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Weekly Global Update for July 2, 2014

07.02.2014 // Walt D. Custer // Industry Conditions

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Flash June PMI Results

Markit Economics “Flash” Purchasing Managers Indices for June for a few countries were last week. The full release will occur July 1-3. Relative to May the PMIs improved for the U.S., China, Germany and Japan while Europe and France weakened. PMI values greater than 50 indicate expanding conditions.

Source: www.markiteconomics.com

U.S. May Electronic Durable Goods Orders Decline

The U.S. Commerce Department released its May “Durable Goods” report with the first data on electronic equipment shipments, orders and inventories.

  • Electronic equipment orders and shipments weakened slightly compared to April (Chart 2) as order growth slowed (Chart 3).
  • The ratio of electronic equipment inventories/orders increased (Chart 4).
  • Communication equipment orders declined (Chart 5) but computer orders improved (Chart 6).
  • Defense capital goods orders declined (Chart 7) as did aircraft shipments (Chart 8).

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

Solar/Photovoltaic Industry – Global Growth Resumes

After a multiyear decline sales are improving again.

  • Based on consolidated financials of 81 companies involved in the global solar/photovoltaic supply chain revenues rose 6.4% in 1Q’14 vs. 1Q’13 (Chart 9).
  • Sales growth peaked in 1Q’11 and then turned negative in 4Q’11. Growth then resumed in 3Q’13 (Chart 10).
  • Growth varies by sector with vertically integrated companies and cell, module and panel manufacturers expanding the most (Chart 11).
  • Taiwan-listed solar/photovoltaic companies have been expanding in sales since early 2013 (Chart 12).

Source: Custer Consulting Group based on company financial reports. Many more details in our Business Outlook chart sets. See www.custerconsulting.com

Silver Inks and Pastes Market to be US$5.7 billion in 2019

According to NanoMarkets the market for silver inks and pastes will be worth US$5.7 billion in 2019. The report, "Silver Inks and Pastes Markets 2014-2021" analyzes and forecasts the potential for silver inks and pastes in the ever-changing photovoltaics, displays, OLED lighting, RFIDs, sensors and traditional thick-film business segments.

Key Takeaways from the Report:

Traditional thick-film is where the bulk of the industry's growth prospects will come from for the next several years. This sector consists of membrane switches, keyboards/keypads, capacitors, resistive heaters and EL lighting. This sector is expected to consume $2.8 billion in silver inks and pastes in 2019, compared with $2.0 billion today. DuPont (U.S.), Henkel and Heraeus (Germany) will continue to dominate the silver inks and pastes market. However, the report warns that China is increasingly producing serious competitors in this space offering high-quality products.

Despite the recent resurgence of the crystalline silicon (c-Si) solar panels, the photovoltaics business will continue to produce declining revenue opportunities for the silver inks and pastes suppliers. This is primarily because there is now an unstoppable trend to design silver out of solar panels. Nonetheless, solar markets will remain big enough, however, for the silver inks and paste makers to treat as a "cash cow" for another decade.

NanoMarkets believes that there will also be newer market segments that will eventually offer reasonable opportunities to silver ink and pastes market. For example, spurred by the growth in the Internet-of-Things (IoT) and wearable computing, RFIDs and sensors will consume $115 million by 2019.

However, the products and markets in this area are still being defined. In addition, while the display segment of the silver inks and pastes market is in decline, NanoMarkets expects it to revive after 2017, by which time the use of printed silver in OLED displays and touch sensors will help offset the disappearance of plasma displays which were a major consumer of silver pastes at one time.

Details of the report − Silver Inks and Pastes Markets 2014-2021 (Nano-727)-- including a table of contents are available at http://nanomarkets.net/market_reports/report/silver-inks-and-pastes-markets- 2014-2021.

Source: www.nanomarkets.net

Growth Slows for the North American PCB Industry (Charts 13-16)

According to IPC total North American PCB shipments increased just 0.1% in May 2014 from May 2013, which moved year-to-date shipment growth to -0.1%. Compared to the previous month, PCB shipments declined 0.3%.

PCB bookings fell by 18.0% year over year in May, pushing year-to-date order growth down to 8.1%. Order growth fell 14.3% from the previous month.

The North American PCB book-to-bill ratio dropped below parity to 0.98.

"While sales growth is slowing, declining orders pushed the book-to-bill ratio below parity after just two months of positive ratios," said Sharon Starr, IPC's director of market research. "This setback in the industry's recovery is likely to be short-lived, given the positive economic outlook for North America this year," she added.

The next edition of IPC's North American PCB Market Report, containing detailed May data from IPC's PCB Statistical Program, will be available in July. The monthly report presents detailed findings on rigid PCB and flexible circuit sales and orders, including separate rigid and flex book-to-bill ratios, military and medical market growth, demand for prototypes, and other timely data. This report is available free to current participants in IPC's PCB Statistical Program and by subscription to others. More information about this report can be found at www.ipc.org/market-research-reports.

Source: www.ipc.org

Worldwide 3D printer shipments reached 26,800 units in 1Q14; market gaining significant traction among consumers - Canalys

In the first quarter of 2014, 26,800 3D printers were shipped worldwide, according to Canalys estimates. Of these, most were purchased by enterprise customers, ranging from micro businesses to large organizations. But 46% were acquired by consumers, up from 43% for full-year 2013, reflecting the availability of increasingly competitively priced units.

"To date, the enterprise space has been the focus of 3D printing activities. Businesses from a range of industries have invested in the technology to experiment and test its potential, to expedite design and prototyping processes, or to enable local customized manufacturing," said Canalys senior analyst Tim Shepherd. "While enterprise engagement will continue to grow, it looks to be the consumer space that will drive shipments in the near future. We are already seeing significant numbers of early technology adopters and hobbyists investing in relatively cheap 3D printers. As prices continue to fall, the technology improves and use cases are tested, this trend is set to continue."

One notable factor in the growing availability of low-cost 3D printers is crowdfunding. "The sheer number of ultra-low-cost printers, typically from innovative and aspiring start-up companies, which are finding investment through crowdfunding sites, such as Kickstarter and Indiegogo, is impressive. The often rapid success of these projects in reaching their funding goals shows that crowdfunding sites represent a viable source of finance in this area and, more importantly, verifies real consumer interest levels. While they are often limited in the size of objects they can print, the materials they can use and the finish they can provide, affordable printers will continue to drive interest and adoption in the fledgling consumer market, giving vendors an opportunity to upsell down the line," said Shepherd.

Canalys said it estimates that 67% of 3D printers shipped in first-quarter 2014 were priced, pre-tax, at under US$10,000. "In reality, there is a good number of basic printer models coming to market at sub-US$1,000 price points, and some crowdfunding projects promise sub-US$500 prices," said Canalys research analyst Joe Kempton. "As competitive pressures in the market increase, various technology patents lapse, and vendors are eager to fulfill interest and demand, falling prices are making printers more affordable for more consumers. These consumers are being addressed not just by start-up companies but also established vendors, such as Stratasys through its MakerBot-branded products. We've also seen other efforts to make 3D printing more accessible, most recently from Autodesk, which is making both its 3D printer hardware and its Spark design software package open source. Within 10 years, 3D printers will be common household items in developed markets, and these developments are moving us in the right direction."

Meanwhile, at the premium end of the market, industrial-grade printers costing over US$100,000 continue to make up 1% of unit shipments. Vendors targeting this space sell small numbers of printers in a year, but with price points for some high-end units at over US$1 million, it is still possible to earn substantial revenues. And increasing use of 3D printing in the manufacturing industry could yet see shipments in this area increase in coming years, the firm added.

Source: www.canalys.com

Global Consumer Electronics & Components Market to Reach US$1.34 Trillion Worldwide in 2014

The global market for consumer electronics and components is expected to grow over the next 10 years amid the trend of the "Internet of Things," -- connecting more devices to the Internet and to each other, according to a local research institute.

The consumer electronics and components market will reach US$1.34 trillion worldwide in 2014, and the market is likely to grow by 5 to 10% each year until 2020, the Taipei-based Topology said.

The industry will generate business of around US$2 trillion by 2020, predicted Simon Yang, a researcher at Topology.

If other sectors such as software, content, services are included, the total market can be as big as US$3 trillion by 2020, he added.

Yang forecast the growth will be even stronger after 2020, and that the annual growth of the global market of consumer electronics and components will be at 10 to 20% each year.

By that rate, the output of the global consumer electronics industry will be US$3 trillion by 2024, and the total market, including other sectors, will reach US$5 trillion worldwide, Yang forecast.

Source: Topology Research Institute

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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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