higher than first quarter 2013 shipments.
"Total silicon shipment volumes registered first quarter growth, with volumes also up relative to the same quarter last year,” said Hiroshi Sumiya, chairman of SEMI SMG and general manager of the Corporate Planning Department of Shin-Etsu Handotai Co., Ltd. “This growth at the start of the year is in-line with other semiconductor industry data showing improved conditions compared to the start of 2013.”
Semiconductor Industry Company Consolidation Continues to Accelerate (Chart 16)
MediaTek, SK Hynix, AMD, and Micron Sales Surge in 1Q’14!
Top 20 ranking shows that semiconductor industry company consolidation continues to accelerate.
IC Insights’ May Update to the 2014 McClean Report will show a ranking of the 1Q’14 top 25 semiconductor suppliers. A preview of the top 20 companies is presented in chart 16.
The top-20 ranking includes three pure-play foundries (TSMC, GlobalFoundries, and UMC) and six fabless companies. It is interesting to note that the top four semiconductor suppliers all have different business models. Intel is essentially a pure-play IDM, Samsung a vertically integrated IC supplier, TSMC a pure-play foundry, and Qualcomm a fabless company.
IC foundries are included in the top 20 ranking because IC Insights has always viewed the ranking as a top supplier list, not as a market share ranking, and realizes that in some cases semiconductor sales are double counted. With many of our clients being vendors to the semiconductor industry (supplying equipment, chemicals, gases, etc.), excluding large IC manufacturers like the foundries would leave significant "holes" in the list of top semiconductor suppliers. In the April Update to The McClean Report, market share rankings of IC suppliers by product type were presented and foundries were excluded from these listings.
It should be noted that not all foundry sales should be excluded when attempting to create market share data. For example, although Samsung had a large amount of foundry sales in the first quarter, most of its sales were to Apple. Apple does not re-sell these devices, so counting these foundry sales as Samsung semiconductor sales does not introduce double counting.
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.
Walt D. 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.