U.S. Shipments, Orders and Inventories – Historical Data Revision

On May 18, 2017 the Census Bureau of the U.S. Department of Commerce issued its annual revision of shipments, orders and inventories of U.S. made products. For electronics the changes were significant.

  • Chart 1 shows monthly total electronic equipment shipments before and after the revision. Shipments were lowered $1.1 billion per month (over 6% when) comparing 1Q’17 before and after the revision.
  • Historically the data revision was evident starting in 2014 and was very significant from 2014 to present.
  • Revised growth for 1Q’17 versus 1Q’16 varied by product (Chart 2).
  • Electromedical, measurement and control equipment shipments were revised down by 8% (Chart 3), communication equipment down 15% (Chart 4) and passive components by 20% (Chart 5).
  • By contrast computer equipment shipments were revised up 14%.


Chart 7 shows 3/12 growth rates for total electronic equipment orders and shipment. Total orders were up 3.7% and shipments up 4.5% in 1Q’17 versus 1Q’16.

Chart 8 shows monthly electronic equipment orders by product. Electromedical, measurement and control equipment is still the largest sector but it is not as dominant as it had been depicted prior to the 5/18/2017 revision.

A discussion of the DOC’s revision methodology is given on the right hand column of www.census.gov/manufacturing/m3/index.html

Worldwide Semiconductor Revenue grew 2.6% to $343.5 billion in 2016 (Chart 9)

Worldwide semiconductor revenue totaled $343.5 billion in 2016, a 2.6% increase from 2015 revenue of $334.9 billion, according to final results by Gartner, Inc. The top 25 semiconductor vendors' combined revenue increased 10.5%, a significantly better performance than the overall industry's growth; however, most of this growth resulted from merger and acquisition (M&A) activity.

"The semiconductor industry rebounded in 2016, with a weak start to the year, characterized by inventory correction, giving way to strengthening demand and an improving pricing environment in the second half," said James Hines research director at Gartner. "Worldwide semiconductor revenue growth was supported by increasing production in many electronic equipment segments, improving NAND flash memory pricing and relatively benign currency movements."

Intel retained its No. 1 position as the largest semiconductor manufacturer and grew its semiconductor revenue 4.6% in 2016. Samsung Electronics continued to maintain the number two spot with 11.7% market share.

Consolidation continued to play a major role in the market share rankings, with several large companies growing through acquisitions. Merger and acquisition activity among the major vendors in 2016 included Avago Technologies' acquisition of Broadcom Corp. to become Broadcom Ltd., On Semiconductor's acquisition of Fairchild Semiconductor, and Western Digital's acquisition of SanDisk. The largest mover in the top 25 was Broadcom Ltd., which moved up 12 places in the market share ranking.

"The combined revenue of the top 25 semiconductor vendors increased by 10.5% during 2016 and accounted for a 74.9% share, outperforming the rest of the market, which saw a 15.6% revenue decline," said Hines. "However, these results are skewed by the large amount of M&A activity during 2015 and 2016. If we adjust for this M&A activity by adding the revenue of each acquired company to the revenue of the acquirer for both 2015 and 2016 where necessary, then the top 25 vendors would have experienced a 1.9% revenue increase, and the rest of the market would have increased by 4.6%."

Source: www.gartner.com

Global DRAM Market surged 13.4% q/q to US$14.13 billion in 1Q’17

Sales in the global DRAM market surged 13.4% sequentially to US$14.13 billion in the first quarter of 2017, when PC DRAM contract prices rose 30%according to DRAMeXchange. The revenues for the quarter were also a record high.

Global supply of DRAM has fallen short of demand severely since late 2016, said DRAMeXchange, adding that most PC OEMs started to negotiate first-quarter contracts in advance. Robust demand from PC OEMs resulted in an at least a 30% rise in the ASP of PC DRAM modules between the fourth quarter of 2016 and first-quarter of 2017, DRAMeXchange indicated.

Server and mobile DRAM prices were also spurred by the rally in PC DRAM prices, DRAMeXchange observed. Prices for mobile DRAM products, for example, grew by nearly 10% on average in the first quarter compared to the prior quarter.

"From the supply side, additional DRAM manufacturing capacity will become available in this year's second half at the earliest mainly to meet the demand related to shipments of new smartphones and PCs during that period," said Avril Wu, research director of DRAMeXchange.

"As for this second quarter, the mobile DRAM market has cooled down temporarily, but the server DRAM market is still quite hot," Wu continued. "DRAMeXchange anticipates product prices will again go up significantly in both PC and server DRAM markets, with their respective average increases exceeding 10% from the first quarter."

Samsung Electronics continued to lead the global DRAM market in the first quarter of 2017, with revenues rising 6.8% sequentially, while second-ranked SK Hynix' revenues grew by a larger 21.5% on quarter, DRAMeXchange said. Samsung held a 44.8% share of the market during the quarter followed by SK Hynix with a 28.7% share. Third-ranked Micron Technology saw its DRAM revenues increase 22.3% sequentially in the first quarter, and grabbed a 21% share of the global market, DRAMeXchange said.

Source: www.digitimes.com

Global Surface Mount Technology equipment market value to grow at 4.4% CAGR from US$4850 million in 2016 to US$7075 million by 2025

The vendor landscape of the global surface mount technology equipment market is largely consolidated, with the top five vendors, namely Fuji Machine Mfg. Co., Ltd., Panasonic Corporation, Juki Corporation, Mycronic AB, and Siplace, collectively accounting for a massive 93% of the overall market in 2016, observes Transparency Market Research in a recent report. In the stiffly competitive market, product innovation, technological advancement, and focus on expansion across potential high-growth regional markets are some of the key growth strategies adopted by leading vendors to strengthen their hold and gain new consumers.

In December 2016, Juki Corporation launched a new long-board SMT placement machine, called the JX-350. The machine is said to have faster placement speed and better component placing capability for LED manufacturing industry. Earlier the same year, Juki had also introduced new packaging equipment capable of presenting a detailed all-surface wafer defect review, inspection, and metrology, ensuring high throughput.

Transparency Market Research estimates that the global surface mount technology equipment market was valued at US$4850 million in 2016 and is anticipated to reach US$7075 million by 2025, exhibiting a CAGR of 4.4% from 2017 to 2025.

Placement Equipment to Account for Massive Chunk in Global Revenues

In terms of equipment type, sales of SMT placement equipment account for a massive chunk of the sales of all varieties of SMT equipment in the global market. The segment accounted for a massive 35.7% of the global market in 2016 and is expected to witness a rise in its share in the global market by the end of the report's forecast period. In terms of geography, the Asia Pacific market is expected to remain the leading regional market for SMT equipment. With a 42% of the global market in 2016, the region holds a prominent position in the SMT equipment market owing to the presence of large number of electronics manufacturers and SMT equipment companies.

Rising Usage of Flex Circuits in Electronic Devices Key to Market Development

The global market for surface mount technology equipment is expected to benefit significantly from the increased usage of flex circuits in wearable devices and in mobile devices such as smart phones. Industries such as medical, automotive, and telecommunications are also increasingly adopting flex circuits for a number of applications. Benefits of flex circuits such as improved signal quality, reduced wiring errors, and improved electrical performance are allowing their increased adoption in electronics components in these industries. Moreover, the rising trend of miniaturization of electronics, while improving performance and lowing cost of configuration are leading to the increased demand for flex circuits, driving, in turn, the demand for SMT equipment.

Source: www.transparencymarketresearch.com

Global Wearables shipments rose 21% y/y to 22 million units in 1Q’17, Apple replaced Fitbit as the world's top wearables vendor (Chart 10)

According to Strategy Analytics, global wearables shipments reached 22 million units in the first quarter of 2017. Apple captured 16% market share and became the world’s largest wearables vendor, overtaking Fitbit.

Steven Waltzer, Industry Analyst at Strategy Analytics, said, “Global wearables shipments reached 22.0 million units in Q1’17, rising 21% annually from 18.2 million in Q1’16. Stronger demand for new smartwatch models in North America, Western Europe and Asia drove the uptick.”

Neil Mawston, Executive Director at Strategy Analytics, said, “Apple shipped 3.5 million wearables worldwide in Q1 2017, rising 59% annually from 2.2 million units in Q1 2016. Apple captured 16% global market share and overtook Fitbit to become the world’s largest wearables vendor. The new Apple Watch Series 2 is selling relatively well in the U.S., UK and elsewhere, due to enhanced styling, intensive marketing and a good retail presence. Xiaomi shipped 3.4 million wearables for 15% market share worldwide in Q1’17. Demand for its popular Mi Band fitness range was broadly flat across its core markets of Asia.”

Cliff Raskind, Director at Strategy Analytics, said, “Fitbit shipped 2.9 million wearables worldwide in Q1’17, falling a huge 36% annually from 4.5 million in Q1’16. Fitbit has lost its wearables leadership to Apple, due to slowing demand for its fitness bands and a late entry to the emerging smartwatch market. Fitbit’s shipments, revenue, pricing and profit are all shrinking at the moment and the company has a major fight on its hands to recover this year.”

The definition of wearables includes products such as smartwatches, fitness bands and smart glasses, but does NOT include peripheral attachments such as smart weighing scales.

Source: www.strategyanalytics.com

China Vendors Smartphone Shipments decreased 2.7% y/y to 152 million units globally in 2Q’17

China-based vendors will together ship 151.8 million smartphones globally during the second quarter of 2017, increasing 13.0% on quarter but decreasing 2.7% on year and taking up 46.7% of the global total, according to Digitimes Research.

Source: www.digitimes.com

Worldwide Silicon Wafer Area Shipments increased 12.6% y/y to 2,858 million square inches in 1Q’17 (Chart 11)

First Quarter 2017 Silicon Wafer Shipments Increase Quarter-Over-Quarter; Continue to Ship at Record Levels

Worldwide silicon wafer area shipments increased during the first quarter 2017 when compared to fourth quarter 2016 area shipments according to the SEMI Silicon Manufacturers Group (SMG) in its quarterly analysis of the silicon wafer industry.

Total silicon wafer area shipments were 2,858 million square inches during the most recent quarter, a 3.4% increase from the 2,764 million square inches shipped during the previous quarter. New quarterly total area shipments are 12.6% higher than first quarter 2016 shipments and are at their highest recorded quarterly level.

"Global silicon wafer volume shipments for the first quarter defied typical seasonal weakening," said Chungwei (C.W.) Lee, chairman of SEMI SMG and spokesman, VP, Corporate Development and chief auditor of GlobalWafers. "Continued growth on top of previous record quarterly shipments has resulted in another record level of silicon shipped."

Source: www.semi.org

German Speaking Country PCB business grows rapidly in March 2017

Sales of the PCB manufacturers in the DACH region increased 13.6% in March, compared to March 2016. The first quarter closed 8% above the previous year's figure. This is reported by the ZVEI-Fachverband PCB and Electronic Systems.

Order intake in March brought an increase of 23.5% compared to the previous year. The first three months of the year show a cumulative 23.7% higher than in 2016.

As a result, both sales and orders received the highest absolute values in 15 years. The main reason for the increase was the scarcity of copper foil. This has resulted in unpunctual or missing deliveries from Asia.

The book-to-bill ratio went back to 1.14.

The number of employees rose by 1.2 compared to February. It was 5.6% higher than in the first quarter of the previous year.

Source: www.zvei.org

Top 50 Component Distributors (Chart 12)

Source: www.sourcetoday.com

Global tablet shipments are expected to decrease 13.7% y/y to 35.08 million units in 2Q’17; Taiwan-based ODMs and OEMs will together ship 11.5 million tablets in the quarter

Over 35 million tablets to be shipped globally in 2Q’17

There will be 35.08 million tablets shipped globally during the second quarter of 2017, decreasing 5.7% on quarter and 13.7% on year, according to Digitimes Research.

iPad models will account for 25.4% and white-box units for 27.3% of tablets shipments, Digitimes Research indicated.

Apple will be the largest vendor accounting for 25.4% of the shipments, followed by Samsung Electronics with 15.1%, Amazon with 7.4%, Huawei Technologies with 6.6%, Lenovo with 6.6%, Asustek Computer with 3.3%, TCL with 1.7%, Microsoft with 1.5% and Acer with 1.3%.

Taiwan-based ODMs and OEMs will together ship 11.5 million tablets in the quarter, slipping 3.4% on quarter and 16.1% on year. Foxconn Electronics will account for 73.1% of the shipments, Compal Electronics for 11.4%, Pegatron for 8.1%, Quanta Computer for 4.7% and Inventec for 1.8%.

Source: www.digitimes.com

U.S. Industrial Production advanced 1% in April for its third consecutive monthly increase and its largest gain since February 2014. Manufacturing output rose 1% (Charts 13 & 14)

Industrial production (Chart 13) advanced 1.0% in April for its third consecutive monthly increase and its largest gain since February 2014.

World industrial production growth is positive in most key areas of the world (Chart 14).

Source: www.federalreserve.gov/releases/g17/table1_2.htm

Source: www.economist.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. View other posts from Walt D. Custer.
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