Japan Update
JEITA just released Japanese domestic production data for June:
- Chart 1 summarizes 2Q’18 vs.2Q’17 production growth by sector.
- Monthly production is seasonal but June 2018 was down 3.3% vs. June 2017 (Chart 2).
- Passive component production has risen 19% from its recent February 2018 low (Chart 3).
- Electronic component production was up 5.5% in 2Q’18 vs. 2Q’17 but electronic device production declined 4.7% for the same period (Chart 4).
- PCB production has been relatively flat since 2015 (Chart 5) and the Japan PMI leading indicator points to minimal growth ahead (Chart 6).
Source: www.jeita.or.jp
Total Semiconductor Capital Expenditures will Increase 9% y/y to $102 Billion in 2018 (Charts 7 & 8)
- Memory ICs nearly doubling from 27% ($14.7 billion) in 2013 to a forecast of 53% ($54.0 billion) of total industry capex in 2018 (Chart 7).
- Memory ICs to account for 53% of total 2018 Semi Capex (Chart 8)
IC Insights forecasts total semiconductor capital expenditures will rise to $102 billion this year, marking the first time that the industry has spent more than $100 billion on capital expenditures in one year. The $102 billion spending level represents a 9% increase over $93.3 billion spent in 2017, which was a 38% surge over 2016.
Chart 8 shows that more than half of industry capital spending is forecast for memory production—primarily DRAM and flash memory—including upgrades to existing wafer fab lines and brand new manufacturing facilities. Collectively, memory is forecast to account for 53% of semiconductor capital expenditures this year. The share of capital spending for memory devices has increase substantially in six years, nearly doubling from 27% ($14.7 billion) in 2013 to a forecast of 53% ($54.0 billion) of total industry capex in 2018, which amounts to a 2013-2018 CAGR of 30%.
Of the major product categories shown, DRAM/SRAM is forecast to show the largest increase in spending, but flash memory is expected to account for the largest share of capex spending this year. Capital spending for the DRAM/SRAM segment is forecast to show a 41% surge in 2018 after a strong 82% increase in 2017. Capital spending for flash memory is forecast to rise 13% in 2018 after a 91% increase in 2017.
After two years of big increases in capital expenditures, a major question looming is whether high levels of spending will lead to overcapacity and a softening of prices. Historical precedent in the memory market shows that too much spending usually leads to overcapacity and subsequent pricing weakness. With Samsung, SK Hynix, Micron, Intel, Toshiba/Western Digital/SanDisk, and XMC/Yangtze River Storage Technology all planning to significantly ramp up 3D NAND flash capacity over the next couple of years (and new Chinese memory startup companies entering the market), IC Insights believes that the future risk for overshooting 3D NAND flash market demand is high and growing.
Source: www.icinsights.com
Taiwanese Manufacturers in China Planning to Expand Production in Taiwan
The heightened US-China trade tensions have sparked concerns among Taiwanese manufacturers in China, and plans to expand manufacturing facilities in the home country.
At least four major Taiwanese manufacturers which have invested in China are planning to build factories in Taiwan, including the telecom broadband solution provider Sercomm Corp., power supply maker Delta Electronics, Compal Electronics, and Quanta Computer, according to a Mirror Media report.
Sercomm's General Manager Wang Wei told the media that if the U.S. imposes a 25% tariff on Chinese imports, up to 90% of telecom and broadband equipment manufacturers in China would be negatively affected, and by then it would be time for the company to opt out of China as the main manufacturing base.
Delta founder Bruce Cheng said recently at a tech summit in Beijing that the trade war is leaving a tremendous impact on Chinese and Taiwanese tech companies, and his company is preparing itself for the worst to minimize the loss. People familiar with the matter told the media that Delta has manufacturing facilities in Thailand, India, and Slovakia, while it has decided to spend NT$2.7 billion on a new facility of nearly one hectare at the Southern Taiwan Science Park, and NT$1.5 billion to build a research and development center near its Taipei headquarters.
Compal, the computer and peripheral equipment supplier, is also planning to restart its facility in Pingzhen, Taoyuan to respond to the threat of a trade war. Compal Vice Chairman Ray Chen said recently at an institutional investor conference that the company is planning to restart its Taoyuan facility, whose annual capacity is 3-5 million laptops, for exporting to the U.S. market.
A business insider told Mirror Media that Quanta has procured robot arms from KUKA for its new server facility in Linkou, New Taipei City, as a precautionary move to avoid impact from the trade war.
Source: www.taiwannews.com.tw
IPC Releases North American PCB Industry Results for July 2018 (Charts 9-12)
North American PCB Industry Growth Continues
IPC announced the July 2018 findings from its North American Printed Circuit Board Statistical Program. Year-over-year growth continued for industry sales and orders. The book-to-bill ratio for July held steady at 1.05.
Total North American PCB shipments in July 2018 were up 10.8% compared to the same month last year. This year to date, shipments are 10.5% above the same period last year. Compared to the preceding month, July shipments decreased 19.1%.
PCB bookings in July increased 4.9% year-over-year. Year-to-date order growth was 11.7% above the same period last year. Bookings in July were down 12.3% from the previous month.
“Business growth continued in July for the North American PCB industry although at a slightly slower pace than in the previous month,” said Sharon Starr, IPC’s director of market research. “July was the 11th consecutive month of sales growth and the 14th month of continuous order growth. The month-to-month decreases in sales and orders in July follows a typical seasonal pattern in which business is strongest in the last month of the quarter and falls off in the first month of the next quarter, probably due to sales activity. The book-to-bill ratio in July remained above parity (1.0) for the 18th consecutive month, which is a positive indicator of continued growth for the remainder of this year.”
Source: www.ipc.org
Huawei Secured No. 2 Worldwide Smartphone Vendor Spot, Surpassing Apple in Second Quarter 2018 (Charts 13-16)
Worldwide Sales of Smartphones Grew 2% in Second Quarter 2018
In the second quarter of 2018, Huawei surpassed Apple to secure the No. 2 worldwide smartphone vendor position for the first time ever, according to Gartner, Inc. Apple moved into the No. 3 spot. Overall, sales of smartphones to end users grew 2% in the second quarter of 2018 to reach 374 million units.
"Huawei’s smartphone sales grew 38.6% in the second quarter of 2018. Huawei continues to bring innovative features into its smartphones and expand its smartphone portfolio to cover larger consumer segments," said Anshul Gupta, research director at Gartner. "Its investment into channels, brand building and positioning of the Honor devices helped drive sales. Huawei is shipping its Honor smartphones into 70 markets worldwide and is emerging as Huawei’s key growth driver."
Samsung maintained the No. 1 global smartphone vendor spot, declining 12.7% in the second quarter of 2018. "Samsung faces slowing global smartphone demand and ever-growing competition from Chinese manufacturers," said Gupta. "The slowing demand for its flagship smartphones left Samsung with lower profitability. It now expects the Note 9 smartphone to revive growth."
Apple’s performance was flat in the second quarter of 2018 (0.9% growth). "Minimal incremental value in Apple's current-generation flagship iPhones led to slower growth in the second quarter of 2018," said Gupta. “Demand for the iPhone X has started to slow down much earlier than when other new models were introduced.”
"Growing competition from Chinese brands and consumers’ greater expectations for phone value is putting immense pressure on Apple to deliver enhanced value on their premium iPhones to foster growth," added Gupta.
Xiaomi’s focus on expanding its portfolio and adopting a unified retail model by integrating offline and online retail is driving growth in a slowing global smartphone market. This helped Xiaomi secure the No. 4 spot in the global smartphone market in the second quarter of 2018.
In the smartphone operating system (OS) market, Google’s Android further extended its lead over Apple’s iOS in the second quarter of 2018, securing 88% market share to 11.9% share for iOS.
Source: www.gartner.com
Global Industrial Robots Sales Increased 29.3% y/y to 380,600 in 2017
Automakers purchased 125,400, growing 21% y/y
In 2017, 380,600 industrial robots were sold globally, increasing 29.3% on year, according to World Industrial Robot 2018 published by International Federation of Robotics (IFR).
Of the total, 125,400 were purchased by users in the automaking industry, growing 21% on year. Shipments to the manufacturing industries of metals, electronics/electric appliances and food rose 54%, 27% and 19% respectively. Although growth in global car sales is slowing down, automakers keep hiking automation of production, especially China-based ones and makers of electric vehicles.
Among regional markets, 255,000 industrial robots were sold in Asia and Australia, up 34% on year; 67,000 units in Europe, up 20%; and 50,000 units in North and Latin Americas, up 22%.
China, South Korea and Japan were the three largest country markets with sales of 138,000, 40,000 and 39,000 units respectively. The US ranked fourth with 33,000 units, followed by Germany (22,000) and Taiwan (11,000).
Manufacturing industries around the world recorded an average use density of 74 industrial robots per 10,000 workers, with South Korea posting the highest density of 631 units per 10,000 workers. Taiwan's use density stood at 177 industrial robots per 10,000 workers, ranking 10th globally. While China ranked 23rd, its government aims to advance the country to the top-10 in terms of industrial automation with use density to rise to over 150 industrial robots per 10,000 workers in 2020.
Source: www.digitimes.com
Electronic Component Manufacturing to Take Up 36% of Collaborative Robots to be Used in Taiwan
Manufacturing of electronic components including ICs and PCBs will account for 36% of collaborative robots to be deployed in Taiwan in the future, followed by metal working with 32%, retail logistics with 15%, food processing with 11% and shoe making with 6%, according to Industry, Science and Technology International Strategy Center under government-sponsored Industrial Technology Research Institute (ITRI).
While demand for all types of industrial robot in China, Germany, Japan, South Korea and the US kept increasing at a CAGR of about 13% during 2011-2017, global demand for collaborative robots alone hiked 89% on year in 2016, 75% in 2017 and is forecast to hike 65% in 2018, the center said. Human-machine collaboration functionally fills the gap between 100% manually operated production and completely automated production and is becoming the mainstream mode in the global industrial automation market, the center explained.
For manufacturing of electronic components, collaborative robots will be paired with AGVs (automated guided vehicles) for feeding, cutting and moving of materials mostly, the center noted. For metal working processes, collaborative robots will be used in feeding, cutting, moving and carrying of materials as well as grinding, paint spraying, gluing and polishing, the center indicated.
Source: www.digitimes.com
Worldwide Large Format Printer Shipments up Through the 1H’18 (Charts 17 & 18)
Worldwide shipments of large format printers increased 4% year over year while large format printer revenue grew 3% year over year in the second quarter of 2018 (2Q18), according to the International Data Corporation (IDC) Worldwide Quarterly Large Format Printer Tracker. For the first half of the year, shipments are up 3.5% while revenue is up over 5% compared to the first half of 2017.
"New solutions, capabilities, and technologies continue to drive investment in large format printing equipment on a worldwide basis," said Tim Greene, research director, U.S. Large Format Printer Tracker. "While some regions and technologies are maturing, we also see that manufacturers and dealers are incentivizing new printer shipments with discounts, bundles, and aggressive promotions.
"A recovery in technology categories like eco-solvent and toner-based printers have run counter to some of the market trends over the past few quarters to create a bit of a surprisingly strong second quarter," Greene added.
Other Highlights
Large format UV and large format dye-sublimation inkjet printer shipments were both up by more than 1,000 units from Q2 2017.
Surprisingly, large format eco-solvent inkjet printer shipments were steady compared to the recent quarters while Latex printer shipments were slightly lower in 2Q18.
Source: www.idc.com
Worldwide Smartphone Shipments Expected to Decline 0.7% From 1.465 Billion in 2017 to 1.455 Billion Units in 2018
While the worldwide smartphone market is expected to decline again in 2018, IDC believes the market will experience low single-digit growth from 2019 through the end of its forecast in 2022. The International Data Corporation (IDC)
Worldwide Quarterly Mobile Phone Tracker forecasts worldwide smartphone shipments to decline 0.7% in 2018 to 1.455 billion units, down from 1.465 billion in 2017. However, IDC believes the market will return to positive growth in the second half of 2018 with volumes up 1.1% compared to the second half of 2017. In the long-term forecast, IDC expects the overall smartphone market to reach 1.646 billion units shipped in 2022.
Overall, the global smartphone market is healthy and has plenty of upside, which is noted by the return to growth in the forecast. When breaking down the growth by device type, it is clear that large-screen smartphones (5.5 inch and larger) will lead the charge with volumes of 941.6 million in 2018, accounting for 64.7% of all smartphones, up from 623.2 million units in 2017 and 42.5% share. By 2022, shipments of these larger screen smartphones will jump to 1.391 billion units, or 84.5% of overall shipment volume.
The industry is experiencing a shift toward higher aspect ratios, at or near 18:9, which require a larger screen to support the widescreen viewing angle. While the 18:x aspect ratio started with flagship and higher-end devices in 2017, it began to appear in lower-priced devices in 2018, including some sub-$200 handsets. By Q2 2018, 16:9 smartphones were overtaken by 17.5:9 aspect ratios (or higher) for the first time. As Chinese brands, such as Huawei, OPPO, vivo, and Xiaomi, expand their international presence, it is likely the focus on large screens and aspect ratios will remain a focus across their entire portfolio. The anticipation of the new iPhone models this fall, two of which IDC believes will be above 6 inches and available for shipment in the second half of 2018, will act as another catalyst toward driving these important display trends.
"With two out of three new iPhones expected to be larger than 6 inches, Apple will not be left behind in the 2018 race for increased screen real estate," said Melissa Chau, associate research director with IDC's Worldwide Quarterly Mobile Device Trackers. "You could say the term 'phablet' is becoming less relevant now that most smartphones will ship with larger screens, and when folding screens start coming into play in the medium term, this screen trend will evolve in new directions."
From a geographic perspective, the China market is finally showing signs of recovery and while IDC still expects the largest market in the world to be down 6.3% in 2018 (slightly worse than the 2017 downturn), that is mainly attributed to an extremely poor first half, which saw smartphone volumes down 11%. The second half is expected to improve to a decline of 2% before returning to positive growth in 2019. Asia/Pacific as a region still holds plenty of market growth led by India and Indonesia, which are expected to grow shipments in 2018 by 14.4% and 15.4% respectively.
“We still believe the smartphone market has some healthy growth in the years to come, although finding and competing in those markets and segments is increasingly more challenging," said Ryan Reith, program vice president with IDC's Worldwide Mobile Device Trackers. "With the US-China trade tariffs changing and unfolding daily it is hard to pinpoint what the exact impact on the market will be, but for the time being OEMs are pushing forward with important initiatives that include the previously mentioned traction around bigger and better displays. But the industry also has 5G knocking at its doors, and many OEMs, retailers, telcos, and supply chain partners will be working diligently to ensure consumers see the need to upgrade when products and services are readily available."
Source: www.idc.com
PCB Makers Increase Q3 Operations Due to Apple’s New Models Launching and the Raw Materials Stocking Trend
Apple’s earnings and outlook are better than expected, thus stimulating Apple’s market value to hit US$1 trillion and spurring on Taiwan’s Apple supply chain. Therein, Apple’s PCB supply chain, including Zhen Ding Tech, Flexium Interconnect, Compeq, and Unitech, anticipate increasing their production capacities with the beginning of peak season in Q3 in order to stock up on raw materials for the launch of new models.
This year, Flexium Interconnect has obtained new orders for Apple’s communication management and wireless transmission modules. As the gross profit margin is better than that of last year’s wireless charging modules, it will help Flexium Interconnects’ profit in the second half of the year. Feeling optimistic about the upcoming peak shipment season in the second half of the year, the company revenue is anticipated to grow quarter by quarter. Following the mass production of new materials, Flexium Interconnect noted that the gross profit margin will likely increase further. Its production and inventory volume in Q3 are expected to increase by 0~10% annually, with peak shipments falling from August to November.
Zhen Ding Tech has performed well this year. Following the beginning of the traditional peak season in the second half of the year, its operations will continue to rise quarter by quarter, and its annual revenue expected to hit a record high again. As Zhen Ding Tech has won more orders, its revenue in the second half year is growing and is expected to reach an annual revenue of NT$120 billion, with a year-on-year increase of NT$10 billion, to outperform the industry. The substrate like PCB (SLP) business, in particular, has turned profitable since the end of last year.
Compeq’s operation in the second half of the year is growing quarter by quarter. Due to increasing SLP competitors and a higher inventory on old models, it is facing more pressure on market prices this year. However, by improving its yield and product structure, Compeq’s gross profit margin and profit performance have stabilized this year. (News source: Liberty Time Net)
Source: www.tpca.org.tw
Global Personal Computing Devices Market to Contract 3.9% in 2018 (Chart 19)
Performance and portability shine in declining markets for personal computing devices, says IDC.
Unit shipments for the global personal computing devices market, comprised of traditional PCs, tablets, and workstations, is expected to contract by 3.9% in 2018, according to the latest forecast from IDC. This decline is expected to continue throughout the forecast period as the market shrinks to 383.6 million units shipped in 2022 with a five-year CAGR of negative 1.5%.
Despite the decline in overall shipment volume, the market is expected to grow 3.6% in terms of dollar value to US$237.3 billion in 2018, fueled by 2-in-1s (detachable tablets and convertible notebooks), ultraslim notebooks, and even desktops, particularly ones used for gaming.
"Although average time spent on a PC has declined substantially in the past few years, the need for better designs and greater performance has continued to grow," said Jitesh Ubrani, senior research analyst with IDC's Quarterly Personal Computing Device Tracker. "The market for gaming PCs provides a much needed uplift in the short term and beyond that we still anticipate the need for performance-oriented machines that cater to designers, AR/VR related tasks, and even to creators that are part of the YouTube generation."
Among the various form factors, desktops are expected to see a CAGR of negative 2.7% as most of these devices are destined for the commercial market where lengthy refresh cycles and saturation are contributing to a steady decline in shipments. Slate tablets, along with traditional notebooks and mobile workstations, share a similar outlook with five-year CAGRs of negative 5.3% and negative 9.1% respectively.
Meanwhile, ultraslim notebooks and 2-in-1 devices share a much more positive outlook as the categories are forecast to achieve CAGRs of 7.8% and 9.3% respectively.
"While the ramp of convertibles and detachables has been more crawl than run, the category on the whole continues to build momentum," said Linn Huang, research director, Devices & Displays at IDC. "Strong form factor appeal, the continued growth of gaming, and even the ascent of Chromebook as a consumer device in North America will all play an important role in bolstering the critical holiday season that is looming."
Source: IDC, compiled by Digitimes, August 2018
