April U.S. Electronics Shipments, Orders and Inventories

The Department of Commerce released its Durable Goods report for April. Note that the DOC issued a significant historical revision of its data on May 14 and this April Durable Goods report reflects these changes.

  • Electronic equipment 3-month average book/bill declined to 1.03 with the 1-month B/B at 1.01 (Chart 1).
  • Electronic equipment order growth dipped on a 3/12 basis but shipment growth improved (Chart 2). Actual order and shipments values mirror the 3/12 growth changes (Chart 3).
  • Defense capital goods orders declined slightly (Chart 4).
  • Aircraft & related parts shipments reached an all-time high driven by the non-defense sector (Chart 5).

Source: http://www.census.gov/manufacturing/m3/index.html

U.S. Dollar Exchange Rates

The U.S. dollar remains strong versus most of the world’s currencies.

  • Euro is at its weakest point since 2003 (Chart 6).
  • Canadian dollar is the weakest in six years (Chart 7).
  • Japanese yen is its weakest in 13 years (Chart 8).
  • Taiwan dollar exchange rate is fluctuating but is generally weakening from its strongest point in 2011 (Chart 9).
  • South Korean won has been relatively stable but it is at its weakest point in two years (Chart 10)

Metal Prices

Here are historical and current prices for copper (Chart 11), tin (Chart 12), gold (Chart 13) and silver (Chart 14). Source links are provided at lower left of each chart.

Worldwide Mobile DRAM Revenue fell 1% q/q to US$3.576 billion in 1Q’15 (Chart 15)

Profits stabilize for memory makers as global mobile DRAM prices resist further decline

According to DRAMeXchange, a division of Trendforce, the worldwide mobile DRAM revenue reached US$3.576 billion in the first quarter, a decline of less than 1% QoQ. Mobile memory sales accounted for 29.8% of total DRAM industry revenue in the first quarter and are expected to keep growing. According to DRAMeXchange’s Assistant Vice President Avril Wu, the additional 23nm production from Samsung boosted the first quarter’s mobile DRAM shipments by 8.2% QoQ. Furthermore, the average selling prices for mobile DRAM have been relatively steady. These factors contribute to the ongoing growth of the global mobile DRAM revenues.

Wu noted that mobile DRAM prices will remain stable with a slight decline in the first half of 2015. New opportunities will arise as LPDDR4 arrives on the market and replaces its predecessor. For example, Samsung is seeing stronger than anticipated shipments of Galaxy S6, which carries 3GB of LPDDR4. Additionally, it is widely expected that the next-generation iPhones will come with 2GB of mobile memory. As such, prices will fall but the decline will be very limited. Currently, mobile DRAM accounts for almost 40% of the total DRAM supply. Both the speed of technology migration and the speed of LPDDR4 transition will determine whether global DRAM suppliers will maintain profit growths in the peak season during the traditional peak season in the second half of 2015.

Source: www.dramexchange.com

Worldwide Smartphone Sales Increased 19.3% to 336 million units during the 1Q’15 (Charts 16-18)

  • Emerging markets drove worldwide smartphone sales growth
  • Apple became the number one smartphone vendor in China for the first time

Worldwide sales of smartphones to end users reached 336 million units, an increase of 19.3% during the first quarter of 2015, according to Gartner, Inc. This growth was led by strong smartphone sales in emerging markets (excluding China); the fastest growing regions were emerging Asia/Pacific, Eastern Europe, and the Middle East and North Africa. Due to these high-performing regions, the emerging markets achieved a 40% increase in sales during the first quarter of 2015.

"During this quarter, local brands and Chinese vendors came out as the key winners in emerging markets," said Anshul Gupta, research director at Gartner. "These vendors recorded an average growth of 73% in smartphone sales and saw their combined share go up from 38% to 47% during the first quarter of 2015."

Apple continued to exhibit a strong performance in the quarter, particularly in China. iPhone sales were up 72.5% during the first quarter of 2015, making Apple the No. 1 smartphone vendor in China — just ahead of Xiaomi — for the first time. Greater China also became Apple's largest volume market, ahead of North America, thanks to strong sales in China during the first quarter of 2015.

"Apple’s extension into more Asian markets helped it close the gap with Samsung globally. In the same period last year, there was a difference of more than 40 million units with Samsung; this difference has been halved, within one year, to just over 20 million units," said Gupta.

Source: www.gartner.com

Global Smartphone Shipments Expected to Grow 11.3% y/y to 1,447.3 million units in 2015 (Charts 19-22)

According to IDC smartphone shipments are expected to grow 11.3% in 2015, which is down from 27.6% in 2014. This is on par with IDC's previous smartphone forecast of 11.8% growth in 2015. While overall smartphone growth will continue to slow, many markets will experience robust growth in 2015 and beyond, and worldwide shipment volumes are forecast to reach 1.9 billion units annually by 2019.

IDC expects 2015 to bring two notable milestones. First, IDC projects this to be the first year in which China's smartphone growth, forecast to be 2.5% in 2015, will be slower than the worldwide market. Secondly and somewhat related to the China forecast, Android smartphone growth is also expected to be slower than the worldwide market at 8.5% in 2015. IDC believes both trends will persist throughout the forecast period, which now goes to 2019.

"Smartphone volume still has a lot of opportunity in the years to come, but two fundamental segments driving recent years' growth are starting to slow," said Ryan Reith, Program Director with IDC's Worldwide Quarterly Mobile Phone Tracker. "As reported earlier in May, smartphone shipments in China actually declined year-over-year in the first quarter of 2015, showing that the largest market in the world has reached a level of maturity where rapid growth will be harder to achieve. This has implications for Android because China has been a critical market for Android smartphone shipments in recent years, accounting for 36% of total volume in 2014. As Chinese OEMs shift their focus from the domestic market to the next high-growth markets, they will face a number of challenges, including competition from 'local' brands."

Source: www.idc.com

Worldwide Server Shipments Grew 13% in 1Q’15 (Charts 23-26)

In the first quarter of 2015, worldwide server shipments grew 13% year over year, while revenue increased 17.9% from the first quarter of 2014, according to Gartner, Inc.

"The first quarter of 2015 was a particularly strong start to the year, with the strongest shipment growth since the third quarter of 2010, when the market was recovering from the downturn. It was also the second-largest-volume quarter ever," said Adrian O'Connell, research director at Gartner. "The market was driven by particularly strong demand from the hyperscale area, which benefited North America, in particular. This comes at a time when other regions are struggling, due to price pressure driven by the appreciation of the U.S. dollar. The strength in North America was strong enough to offset declines in Latin America and Japan. EMEA was barely positive, with 1% volume growth."

Source: www.gartner.com

Worldwide PC Shipments Expected to fall 6.2% to 289 million units in 2015 (Chart 27)

Worldwide PC shipments are expected to fall 6.2% in 2015 according to IDC. This will be the fourth consecutive year of declining volume as the PC market continues to struggle with competition from tablets and smartphones and generally low demand. The market almost saw stable shipments in mid-2014 as the end of support for Windows XP boosted demand for replacements, but that cycle has passed and been replaced by a reduction in inventory on the supply side as the market awaits the arrival of Windows 10 this summer.

Windows 10 should be a significant contributor to the PC market – providing an upgrade path from Windows 7 for commercial users and a range of features boosting convenience and integrating the user experience across platforms. Nevertheless, changes like the free upgrade option for consumers and platform integration aren't expected to drive a surge in new PC shipments. The commercial segment is expected to evaluate the OS before deploying it and most new commercial PCs will be replacement systems. The consumer transition to Windows 10 should happen quickly, but the free upgrade reduces the need for a new PC and IDC expects many consumers will continue to prioritize spending on phones, tablets, and wearable devices like the Apple Watch during the holiday season.

"Microsoft and PC vendors still need to convince users of the advantages of the new OS and new PCs, which will take some time," said Loren Loverde, Vice President, Worldwide PC Trackers. "In addition to educating clients, they'll face tough competition from other devices, and weak spending in many regions. As a result, we see PC shipments stabilizing in 2016, followed by limited growth for the next few years."

Source: www.idc.com

Worldwide Tablet Growth Will Continue to Slow in 2015 While Cellular-Connected Tablets and 2-in-1s Maintain Their Momentum (Charts 28-29)

Worldwide shipments of tablets and 2-in-1 devices are forecast to reach 221.8 million units in 2015, a decline of -3.8% from 2014, according to IDC. The new outlook follows two consecutive quarters of declining sales and represents a modest downward revision from the previous forecast of 234.5 million units and 2.1% year-over-year growth in 2015. While IDC expects overall sales to decline in 2015, some segments of the product category are poised to experience strong growth.

"We're seeing cellular-capable tablets and 2-in-1 devices experience important growth in certain parts of the world and we think this represents a huge opportunity for the entire tablet ecosystem," said Jean Philippe Bouchard, Research Director, Tablets. "Those cellular-connected devices fill multiple needs for vendors and carriers around the world; they offer a quick solution to price and margin erosion, and when compared to smartphones, they offer a less expensive way for carriers to increase their subscriber base."

Cellular-capable tablets and 2-in-1 devices still represent a small portion of the entire market but are expected to grow in 2015 and beyond. IDC forecasts that this segment will grow at a five-year compound annual growth rate (CAGR) of 5.6% compared to Wi-Fi-only devices, which will experience a negative five-year CAGR of -0.4%.

Source: www.idc.com

WLAN Market Grew 3.0% Year-over-Year in 1Q’15 (Chart 30)

The combined consumer and enterprise worldwide wireless local area network (WLAN) market segments increased 0.6% year-over-year in 1Q’15. According to IDC the enterprise segment's growth slowed significantly compared to preceding quarters, increasing just 3.0% over the same period last year. After several quarters of high single-digit growth rates, the enterprise WLAN market growth rate fell to the lowest growth level seen in years due to the confluence of two factors: education revenues in the U.S. that likely are delayed due to the pending release of E-rate funding for K-12 public schools and general softness in the public sector and in Asia/Pacific during the first quarter of the year.

The consumer WLAN market decreased 2.0% year over year in 1Q’15, reversing a trend of moderate year-over-year growth over the last several quarters. The ongoing transition from the older 802.11n standard to the newer and faster 802.11ac standard has been the driver for this segment.

"From education to healthcare to large enterprise, the increasing preference for wireless network access will continue to be seen, especially as emerging Wave 2 802.11ac will enable more applications to move to wireless," said Nolan Greene, Research Analyst, Network Infrastructure, at IDC. "While seasonality and the future release of E-rate funding slowed growth in the first quarter of 2015, we expect 802.11ac's momentum to once again boost the market in subsequent quarters."

Source: www.idc.com

Consumer Electronics Association's Index of Consumer Expectations declined 2.4 points m/m to 173.7 in May (Chart 31)

Both the CEA Index of Consumer Expectations and the CEA Index of Consumer Technology Expectations decreased in March. The CEA Index of Consumer Expectations (ICE) measures consumer expectations about the broader economy. The CEA Index of Consumer Technology Expectations (ICE) measures consumer expectations about technology spending.

Source: www.ce.org/

Worldwide Large Format Printer Shipments declined less than 1% y/y (revenue declined by almost 3%) in 1Q’15 (Charts 32 & 33)

According to IDC large format printer shipments declined by less than 1% year-over-year in the first quarter of 2015 while revenue declined by almost 3%.

“The first quarter got the year off to a strong start with key wide format printing technologies like Latex, UV, and Eco-solvent inkjet showing nice growth overall. Latex really stood out in the quarter with shipments up over 55% compared to the first quarter of last year.”

Source: www.idc.com

Worldwide Production Printer Shipments grew 7.5% y/y to 11,167 units (printers and MFPs) in 1Q’15, and Shipment Value increased 3.6% to nearly $1.2 billion (Charts 34 & 35)

The worldwide production print market enjoyed 7.5% year-over-year growth in unit shipments in 1Q’15, according to IDC. Unit shipments grew to approximately 11,167 units (printers and MFPs), and shipment value increased 3.6% to nearly $1.2 billion in the same time period.

Source: www.idc.com

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. View other posts from Walt D. Custer.

 

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.

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