Leading Indicators
Markit Economics released its February PMI leading indicators by major country:
- Global PMI improved but still remained in low growth territory (Chart 1)
- Many countries reported higher PMI values in February. The U.S. and Japan were notable exceptions (Chart 2).
- Institute of Supply Management’s PMI decline with the negative effect of the west coast dock strike mentioned by many who contributed to the survey (Chart 3).
| Source: | www.markiteconomics.com |
| www.ism.ws |
U.S. January “Factory Orders”
As a more detailed report to the prior week’s “Durable Goods” publication the U.S. Commerce Dept. released the January “Factory Orders report. Highlights included:
- Electronic equipment orders remained sequentially flat with the electromedical, instrument and control sector continuing to gain share versus the other end markets (Chart 4).
- Vehicle shipments declined, negatively impacted by severe winter weather (Chart 5).
- Military electronics orders rebounded to their shipment trend line (Chart 6).
- Electromedical, Measurement and Control Equipment remained the strongest growth sector although orders weakened slightly in January (Chart 7).
- Passive component orders and shipments continued to expand (Charts 8 & 9) although the U.S. PMI leading indicator points to slower growth ahead (Chart 10)
Chart 11 summarizes the annualized 912/12) and 3-month (3/12) growth of the domestic electronics supply chain. The 3/12 “leads” the 12/12 with a value of 100 indicating zero growth vs. the same period a year earlier.
Source: www.census.gov/indicator/www/m3/
Worldwide Semiconductor Sales Increased 8.7% y/y to $28.5 billion in January 2015, the Industry's Highest-ever January total (Charts 11-15)
SIA released global semiconductor sales data for the month of January 2015. Key points:
- Worldwide sales of semiconductors reached $28.5 billion for the month of January 2015, the industry’s highest-ever January total and an increase of 8.7% from January 2014 when sales were $26.3 billion.
- Global sales from January 2015 were 2% lower than the December 2014 total of $29.1 billion, reflecting normal seasonal trends.
- Regionally, sales in the Americas increased by 16.4% compared to last January to lead all regional markets.
“After a record-setting 2014, the global semiconductor industry is off to a promising start to 2015, posting its highest-ever January sales led by impressive growth in the Americas market,” said John Neuffer, president and CEO, Semiconductor Industry Association. “Global sales have increased on a year-to-year basis for 21 consecutive months and remain strong across most regions and product categories.”
Source: www.sia-online.org
North American PCB Business Growth Sags in January but Indicators of Future Growth Remain Positive (Charts 16-18)
IPC announced the January findings from its monthly North American Printed Circuit Board (PCB) Statistical Program. Despite sluggish sales and orders in January, the positive book-to-bill ratios of the past four months indicate sales growth in the first half of 2015.
Total North American PCB shipments decreased 2.0% in January 2015 from January 2014. Compared to the previous month, PCB shipments were down 11.6%.
PCB bookings decreased by 2.9% compared to January 2014. Orders declined 6.8% in January compared to the previous month.
The North American PCB book-to-bill ratio decreased but remained positive at 1.01 in January.
"January 2015 PCB business in North America was down slightly from January 2014, but the book-to-bill ratio and other leading indicators continue to offer hope of some renewed growth in 2015," said Sharon Starr, IPC's director of market research.
Source: www.ipc.org
PC Shipments in 1Q’15 may fall over 20%, say Upstream Suppliers
PC shipments so far in the first quarter of 2015 have been short of expectations because many vendors are still clearing inventories and demand in Europe and emerging markets including China and Southeast Asia is weak. Consequently, shipments in the quarter are likely to drop over 20% sequentially, according to sources from ODMs and component makers.
With PC products still lacking innovative features that could attract consumers, and smartphones and tablets continuing cannibalizing the PC shipments have been weak since the beginning of 2015.
When vendors including Lenovo, Hewlett-Packard (HP), Dell and Asustek Computer aggressively increased their orders during the second half of 2014, most upstream suppliers were optimistic about their shipments in 2015 and expected to see a wave of new orders after the Lunar New Year holidays. But so far, they have been disappointed.
The sources pointed out that the retail channel has been unable to digest the inventory as quickly as originally expected and in turn PC vendors have refrained from placing orders with their upstream partners.
Among first-tier vendors, Apple is the only player that has not been affected by the downturn as its high-end MacBook Air and Pro devices continue to enjoy strong demand.
For component suppliers that heavily rely on PC-related product lines, their sales in the first quarter are likely to slump dramatically, while those who have strong presence in the server, smartphone and tablet segments will be able to report stable results.
Major PC ODMs, Quanta Computer, Compal Electronics, Wistron, Inventec and Pegatron Technology are expected to see their notebook shipments dip significantly in the first quarter, but their revenues will not decline as seriously thanks to orders for Apple's products, said the sources, adding that Quanta will start shipping the Apple Watch in March, while Pegatron is also still seeing significant orders for the iPhone 6.
As for Intel, the sources expect the CPU giant's PC business to be impacted by the weak demand; however, its server and Internet of things (IoT) product shipments will remain strong.
Source: www.digitimes.com
Electronic systems production value expected to grow at a 5.2% CAGR from 2013-2018 from $1,488 billion in 2014 to about $1.82 trillion in 2018 (Charts 19 & 20)
Comparing Market Sizes and Forecasted Growth Rates for Systems, ICs
Cellphones expand as largest system market; IoT growing fastest through 2018.
Total production value of electronic systems increased 5% in 2014 to $1,488 billion. Electronic system production is forecast to grow at a compound annual growth rate (CAGR) of 5.2% from 2013-2018. Chart 20 compares the relative market sizes and projected growth rates of 10 major systems segments covered in the 2015 edition of IC Insights’ IC Market Drivers report. These 10 market categories represented a little over two-thirds of the total production value of all electronic systems in 2014.
Cellphones expanded their lead over standard personal computers (desktops and notebooks) as the largest electronic systems market in 2014 after overtaking standard PCs for the first time in 2013. Cellphones accounted for 18% of total electronics systems sales ($265.2 billion) versus about 13% for standard PCs ($196.0 billion) in 2014. Cellular phone sales are projected to rise by a CAGR of 5.6% in the 2013-2018 period, while standard PC revenues are expected to slump by an annual rate of -1.1%, partly due to the popularity of tablet computers and growing use of smartphones to access the Internet.
Chart 20 shows the market sizes of IC sales for 11 major electronic system categories covered in the 2015 IC Market Drivers report. After dominating IC sales for most of the last two decades, standard PCs were unseated by cellphones as the largest end-use IC application in 2013 and the gap widened in 2014. Cellular handsets accounted for 25% of IC sales in 2014, while standard PCs represented about 21% of the total. IC sales for standard PCs have stalled out while cellphone IC revenues are projected to grow by a CAGR of 8.7% between 2013 and 2018. Among these 11 end-use market segments, IC sales growth is expected to be the strongest in systems for connections to the Internet of Things (a CAGR of 22.3%) in the five-year forecast period. IC revenues generated by these 11 end-use systems categories represented nearly 80% of total integrated circuit sales worldwide in 2014.
Source: www.icinsights.com
Smartphone Sales Surpassed One Billion Units in 2014 (Charts 21-23)
Smartphone Sales Represented Two-Thirds of Global Phone Market in 2014
In Fourth Quarter of 2014 Samsung Lost number one Position to Apple in Global Smartphone Market
Worldwide sales of smartphones to end users had a record fourth quarter of 2014 with an increase of 29.9% from the fourth quarter of 2013 to reach 367.5 million units, according to Gartner, Inc. Samsung lost the number one spot to Apple in the global smartphone market in the fourth quarter of 2014. Samsung had been in the top spot since 2011.
In 2014, sales of smartphones to end users totaled 1.2 billion units, up 28.4% from 2013 and represented two-thirds of global mobile phone sales.
"Samsung's performance in the smartphone market deteriorated further in the fourth quarter of 2014, when it lost nearly 10% percentage age points in market share," said Anshul Gupta, principal research analyst at Gartner. "Samsung continues to struggle to control its falling smartphone share, which was at its highest in the third quarter of 2013. This downward trend shows that Samsung's share of profitable premium smartphone users has come under significant pressure."
"With Apple dominating the premium phone market and the Chinese vendors increasingly offering quality hardware at lower prices, it is through a solid ecosystem of apps, content and services unique to Samsung devices that Samsung can secure more loyalty and longer-term differentiation at the high end of the market," said Roberta Cozza, research director at Gartner.
Source: www.gartner.com
Apple Watch to Ship 15 Million Units Worldwide in 2015 (Chart 24)
According to Strategy Analytics, the Apple Watch smartwatch will ship 15 million units worldwide in 2015. Apple will quickly become the world's number one smartwatch vendor with 55% global market share this year.
Cliff Raskind, Director at Strategy Analytics, said, "We forecast total global smartwatch shipments to grow 511% from 4.6 million units in 2014 to 28.1 million units in 2015. Most of the smartwatch growth will come from the new Apple Watch, which we forecast to ship 15.4 million units worldwide in 2015. Apple will quickly become the world's number one smartwatch vendor and capture 55% global market share this year."
Neil Mawston, Executive Director at Strategy Analytics, added, "The Apple Watch is the catalyst to ignite the global smartwatch market. Apple's famous brand, loyal fan base, deep retail presence and extensive apps ecosystem will ensure healthy uptake for its Watch. However, Apple's first-generation Watch is not yet perfect. For example, Apple's Watch hardware design is arguably less attractive than some rival models such as the Huawei Watch, battery life may not be as long as many traditional wristwatch owners are used to, and Apple's premium pricing may be challenging for mass-market consumers. Apple will need to upgrade tangibly its second-generation Watch to stay ahead of competitors later this year."
Source: www.strategyanalytics.com
Hard Disk Drive Unit Shipments grew 2.2% to 564 Million Units in 2014; Expected to Drop to 480,000 Units in 2018 (Charts 25 & 26)
For the first time since 2006, hard disk drive (HDD) shipments are forecast to dip below the 500 million level in 2018, according to according to the report The Hard Disk Drive (HDD) and Solid State Drive (SSD) Industries: Market Analysis and Processing Trends, recently published by The Information Network.
“The HDD market recorded a growth of 2.2% in unit shipments to 563.9 million units in 2014,” noted Kristian Castellano, an analyst with The Information Network. “However, the growth in 2014 follows three successive years declining shipments as SSDs rapidly encroach on the HDD industry. We see the growth in 2014 as an anomaly, and shipments of HDDs will continue dropping to 480,000 units in 2018.”
Manufacturers continue to make enhancements in their HDD products, such as the introduction of helium filled disk drives, which will enable the addition of more platters in the same volume as well as offer enhanced stability and reliability, lower power consumption, and lower total cost of ownership.
Source: www.theinformationnet.com
World's Top 100 Largest Arms-producing and Military Services Companies (Chart 27)
Sales of arms and military services by the SIPRI Top 100 - the world’s 100 largest arms-producing and military services companies (outside China), ranked by their arms sales - Totaled $402 billion in 2013.
For a list of the SIPRI Top 100 for 2013 see:
www.sipri.org/research/armaments/production/recent-trends-in-arms-industry/The%20SIPRI%20Top%20100%202013.pdf
Source: www.sipri.org/
Worldwide Production Printer Shipments by Vendor 4Q’14 (Charts 28 & 29)
The worldwide production print market enjoyed double-digit year-over-year shipment growth in the fourth quarter of 2014 (4Q14). Unit shipments grew 17.1% to approximately 11,650 units (printers and MFPs) and shipment value increased 4.5% to nearly $1.4 billion in the same time period.
"The worldwide production market saw gains as print service providers across the globe are investing in digital. The United States is still the largest opportunity for the digital production market, but other regions are showing high demand for equipment. Vendors are truly focused on selling value and services, adding to their sales forces to target specific print environments and applications. They are reducing barriers to entry, offering increased options and greater print quality at lower price points, and appealing to print service providers of varying size. And for inkjet specifically, image quality will only get better and media libraries will continue to expand, pushing that high-speed technology to high growth rates," said Amy Machado, Senior Research Analyst, Hardcopy Peripheral Solutions.
Source: www.idc.com
Worldwide Server Shipments Grew 4.8% while Revenue Increased 2.2% in 4Q’14 (Charts 30-33)
In the fourth quarter of 2014, worldwide server shipments increased 4.8% year-over-year, while revenue grew 2.2% from the fourth quarter of 2013, according to Gartner, Inc. In all of 2014, worldwide server shipments grew 2.2%, and server revenue increased 0.8%.
"There were several factors that produced the strong growth in the server market in 2014," said Jeffrey Hewitt, research vice president at Gartner. "On a worldwide basis, hyperscale data center deployments as well as service provider installations drove the x86-based server market upward. Enterprises had less unit growth impact because of the ongoing presence of physical server consolidation through x86-server virtualization. This overall market growth developed despite declines in both mainframe and Unix platforms."
In the fourth quarter of 2014, the regions with the highest growth rates in terms of unit shipments were the Middle East and Africa (10.7%), Asia/Pacific (9.1%) and North America (7.6%).
HP led the worldwide server market based on revenue in the fourth quarter of 2014 (see Table 1), but only grew 1.5% year-over-year. The company ended the year with $3.9 billion in revenue for a total share of 27.9% worldwide. IBM experienced a decline of 50.6% while Lenovo experienced strong growth of 743.4%. The significant changes in IBM's and Lenovo's growth rates are due to the completion of the sale of IBM's x86 server business to Lenovo in the fourth quarter.
Source: www.gartner.com
