JEITA just released Japanese domestic electronic equipment, component and device production by type for August:
- Although normal seasonality prevailed Japanese electronic equipment production increased 2.6% in the 3-month period Jun-Aug 2015 vs. Jun-Aug 2014. However it was down 0.5% for the month of August 2015 vs. August 2014 (Chart 1).
- Semiconductor shipments to Japan were in line with electronic equipment production on a 3/12 growth basis – when both are denominated in yen (Chart 2).
- Domestic semiconductor (IC & Discrete) production declined sequentially from July (Chart 3).
- Passive component production was down in August (Chart 4) but it is up 19.4% for Jun-Aug 2015 versus the same period a year earlier.
- PCB shipments also dropped sequentially in August (Chart 5) however they are up 9.2% on a 3/12 growth basis (Chart 6).
- Markit Economics Japan “flash” October PMI leading indicator rose signaling further Japanese domestic manufacturing growth ahead (Chart 7).
October “Flash” PMI Leading Indicators
Markit Economics just released October “flash” Purchasing Manager (PMI) indices for the USA, Japan, Europe, Germany and France. Unfortunately the flash China PMI is no longer available:
- October PMIs rose for the USA, France and Japan, were unchanged for the Eurozone and declined for Germany (Chart 8).
- As noted above Japan manufacturing sector is expanding (Chart 7), the USA’s rebounded from its recent declines (Chart 9) and Eurozone’s PMI (Chart 10) was sequentially flat from September but remained in clear growth territory (PMI>50) .
North American Semiconductor Equipment Industry September Book/Bill=1.07 (Charts 11 & 12)
North America-based manufacturers of semiconductor equipment posted $1.60 billion in orders worldwide in September 2015 (3-month average basis) and a book-to-bill ratio of 1.07, according SEMI.
SEMI reports that the 3-month average of worldwide bookings in September 2015 was $1.60 billion, 4.15 lower than August 2015 and 35.1% higher than the September 2014.
The 3-month average of worldwide billings in September 2015 was $1.50 billion, 4.6% lower than August 2015 and 19.7% higher than September 2014.
“Both bookings and billings trended slightly lower in the September three-month average compared to August,” said Denny McGuirk, president and CEO of SEMI. “While year-to-date billings through the first three quarters are above 2014 billings, uncertainty with semiconductor demand has dampened expectations with capex plans in the near-term.”
Japan September Semiconductor and Flat Panel Display Equipment Orders and Shipments
The Semiconductor Equipment Association of Japan just released orders and shipments for September SEMI (Chart 13) and FPD (Chart 14) equipment.
World 2015 IC Market Forecast Lowered from +1% to -1% by IC Insights
Slowing China economy, strong U.S. dollar, and falling DRAM ASPs all contributing to weaker IC market outlook
IC Insights recently released its October Update to The McClean Report, which examined the effects of slowing worldwide GDP growth and a stronger U.S. dollar on the 2015 IC market forecast.
Since all of IC Insights’ figures are presented in U.S. dollars, a strengthening U.S. currency deflates foreign sales and market results while a weakening U.S. dollar serves to inflate the sales and market figures. The rare occurrence of significant strengthening of the U.S. dollar versus most of the major currencies this year is expected to deflate the 2015 worldwide IC market growth rate by at least three full percentage points. This “deflation” presents itself in the form of lower IC average selling prices (ASPs), which are forecast to register a steep 5% decline this year when reported in U.S. dollars.
Chart 15 compares the worldwide monthly IC market figures from January through August of 2015 and 2014. As shown, the beginning of this year started out very strong with the January 2015/2014 IC market showing year-over-year growth of more than 10%. In total, the 1Q’15 IC market ended up 6.5% higher than the 1Q’14 worldwide IC market.
The second quarter of 2015 began by registering similar monthly year-over-year IC market growth that was displayed in 1Q’15, with the combined 2015 April and May IC markets up 5.6% compared to the combined April and May IC markets in 2014. However, things began to change in June as the IC market ended up 3.1% lower than the June 2014 IC market. Unfortunately the 2015 July and August worldwide IC markets followed the disappointing year-over-year trend that began in June.
It should be noted that the average second half versus first half of the year growth rate in the IC market since 1990 is 9.2%. However, IC Insights is forecasting that the 2H15 IC market will be down 1.0% as compared to 1H15. If this occurs, it would be only the fifth time since 1990 that the second half of the year IC market was worse than the first half (the other years being 1996, 2001, 2008, and 2011). This weak second half market has resulted in IC Insights lowering its full-year 2015 IC market forecast from +1% to -1%.
Looking ahead to 2016, three reasons lead IC Insights to believe that the worldwide IC market will register mid-single digit growth next year:
- The current excess IC inventory is forecast to be under control by early next year.
- Worldwide GDP growth in 2016 is expected to show some improvement as compared to 2015.
- The U.S. dollar is unlikely to show nearly as much strength against the major foreign currencies next year as it did this year.
Global Polished and Epitaxial Silicon Shipment Forecast (Chart 16) Wafer Shipments Forecast to Increase in 2015, 2016, and 2017
SEMI recently completed its annual silicon shipment forecast for the semiconductor industry. This forecast provides an outlook for the demand in silicon units for the period 2015–2017. The results show polished and epitaxial silicon shipments totaling 10,042 million square inches in 2015; 10,179 million square inches in 2016; and 10,459 million square inches in 2017 (refer to table below). Total wafer shipments this year are expected to exceed the market high set in 2014 and are forecast to continue shipping at record levels in 2016 and 2017.
"2015 has been a record-breaking year for silicon shipments, attributed primarily to larger diameter wafers," said Denny McGuirk, president and CEO of SEMI. "The outlook for the next two years is measured, but continues on a modest growth path.”
All data cited in this release is inclusive of polished silicon wafers, including virgin test wafers and epitaxial silicon wafers shipped by the wafer manufacturers to the end-users. Data do not include non-polished or reclaimed wafers.
Global Desktop Shipments to decline 15% in 2015
Global desktop shipments are expected to decline 15% on year in 2015 and some brand vendors may see their shipments drop over 20% as demand from emerging markets such as China was weaker than expected, while Windows 10's free upgrade plan is expected to have limited effect on triggering a replacement trend, according to sources from the upstream supply chain.
With the desktop PC market gradually shrinking, many upstream component suppliers have started turning their focuses to other areas.
Global notebook shipments have started recovering since the third quarter, but the desktop segment continued declining, while related enterprise and education procurement orders have also been dropping as the trend of notebooks replacing desktops expands.
However, the all-in-one PC continues to see stable shipments, while mini PC products are enjoying strong growth.
First-tier vendors such as Hewlett-Packard (HP), Dell and Lenovo have all been seriously impacted by the desktop shipment drop, but smaller vendors such as Elitegroup Computer Systems (ECS), Gigabyte Technology and Asustek Computer have seen significant support from their mini PC products.