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Weekly Global Update for June 25, 2014

06.24.2014 // Walt D. Custer // Industry Conditions

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Japan Update

JEITA just released the April Japanese electronic equipment and component production data.

  • Following the "pre-sales tax increase" buying surge in March, Japan’s electronic equipment production revenue dropped 53% in April versus March however it was up 10% compared to April 2013 (Chart 1).
  • All electronic equipment types declined in April (Chart 2).
  • Semiconductor shipments to Japan still exceeds electronic equipment on a 3/12 growth basis (Chart 3).
  • Printed circuit shipments continued to weaken (Chart 4) and Japan’s PMI leading indicator points to further PCB weakness (Chart 5).

www.jeita.or.jp

Korea Electronics Shipments Have Weakened

Based on our recent analysis:

  • Composite quarterly revenues of 11 Korean stock exchange-listed component companies (most that manufacture PCBs) peaked in 2Q’13 and then deteriorated sequentially through 1Q’14 (Chart 6).
  • Korean PMI leading indicator suggests further q/q PCB declines are likely short term (Chart 7).
Source: Company financial reports with Custer Consulting Group analysis

Global PCB Growth Forecast Lowered for 2014

Following our recent analysis of Korean PCB/component sales including their 2H’13 through 1Q’14 declines we have lowered our growth forecast for 2014/2013 world PCB sales growth to +1.9% (Chart 8).

Korea’s decline in PCB growth is shown by the gold colored line in (Chart 9).

On a monthly sales basis (and neglecting seasonality) no region’s PCB shipments are growing significantly (Chart 10) and the global PCB leading indicator does not predict a near-term upturn (Chart 11).

Source: Custer Consulting Group based on regional PCB data

Global Personal Computer Demand to Rebound in 2H14, says Asustek chairman

The negative impact on PC sales from tablets is decreasing and global PC demand is expected to significantly rebound in the second half of 2014, Jonney Shih, chairman of Asustek Computer said at the company's 2014 shareholders meeting on June 17.

Consumers buy tablets for entertainment and will buy PCs for work, generating substantial demand for PCs, Shih said.

www.digitimes.com

Smartphones to Drive Double-Digit Growth of Smart Connected Devices in 2014 & Beyond (Chart 11)

Worldwide smart connected devices are forecast to grow 15.6% year-over- year in 2014, reaching close to 1.8 billion devices according to IDC. Smartphone growth is expected to lead the charge as PC and tablet plus 2-in-1 forecasts have been lowered in light of a weak first quarter. By 2018, IDC estimates shipments will grow to 2.4 billion units.

The smartphone installed base is quickly approaching two billion units, and vendors are scrambling to find the next two billion users in new markets. As such, IDC is forecasting strong double-digit growth in the low-cost Android smartphone segment that is driving much of the growth in emerging countries such as China, India, and Brazil. Meanwhile, mature markets such as the United States and Western Europe are slowing to single-digit growth rates as the installed base swells.

www.idc.com

Worldwide Robot Sales Reached Record 179,000 Robots in 2013 (Chart 13)

The International Federation of Robotics forecasts that industrial robots could hit a record of 200,000 robots sold globally by the end of this year.

Trends toward an accelerated automation include:

  • The need to increase energy efficiency and better use of raw materials
  • The need to increase productivity and quality due to global competitiveness
  • Growing global consumer markets and the need for creating greater production capacities
  • The increasingly shorter lifecycles and the increasing variety of products
  • A global growing awareness that robots have the capacity to improve the quality of work by taking over dull, dirty, and dangerous jobs, protecting the health of the workers
www.worldrobotics.org

Top 10 Global Suppliers of Packaged LED in 2013 (Chart 14)

China’s MLS Electronics in 2013 rose to the number 10 rank in the worldwide market for packaged LEDs

"Since 2011, most of the new LED production capacity that has been added worldwide has occurred in China," said Jamie Fox, principal LED analyst for IHS. "Because of this, it was inevitable that Chinese companies eventually would penetrate the ranks of the top 10 LED suppliers. MLS was first to join the global elite, having established itself as the clear leader in the Chinese market by capitalizing on strong domestic demand. For the major suppliers, MLS’s ascent into the market’s upper ranks represents a clear signal that Chinese firms soon will become major competitors in the global LED business."

www.iSuppl.com

U.S. Leading Economic Index rose for Fourth Straight Month in May

The Conference Board reported that its index of leading U.S. economic indicators rose for the fourth straight month in May.

"May's increase in the LEI, the fourth consecutive one, was broad based," said Ataman Ozyildirim, an economist at the Conference Board. He added, "Housing permits held the index back slightly but the LEI still points to an expanding economy and its pace may even pick up in the second half of the year."

www.conference-board.org

Worldwide PC Monitor Shipments Declined 0.4% y/y to Nearly 33.7 Million Units in 1Q’14 (Charts 15 & 16)

Worldwide PC monitor shipments totaled nearly 33.7 million units in the first quarter of 2014, a year-over-year decline of 0.4%. According to IDC it expects that worldwide shipments to continue on their current trajectory, slipping to 106 million units for the full year 2018.

Technology Highlights

  • LED backlight technology adoption continues to increase with a new high of 92% market share in 1Q’14. This represents a year-over-year increase of 16.4%.
  • Screen size of 21.x-inches wide has held the largest worldwide share for the last six quarters, with 20.5% share in 1Q’14.
  • Aspect ratio of 16:9 continues to dominate with 81.3% market share, which is 6.5 times the second most widely used Aspect ratio of 16:10.
  • Touch screen monitors are still a small segment of the total PC monitor market at 0.4% share, with sales mostly in the U.S. at 32.8% of the total. HP holds a 35.1% share of the U.S. market.

www.idc.com

Worldwide Thin Client and Terminal Client Device Shipments Increased 7.1% y/y to 1.28 million units in 1Q’14 (Chart 17)

According to IDC worldwide thin client and terminal client device shipments totaled 1.28 million units in the first quarter of 2014 (1Q’14), an increase of 7.1% from the same quarter a year ago and 2% lower than IDC's forecast for the quarter. IDC expects the market to continue growing over the remainder of the year with 5.7 million units forecast to be shipped in 2014, representing 5% year-over-year growth. By 2018, these devices are expected to reach 7.8 million units shipped worldwide.

Technology Highlights

  • Thin Clients continue to make up the vast majority (97.5%) of enterprise client devices and saw an increase of 8.9% from the previous year. Terminal clients also saw an increase from the previous year with 25,540 units shipped.
  • The standalone form factor constitutes the largest segment of the overall market at 88.9% share. For the mobile form factor, 67.7% of the worldwide share is concentrated in Japan. Thin clients with LCD are dominant in Asia/Pacific (excluding Japan) with 40% of worldwide share.
  • Thin Clients without Operating Systems (zero clients) now hold 24.6% share among the thin client segment, which is an increase of 13.6% from the previous year. Windows Embedded OS thin clients are the largest at 44.5% share.
www.idc.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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