4Q’16 Electronic Equipment Growth by Sector (first estimate)
Here is a VERY preliminary estimate of 4Q’16 global electronic equipment growth based on a still very limited reporting of the companies in our sample.
- Fourth quarter world electronic equipment sales increased about 3% compared to same quarter in 2015 (Chart 1).
- Sales have increased modestly for the last three quarters (Chart 2).
- A VERY PRELIMINARY estimate of growth by sector is given in Chart 3.
These charts will be updated every week as more companies report their fourth quarter financial results.
Source: Company financial reports plus Custer Consulting Group estimates
Global Semiconductor Sales Reach $339 Billion in 2016 (Charts 4-8)
Worldwide industry posts highest-ever annual sales; year-to-year sales increase 12% in December
The Semiconductor Industry Association (SIA) announced the global semiconductor industry posted sales totaling $338.9 billion in 2016, the industry’s highest-ever annual sales and a modest increase of 1.1% compared to the 2015 total. Global sales for the month of December 2016 reached $31.0 billion, equaling the previous month’s total and bettering sales from December 2015 by 12.3%. Fourth quarter sales of $93.0 billion were 12.3% higher than the total from the fourth quarter of 2015 and 5.4% more than the third quarter of 2016.
“Following a slow start to the year, the global semiconductor market picked up steam mid-year and never looked back, reaching nearly $340 billion in sales in 2016, the industry’s highest-ever annual total,” said John Neuffer, president and CEO, Semiconductor Industry Association.
“Market growth was driven by macroeconomic factors, industry trends, and the ever-increasing amount of semiconductor technology in devices the world depends on for working, communicating, manufacturing, treating illness, and countless other applications. We expect modest growth to continue in 2017 and beyond.”
Several semiconductor product segments stood out in 2016. Logic was the largest semiconductor category by sales with $91.5 billion in 2016, or 27.0% of the total semiconductor market. Memory ($76.8 billion) and micro-ICs ($60.6 billion) – a category that includes microprocessors – rounded out the top three segments in terms of total sales. Sensors and actuators was the fastest growing segment, increasing 22.7% in 2016. Other product segments that posted increased sales in 2016 include NAND flash memory, which reached $32.0 billion in sales for a 11.0% annual increase, digital signal processors ($2.9 billion/12.5% increase), diodes ($2.5 billion/8.7% increase), small signal transistors ($1.9 billion/7.3%), and analog ($47.8 billion/5.8% increase).
“A strong semiconductor industry is strategically important to U.S. economic growth, national security, and technological leadership,” said Neuffer. “We urge Congress and the new administration to enact polices in 2017 that spur U.S. job creation, and innovation and allow American businesses to compete on a more level playing field with our competitors abroad. We look forward to working with policymakers in the year ahead to further strengthen the semiconductor industry, the broader tech sector, and our economy.”
January PMI Leading Indicators
Markit Economics has released its January Purchasing Managers indices:
- The Global PM is near its 6-year high. Although well into expansion territory (PMI>50) the rate of increase of the expansion has leveled off (Chart 9).
- For some key countries (Chart 10) only S Korea was contracting but the rate of PMI growth slowed for China and Taiwan.
- The U.S. showed robust growth based on both the ISM and Markit Economics PMIs (Chart 11).
- Europe (Chart 12) and Asia (Chart 13) PMIs are as noted in the charts.
European Business Outlook (Custer presentation)
Custer was the keynote speaker at EIPC Winter Conference held in Salzburg, Austria on February 2- 3, 2017. His topic was Business Outlook for the Global Electronics Industry (with Emphasis on Europe). This presentation, updated with newer data as available, is attached.
One key conference discussion point was the shortage of copper foil and its impact on global PCB production. Contact Kirsten Smit-Westenberg, Executive Director of the EIPC trade organization, for more details on the conference program. firstname.lastname@example.org
North American PCB Sales Enjoyed Solid Growth in December (Charts 14-16)
IPC announced the December 2016 findings from its monthly North American Printed Circuit Board (PCB) Statistical Program. Sales growth in December was solid while the PCB book-to-bill ratio slipped to 0.98.
Total North American PCB shipments in December 2016 were up 5.9% compared to the same month last year. Year-to-date as of December, shipment growth is up 2.9%. Compared to the preceding month, December shipments increased 12.3%.
PCB bookings in December decreased by 2.2% year-on-year, reducing year-to-date bookings growth to -0.7%. Compared to the previous month, orders in December 2016 were up by 11.6%.
“Year-on-year growth in North American PCB sales and orders both strengthened in December, even though order growth remained negative compared to last year,” said Sharon Starr, IPC’s director of market research. “The North American PCB book-to-bill ratio remained in negative territory for only the second consecutive month, which is a typical seasonal pattern in the PCB industry and not a cause for concern,” she added. “Order growth is likely to resume in early 2017.”
Media Tablet Market 4Q’16 and Total 2016 (Charts 17 &18)
Consumer spending during the holiday quarter of 2016 was clearly not aimed at consuming tablets as the market continued its spiraling decline. The fourth quarter of 2016 (4Q16) marked the ninth consecutive quarter that tablet shipments have declined. According to preliminary data from the International Data Corporation vendors shipped 52.9 million tablets in the fourth quarter, which was a decline of 20.1% from the same quarter one year ago. Similarly, shipments of 174.8 million units for the full year 2016 were down 15.6% compared to 2015, marking the second straight year of declining shipments.
"The sentiment around the tablet market continues to grow stale despite a lot of talk about vendors pivoting their product portfolios toward the detachable segment," said Ryan Reith, program vice president with IDC's Worldwide Quarterly Mobile Device Trackers. "Typical tablets without a dedicated keyboard, which IDC refers to as slate tablets, are continuing to lose relevancy across all regions and, as a result, we see the decline happening globally. We do see future growth in some emerging markets like the Middle East and Africa as well as Central and Eastern Europe with the sole catalysts being simplicity and low cost. Unfortunately for the industry these are the devices that don't equate to large revenues."
Vendors who historically have led the notebook PC market are also talking about expanding their product portfolios to include more detachable tablets, although currently there is more talk than action. As a result, Apple and Microsoft are dominating the detachable tablet segment. IDC believes the second half of 2017 will bring a wide range of new detachable devices from the notebook PC OEMs as well as those playing primarily in the smartphone space.
Yet even detachable tablets struggled to maintain momentum in the fourth quarter as flagship products from key players like Microsoft and Apple started to show signs of age. "The market continues to warm up to two-in-one devices, but we're now getting to a point where the price and performance disparity between detachables and convertibles has started to narrow, and this added competition led to a dampening in the growth of detachable tablets," said Jitesh Ubrani, senior research analyst with IDC's Worldwide Quarterly Mobile Device Trackers. "However, we expect this to be temporary as only two of the three major platforms have any significant hardware presence in the detachable market, and as the ecosystems are further refined with future updates and developer support."