European Growth Slowed Mid-Summer but August and Beyond Look Promising
Chart 1 summarizes industrial production growth (month in 2013 vs. same month in 2012) for key countries. European growth slowed in July. Chart 2 supports this July European slowdown with only the UK growing and Germany, France, Italy and the EU27 contracting.
However, based on the August PMI leading indicator (Chart 3) the outlook looks better going into autumn.
European Electronic Supply Chain Slowdown in July
Europe's electronic industry contracted in July, hopefully to regain growth in August and beyond as noted above. Based on July 2013 Eurostat data:
- Electronic equipment shipments declined 6% in July'13 versus July'12 (Chart 4).
- Automotive shipments plunged following a large jump in June (Chart 5) and aerospace sales weakened slightly on a sequential basis (Chart 6).
- The instrument sector (Chart 7) slipped but medical electronics sales (Chart 8) grew.
- Electronic assembly sales weakened in July (Chart 9) as did component and board (Chart 10) and wiring device (Chart 11).
- Looking forward the European PMI leading indicator points to an increase in printed wiring board (wiring device) production this autumn (Chart 12).
- For the European semiconductor and passive component markets near zero growth prevailed through July but the PMI points to expansion in late summer and beyond (Chart 13). SEMI equipment shipments remain negative as they lag components in the business cycle.
- Chart 14 summarizes the annualized (12/12) and 3-month (3/12) growth of the European electronic supply chain through July. The 3/12 “leads" the 12/12 with values >100 indicating an expansion versus the same 12 or 3 month period a year earlier.
European PCB Market Update
Thanks to our colleague Michael Gasch here is an update on the European printed circuit industry:
- 2013 European PCB production projected to be Eur 2.014 billion which includes 0.2 billion added by Custer as estimate for Russia and FSR (Chart 15).
- European PCB production by major country from 2000 to 2013 (Chart 16). This does not include Russia and FSR.
- Michael Gasch's European PCB market comments (Charts 17 & 18).
Taiwan/China Comments based upon August Sales
Leading indicators rose for all major Asia countries, suggesting that sales will improve beyond August (Chart 19)
For Taiwan listed companies, many with manufacturing in China, consolidated sales were:
- OEM sales of 101 companies were down 2.1% in August 2013 vs. August 2012 (Chart 20).
- ODM and OEM sales were sequentially flat from July to August (Charts 20 & 21).
- Motherboard sales declined slightly but display sales improved (July to August) per Charts 22 & 23.
- Semiconductor shipments to SE Asia were in excess of electronic equipment production on a 3/12 growth basis (Chart 24).
- Passive component shipments were flat (Chart 25) but solar/photovoltaic sales continued to rebound (Chart 26).
- Rigid and Flex printed circuit board (Chart 27) and CCL (rigid laminate) sales (Chart 28) rose.
Tablet Shipments to Top Total PC shipments in 4Q'13 and annually by 2015 (Charts 29 & 30)
The worldwide smart connected device market, comprising PCs, tablets, and smartphones, is forecast to grow 27.8% year-over-year in 2013, slightly lower than the 30.3% growth in 2012. The growth will be driven by tablet and smartphone shipments, while the PC outlook has been lowered by 10% in 2013. As a result, the International Data Corporation (IDC) Worldwide
Quarterly Smart Connected Device Tracker expects tablet shipments to surpass total PC shipments (desktop plus portable PCs) in the fourth quarter of 2013 (4Q'13). PC shipments are still expected to be greater than tablet shipments for the full year, but IDC forecasts tablet shipments will surpass total PC shipments on an annual basis by the end of 2015. Smartphones will continue to ship in high volumes, surpassing 1.4 billion units in 2015 and accounting for 69% of all smart connected device shipments worldwide.
In terms of shipment value, the worldwide smart connected device market will again exhibit double-digit year-over-year growth of 10.6% in 2013, but this growth will gradually slow to just 3.1% in 2017. The tapering revenue forecast reflects the increasing impact of low-cost smartphones and the white box tablet market. Worldwide smart connected device value is expected to be $622.4 billion in 2013, of which $423.1 billion will come from the sub-$350 smartphone and sub-$350 tablet segments collectively. "At a time when the smartphone and tablet markets are showing early signs of saturation, the emergence of lower-priced devices will be a game-changer," said Megha Saini, Research Analyst with IDC's Worldwide Quarterly Smart Connected Device Tracker. "Introducing new handsets and tablet devices at cheaper price points along with special initiatives like trade-in programs from Apple and BestBuy will accelerate the upgrade cycle and expand the total addressable market overnight."
IDC expects the lower-cost devices to drive interest worldwide and help to spark uptake among first-time buyers in commercial sectors like education. A new round of device cannibalization is also expected to kick in, but this time with large-screen (5+ inch) smartphones beginning to impact the smaller (7-8 inch) tablet market. "The device world has seen several iterations of cannibalization impacting different categories, with the last few years focused on tablets cannibalizing PC sales," said Bob O'Donnell, Program Vice President, Clients and Displays. "Over the next 12-18 months, however, we believe the larger smartphones, commonly called 'phablets', will start to eat into the smaller-size tablet market, contributing to a slower growth rate for tablets."
Looking forward, the worldwide smart connected device space will continue to surge, with overall shipments surpassing 2 billion units by the end of 2015 with a market value of $735.1 billion. In terms of device mix, total PC shipments accounted for 28.7% of the smart connected device market in 2012 while tablets accounted for 11.8% and smartphones for 59.5%. By 2017, total PCs are expected to drop to 13%, while tablets and smartphones will contribute 16.5% and 70.5% respectively to the overall market. The shift in demand from the more expensive PC category to more reasonably priced smartphones and tablets will drive the average selling price (ASP) for the collective market from $462 in 2012 to $323 in 2017.
Worldwide Semiconductor Manufacturing Equipment Billings Fell 27% y/y to US$ 7.55 Billion and Bookings Dropped 5% y/y to US $9.17 Billion in 2Q'13 (Charts 31 & 32)
SEMI reported that worldwide semiconductor manufacturing equipment billings reached US$ 7.55 billion in the second quarter of 2013, up 3% vs. first quarter of 2013 and 27% lower than the same quarter a year ago.
Worldwide semiconductor equipment bookings were $9.17 billion in the second quarter of 2013, 5% lower than the same quarter a year ago and 18% higher than the bookings figure for the first quarter of 2013.