June “Flash” PMI Leading Indicators
IHS Markit just released its June “Flash” PMI leading indicators for select countries:
- Manufacturing PMI growth in the USA, Japan and Germany declined compared to May while the Eurozone and France improved. Note that PMIs >50 indicate a manufacturing expansion so the declines noted above just indicates a slower rate of expansion (Chart 1).
- The USA PMI peaked in January and been weakening since – although remaining still in expansion territory (Chart 2).
- The Eurozone PMI reached a new six year high but its rate of growth is slowing (Chart 3).
- Japan’s PMI declined sequentially from May to June but remains in expansion territory (Chart 4).
JEITA just released April Japanese domestic production data.
- Electronic equipment production declined sequentially from March to April (normal seasonality) although production was up 5.9% in the three months of Feb-Apr 2017 versus Feb-Apr 2016 (Charts 5 & 6).
- Semiconductor shipment growth to Japan is in excess of domestic electronic equipment growth but they are both expanding at similar growth trajectories (Chart 7).
- IC and discrete semiconductor production values were little changed from March considering normal seasonality (Chart 8).
- Passive component production was also relative steady from March to April (Chart 9).
- Printed circuit board production was relatively flat from March to April (Chart 10) as PCB’s 3/12 rate growth returned from a decline to “break even” (Chart 11).
- Electronic device and component growth rates are both positive on a 3/12 basis (Chart 12).
- The Japan PMI leading indicator points to a continued expansion but at a slower rate (Chart 13) as Japan’s recent modest expansion may be peaking or slowing.
Smartphone Makers may see Component Shortages in 2H’17 resulting from Design-In of Larger Memory Capacity, High-Density Batteries, High-Resolution Cameras as well as Dual-Lens Camera Modules
As production for new iPhones is expected to begin in third-quarter 2017 and many Android smartphone vendors will also launch new models in second-half 2017, demand for handset components will increase significantly, and may result in shortages, according Taiwan-based component suppliers.
Smartphone vendors in China have been building up their inventories of handset parts recently in preparation of the launch of new models, while inventory levels at channels are also lower at present due to continued adjustments over the past two quarters, said the sources.
However, design-in of larger memory capacity, high-density batteries, high-resolution cameras as well as dual-lens camera modules have resulted in shortages of these key components, said the sources.
A significant increase in the use of 18:9 panels and Type-C interface solutions has also raised concerns of supply uncertainty for related parts in the second half of the year, added the sources.
The beginning of the volume production of the new iPhones in the third quarter could also create a squeeze-out effect on the supply for some components such as fingerprint sensors, metal cases and display components, said the sources.
German Robotics and Automation Sales Expected to Grow 7% Y/Y in 2017 after New High in 2016 (Charts 14-16)
German robotics and automation is on course for growth: The sales volume reached a new high of EUR 12.8 billion in 2016. For the current business year, VDMA forecasts an increase in growth of 7%.
Since the economic crisis, turnover in the sector has more than doubled in seven years. For the current business year, VDMA forecasts an increase in growth of 7%. “In the global race to modernize the industry, the market players from Germany are benefitting from a robust economy. Our sector is looking optimistically to the future,” said Dr. Norbert Stein, Chairman of the VDMA Robotics + Automation Association at the annual press conference on Tuesday in Frankfurt.
The sales volume of the three segments – robotics, integrated assembly solutions and machine vision – rose from EUR 6.2 billion in 2009 to EUR 12.8 billion in 2016. For 2017, VDMA is anticipating a record sales volume in robotics and automation of EUR 13.7 billion.
Foreign business continues to soar
Export sales rose by almost 9%, domestic business continued at a record level. Germany remains the largest single market with a 43% share of turnover. With regard to international sales, Europe is the largest driver of growth with a share of 30%, while China accounted for 10% and North America for 9%. German exports of robotics and automation rose to 57%.
A comparison of the three segments
Integrated assembly solutions remain the largest subsector of the German robotics and automation industry. Sales rose by 2% to EUR 7 billion. Domestic business increased by 3% and exports by 1%. The automotive industry is the number one customer of assembly solution providers accounting for 69% of turnover. For 2017, VDMA forecasts a turnover increase of 6% to reach a new record of EUR 7.4 billion.
German robotics generated an 8% increase in sales year-on-year reaching a total turnover of EUR 3.6 billion climbing to a new record high. According to the latest figures of the International Federation of Robotics, Germany ranks fifth worldwide with an operational stock of 189,400 industrial robots. In terms of units, production increased by 21%. For 2017, VDMA forecasts a sales increase of at least 8% to EUR 3.8 billion.
Machine vision followed the growth trend with a 9% increase in sales. Domestic business rose by 3% and exports by 14%. For 2017, the VDMA forecast anticipates a 10% sales increase.
Digitalization opportunities for the labor market
Labor supply in Germany will be significantly reduced by 2040. Reason: When the baby boomer generation retires, year groups with low birth rates will succeed them. It is estimated that, the available labor force in Germany will shrink by 10 million people by 2040. This corresponds to a decrease of 20%.
To adapt to this new labor market situation, digital transformation through robotics and automation will play a key role: “Demography and digitalization offer the unique opportunity for Germany to combine innovation, qualification and competitiveness over the coming decades into a positive alliance of economic strength and social solidarity,” says Dr. Horst Neumann of the “Institut für die Geschichte und Zukunft der Arbeit” (IGZA – Institute for the history and future of work) in Berlin. “An accelerated digitalization and the resulting increases in productivity are necessary to safeguard competitiveness and to create the foundations for the financing of infrastructure, education, and the pension system.”
Source: IGZA working paper number one: “Deutschland 2040 – 10 Thesen zu Arbeitsmarkt und Rente, Demografie und Digitalisierung” (Germany 2040 – 10 Theses on the labor market and pension, demography and digitalization) http://bit.ly/2sA84y7 (available in German language only).
Cellphone IC Sales Projected to Grow 16% y/y in 2017 to US$84.4 billion while Personal Computing Systems' IC Market will increase 9% y/y to US$80.1 billion (Chart 17)
- Cellphone IC Sales Will Top Total Personal Computing in 2017
- Higher memory prices accelerate sales growth in both cellphones and personal computing systems but cellular handsets will become the largest application for ICs this year.
The ongoing slump in shipments of standard personal computers along with the drop-off in tablets are setting the stage for cellphone IC sales to finally surpass integrated circuit revenues in total personal computing systems this year, based on new forecasts from IC Insights.
IC sales for cellular phone handsets are projected to grow 16% in 2017 to $84.4 billion while the integrated circuit market for personal computing systems (desktop and notebook PCs, tablets, and thin-client Internet-centric units) is now forecast to increase 9% to $80.1 billion this year, according to the 150-page update to the 590-page report, originally released in 4Q’16.
IC sales for both cellphones and total personal computing systems are strengthening significantly in 2017 primarily because of strong increases in the amount of money being spent on memory, with the average selling price (ASP) of DRAM expected to climb 53% and NAND flash ASP forecast to rise 28% this year. In 2016, IC sales for cellphone handsets grew 2% after rising 1% in 2015, while dollar volume for integrated circuits used in personal computing systems increased just 1% last year after falling 6% in 2015. Cellphone IC sales are also getting a lift from a projected 5% increase in shipments of smartphones, which are being packed with more low-power DRAM and nonvolatile flash storage, while growth in personal computing is expected to be held back by 3% declines in both standard personal computer and tablet unit volumes in 2017.
Shrinking shipments of desktop and notebook computers enabled cellphone IC sales to surpass integrated circuit revenues for standard PCs in 2013. During 2015 and 2016, cellphone IC sales came close to catching up with integrated circuit sales for total personal computing systems. In 2017, cellular phone handsets are now forecast to take over as the largest end-use systems category for IC sales. The gap between IC sales for cellphones and total personal computing systems is projected to widen by the end of this decade. Cellphone integrated circuit sales are expected to increase by a compound annual growth average (CAGR) of 5.3% in the 2015-2020 forecast period to $92.1 billion versus personal computing IC revenues rising by CAGR of just 2.9% to $83.8 billion in 2020, says the update of IC Insights’ 2017 IC Market Drivers Report.
The refreshed forecast shows IC sales for standard PCs climbing 11.2% in 2017 to $67.5 billion after increasing about 4% in 2016 to $60.7 billion. Tablet IC sales are now expected to drop 2% to $11.8 billion in 2017 after falling 11% in 2016 to $12.1 billion, based on the updated outlook. IC sales for thin-client and Internet/cloud computing centric systems—such as laptops based on Google’s Chromebook platform design—are projected to rise 15% in 2017 to a $838 million after surging 21% in 2016 to $728 million. Between 2015 and 2020, IC sales for standard PCs are expected to grow by a CAGR of 4.1% to $71.6 billion in the final year of the updated outlook, while table integrated circuit revenues are projected to fall by -3.9% annual rate in the period to about $11.0 billion and ICs in Internet/cloud computing are forecast to rise by CAGR of 13.8% to more than $1.1 billion.
Worldwide 3D Printer Shipments increased 29% in 2016 while Revenue grew by more than 18% Year-over-Year (Chart 18)
The IDC Worldwide 3D Printer Shipment Tracker found that 3D printer shipments increased 29% in 2016 while revenue grew by more than 18% year-over-year in 2016.
"The 3D printing market surge continues on a worldwide basis with more technology and materials options, which are driving more investment in 3D printers and greater utilization of the equipment that has been installed" said Tim Greene, research director, Hardcopy Solutions at IDC. "We're seeing exciting growth in some of the key technology segments, with FFF/FDM, SLA, and Powder-bed Fusion all growing at double-digit rates year-over-year" Greene continued.
Technology Segment Highlights
The fastest-growing technology segments were FFF/FDM and Stereolithography, which each grew shipments by nearly 30% in 2016 versus 2015.
On the revenue side, powder-bed fusion-based 3D printers grew by nearly 40% from 2015 to 2016.
The strongest growth in 3D printer shipments came from the Asia/Pacific region (excluding Japan), Central and Eastern Europe, and the Middle East and Africa.
Shipments in Asia/Pacific surged in 2016 making it the largest 3D printer region in the world in 2016.
3D printer shipments in North America recovered nicely in the second half of 2016, but were still down for the year.
Chinese manufacturers like Flashforge, XYZ Printing, and Tiertime selling low-end FFF/FDM printers make up more than 30% of shipments but less than 5% of worldwide hardware revenue.
Stratasys and 3D Systems make up just over 6% of worldwide shipments, but over 30% of total hardware revenue in 2016.
IDC tracks 3D printing commercial devices based on core technologies as defined by the ASTM Devices tracked include products with product names, not all systems built using additive manufacturing processes
Worldwide Top-5 Notebook Vendors Combined Shipments increased 26% m/m and Top-3 ODMs expanded 34% m/m in May
Because of increased demand from the enterprise market and the fact that the education sector has entered the traditional peak season, the worldwide top-5 notebook vendors saw their combined shipments increase 26%, and the top-3 ODMs 34%, on month in May. The top-3 ODMs together achieved higher growth than the top-5 vendors combined because their proportion of orders from US-based vendors was up from a month ago, while Lenovo performed poorly during the month.
Hewlett-Packard's (HP) shipments grew on month in May, helping the company to become the largest vendor worldwide, surpassing the previous month's number one Dell. HP's shipment gap with Lenovo further expanded to more than 1.2 million units. Dell's shipments in May were down slightly on month, but were up over 10% on year thanks to strong shipments to North America's enterprise market, according to Digitimes Research's latest monthly notebook report.
Lenovo was the third-largest in May, facing serious challenges in both market operations and personnel management.
Quanta Computer's notebook shipments grew 48% from a month ago in May thanks to new projects from HP and increased shipments for Apple's new products. Meanwhile, Compal Electronics and Wistron each saw around 20% on-month growth in May.
Top global 100 vendors in IT in 2016 based on their revenue across IT (excluding communication services) and component market segments released by Gartner.
Win Semi Looks to 5G Base Station Construction for 2018 growth
With 5G base station construction set to kick off in 2018, GaAs IC foundry Win Semiconductors expects its business to enter another high-growth phase, according to company chairman Dennis Chen.
In addition, upcoming rollouts of new smartphones are expected to buoy Win Semi's performance in the second half of 2017, said Chen.
Win Semi reported consolidated revenues of NT$1.27 billion (US$41.8 million) for May 2017, up 5.3% on year and hitting a record high. The company's cumulative 2017 revenues through May came to NT$5.79 billion, rising 2.9% from a year earlier.
Win Semi expects to post revenue growth of 13-17% sequentially for the second quarter of 2017, with a higher gross margin. The company credited its positive outlook to the increase in market demand and inventory build-up of the smartphone supply chain.
Win Semi's shareholders have approved the distribution of a NT$4.50 (US$0.15) cash dividend per share for 2016, when the company generated a record NT$6.04 in EPS.
In other news, Win Semi disclosed plans to raise funds by issuing up to 40 million common shares through private placement. The company said it is seeking partnership with potential strategic partners through the fundraising, which is scheduled to complete by the end of 2017.