Global PMI Leading Indicators
August PMIs have now been released for most countries.
- Growth has accelerated in the U.S., Europe, China and the world (Chart 1).
- The major electronics producing countries all saw improved PMIs in August (Chart 2).
- The Global PMI is at a 23-month high (Chart 3).
- USA PMI is at a 77-month peak (Chart 4).
- Europe PMI growth was mixed by country (Chart 5) but the overall Eurozone PMI was at its highest level since May 2010 (Chart 6).
- Most Asian countries saw PMI growth (Chart 7). China (Chart 8), Taiwan (Chart 9), South Korea (Chart 10) and Japan (Chart 11) manufacturing growth all accelerated.
Global Semiconductor Sales up 24% y/y to $33.6 billion in July (Chart 12-14)
Worldwide sales up 3% compared to previous month; Americas market leads the way with growth of 36% year-to-year and 5% month-to month
The Semiconductor Industry Association (SIA) announced worldwide sales of semiconductors reached $33.6 billion for the month of July 2017, an increase of 24.0% compared to the July 2016 total of $27.1 billion and 3.1% more than the June 2017 total of $32.6 billion. All major regional markets posted both year-to-year and month-to-month increases in July, and the Americas market led the way with growth of 36.1% year-to-year and 5.4% month-to-month. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.
“Worldwide semiconductor sales increased on a year-to-year basis for the twelfth consecutive month in July, reflecting impressive and sustained growth for the global semiconductor market,” said John Neuffer, president and CEO, Semiconductor Industry Association. “Sales in July increased throughout every major regional market and semiconductor product category, demonstrating the breadth of the global market’s recent upswing, and the industry is on track for another record sales total in 2017.”
- Our CCG leading indicator points to continue chip shipment growth ahead (Chart 15).
- The North American share of global semiconductor shipments increased to 21.2% in July (Chart 16) as shipments to North America are at an all-time on a 3-month average basis (Chart 17) however domestic semiconductor growth continues well above end market demand on a 3/12 growth basis (Chart 18).
July U.S. Shipments, Orders and Inventories
The July domestic “Factory Orders” report was recently released:
- Electronic equipment growth remains relatively modest (Chart 19).
- Communication (Chart 20) and computer (Chart 21) demand is flat but military electronics orders have risen slightly (Chart 22) and defense capital goods demand jumped (Chart 23).
- Electromedical, measurement and control equipment orders and shipments are strong and near an all-time high (Chart 24).
- Vehicle shipments are flat (Chart 25).
- Passive component demand is modest (Chart 26) as 3/12 growth has dwindled (Chart 27).
Chart 28 gives the annualized and 3-month growth of the domestic electronic supply chain
Rapid Migration to Larger-sized Screens Enables Public Display Revenue to Grow at 18% CAGR (Chart 29)
In contrast to stable or declining consumer TV sales, worldwide public display revenues are forecast to reach a healthy compound annual growth rate (CAGR) of 18.2%n from 2016 to 2021, according to IHS Markit.
The global public display market, which includes public-display monitors and public-display TVs used in digital signage and professional applications, can be expected to grow from $6 billion in 2016 to $13.7 billion by 2021 in revenues, and from 3.1 million units to 5.1 million units in shipments during the same period, IHS Markit says.
“In the long term, public display revenue growth will be fueled by high demand for larger-sized displays, particularly in the education and corporate space,” said Sanju Khatri, director, digital signage and professional video at IHS Markit.
IHS Markit predicts that by 2019 more than half of the revenue of public display market will originate from display sizes greater than 65 inches.
“Displays sized 65 inches are the most popular category, and those between 80 inches to 89 inches are showing fastest revenue growth in the education and corporate collaboration verticals,” Khatri said.
The use of technology in the education sector is set to increase significantly from an upsurge in digital or video-based learning. The education sector is widely implementing learning aids such as interactive flat panels in an attempt to seek greater interaction and engagement with students in the classroom.
Similarly, with the increased affordability of larger-sized displays, LCDs have become by far the most installed displays in the corporate environment. Conference room displays are considered an important asset for collaboration and communication in today’s geographically dispersed workforce.
Worldwide Brand Motherboard Shipments to decline to 45 million units in 2017
Worldwide brand motherboard shipments are expected to reach only 45 million units in 2017 and may drop further in 2018 as related demand continues shrinking, according to sources from the upstream supply chain.
Worldwide brand motherboard shipments were 75 million units in 2013, but slipped below 50 million units in 2016. Since motherboard demand from China, which had been the main growth driver in the past few years, is dropping significantly, shipments are expected to remain in decline in 2017.
Gigabyte Technology is also expected to see its motherboard shipments drop below 13 million units in 2017. In addition to China's weakening demand, competition from Asustek has also grown fiercer, the sources noted.
However, Gigabyte is still expected to be able to keep its EPS at above NT$3 for 2017 thanks to rising sales from its graphics card business because of the cryptocurrency mining trend and server orders in the first half of the year. In the first three quarters of 2017, Gigabyte is expected to ship 3.4 million graphics cards, a level similar to that of the entire 2016.
Since Gigabyte is still in the process of reorganizing its business, and shadows have been cast over the cryptocurrency trend, the sources believe these issues could pose strong challenges to the company's operation in 2018.
Global DRAM Module Sales dropped 12% y/y to US$6.9 billion in 2016
Global DRAM module sales totaled around US$6.9 billion in 2016, down about 12% from US$7.9 billion a year earlier, according to DRAMeXchange. Falling PC DRAM prices during the first half of the year and the continuing contraction of the DIY market were the main factors behind the revenue decrease.
The DRAM market was still in oversupply during the first half of 2016, with 4GB PC DRAM module ASPs hitting as low as US$12.50, said DRAMeXchange.
However, mobile DRAM demand started to surge after the second quarter, which also began to affect the supply of DRAM products for other applications. The supply of PC DRAM memory has become tight since the second half of 2016 prompting the chip prices to rise, DRAMeXchange indicated.
Nevertheless, PC DRAM ASPs for all of 2016 still plunged by 34% compared to 2015, DRAMeXchange said. Average spot prices for PC DRAM suffered an even steeper drop. Consequently, the overall DRAM module industry took a major hit in revenues with most suppliers experiencing revenue declines in 2016, DRAMeXchange said.
Kingston Technology continued to dominate the DRAM module market in 2016 with a 72.55% share, DRAMeXchange indicated. Despite a more than 30% fall in DRAM contract prices, Kingston managed to post a just 6.7% drop in its overall DRAM module revenues for 2016.
Kingston already has a "sizable" market share for eMCPs used by China's second-tier smartphone makers, and the company is looking to increase eMCP sales to China's first-tier smartphone vendors in 2017, DRAMeXchange said. Also, Kingston has been selling specialty DRAM products in the consumer electronics market since 2016, and has started generating significant revenues from the sector in 2017.
Ramaxel remained the revenue leader among China-based DRAM module houses in 2016, and took third place in the global market, DRAMeXchange said.
Ramaxel's DRAM module revenues fell 39% in 2016, due to weak PC DRAM prices during the first half of the year.
Ramaxel is expected to grow its revenues in the future as the company can count on its relationship with Lenovo, DRAMeXchange noted. Furthermore, Ramaxel will be adding new eMCP products into its portfolio and expanding the share of server DRAM modules in its product mix.
Adata Technology was one of the few DRAM module houses posting revenue growth in 2016, and was still the revenue leader among Taiwan-based suppliers, DRAMeXchange said. ADATA gained a cost advantage over its competitors during the second half of 2016 as it raised the share of gaming products in its product mix and kept its own DRAM inventory at an optimal level.
In recent years, DRAM module makers have searched for new "blue ocean" markets to offset the impact of a shrinking PC DRAM market, according to DRAMeXchange. Kingston, for example, started to focus on smartphone applications in 2015 and has also become active in the specialty DRAM market since 2016. Adata and Team Group have made inroads into the gaming market, while Ramaxel has expanded its presence in the server DRAM segment.
Worldwide AR/VR Headset Shipments grew 25.5% y/y to 2.1 million in 2Q’17 (Charts 30 & 31)
The worldwide market for Augmented Reality (AR) and Virtual Reality (VR) headsets grew 25.5% year over year in the second quarter of 2017 (2Q’17) as shipments reached 2.1 million, according to the International Data Corporation (IDC) Worldwide Quarterly Augmented and Virtual Reality Headset Tracker. Volumes declined slightly from the prior quarter, but recent price cuts on existing products and announced plans for new products are expected to lay the groundwork for a successful holiday season.
"Growth in the VR market has been rather sluggish compared to other recently introduced technologies as the amount of investment and, more importantly, the need for end user education is extremely high for VR," said Jitesh Ubrani senior research analyst for IDC's Mobile Device Trackers. "Though the recent price cuts across all major platforms will help alleviate one of the barriers to adoption, providing consumers the opportunity to learn about products and try before they buy is still a significant hurdle faced by most companies."
Virtual reality products once again made up more than 98% of shipments in the combined AR/VR market. On the VR side, screenless viewers accounted for over half of all the headset shipments during the quarter. Tethered VR headsets captured 43%, up from the 34% in the previous quarter, driven in large part to Sony's ongoing success with the PlayStation VR and Oculus increasing shipment volumes thanks to price cuts. Meanwhile, in the still very small AR headset segment, shipments actually declined year over year as several consumer-focused products with big launches last year failed to sustain their volumes a year later. To date, the small but lucrative volume of success in AR headsets has been focused on the enterprise and that's likely to continue for the near term.
"Consumer-focused AR headsets are still some way off, as most people will first experience AR through the screen on their phone," said Tom Mainelli, vice president, Devices and AR/VR at IDC. "Now that Apple and Google are both focused on helping developers create AR experiences on their platforms—through ARKit for iOS and ARCore for Android—we can expect to see a flood of new AR apps appearing on smartphones later this year and into next. These developments should eventually lead to consumer-centric AR glasses, but that won't happen in meaningful volume, at affordable price points, for some time."
Worldwide Hardcopy Peripherals Market Shipments grew 0.7% y/y to more than 23.3 million units in 2Q’17 (Charts 32 & 36)
The worldwide hardcopy peripherals (HCP) market grew 0.7% year-over-year with more than 23.3 million units shipped in the second quarter of 2017 (2Q’17), according to the International Data Corporation (IDC. Inkjet and laser unit shipments both expanded in the quarter, growing 2.9% and 1.7% year over year, respectively.
- HP Inc. remained the top HCP company with 1.3% year-over-year shipment growth. Second-ranked Canon, third-ranked Epson, and fourth-ranked Brother also saw positive year-over-year growth, while fifth-ranked Samsung declined 5.7% year-over-year.
- Monochrome laser 21-44 ppm devices recorded year-over-year growth of 19.1% in unit shipments. The double-digit expansion was helped by strong performances from the top companies, especially HP Inc. and Canon.
- Brother enjoyed the largest year-over unit gain, increasing 4.6% to more than 1.7 million units shipped. This was largely due to its strong growth within the Asia/Pacific (excluding Japan) region where it changed its channel strategy to provide a wider range of products to its office automation channel partners.
- HP Inc. enjoyed 1.3% year-over-year growth in global shipments with a particularly strong performance in Western Europe and Asia/Pacific (excluding Japan). HP's growth was propelled by an online promotion event and the expansion of tier-three channels that had allowed it to capture the growth in demand from the significant increase of new businesses in the SMB segment.