August PMI Leading Indicators
Purchasing Managers Indices for August have been released:
- Global PMI is at its lowest level in 22 months. Manufacturing growth continues but at a slower pace (Chart 1).
- U.S. PMI results were mixed. Institute for Supply Management reported a record high PMI but Markit Economics showed a multi-month decline (Chart 2).
- Eurozone PMI continues to drop from its December high (Chart 3) as most European countries had slower manufacturing growth in August (Chart 4).
- Asia was mixed with Japan, S. Korea, and Indonesia showing accelerating manufacturing growth (Chart 5).
- China (Chart 6) & Taiwan (Chart 7) saw weakened growth and S. Korea (Chart 8) returned to “break even.”
www.instituteforsupplymanagement.org
U.S. July Electronic Supply Chain Shipments, Orders and Inventories
The U.S. Department of Commerce released its July “Factory Orders” report:
- Electronic equipment shipment and order growth remains strong at near +10% compared to May-June 2017 (Chart 9). Actual $ values are on an upward trajectory (Chart 10).
- Electromedical, measurement and control equipment dominates monthly equipment orders (Charts 11 & 12).
- Vehicle shipments reached record high (Chart 12).
- Military electronics orders were little changed (13).
- Aircraft shipments (Chart 14) and orders (Chart 15) weakened.
- Vehicle shipments reached a record high (Chart 16).
Passive component orders and shipments declined (Chart 17) as their 3/12 growth mirrors (but is less volatile than) North American semiconductor shipments (Chart 18).
Chart 19 summarizes the annualized (12/12) and 3-month (3/12) growth of the domestic supply chain through July.
www.census.gov/indicator/www/m3/
World Semiconductor Sales Increase 17.4% in July (Charts 20-25)
- Global industry posts highest-ever monthly sales; year-to-year growth was seen across all major semiconductor product categories and regional markets
SIA announced worldwide sales of semiconductors reached $39.5 billion for the month of July 2018, an increase of 17.4% compared to the July 2017 total of $33.6 billion. Global sales in July 2018 were 0.4% higher than the June 2018 total of $39.3 billion.
“The global semiconductor industry posted its highest-ever monthly sales in July, easily outpacing last July and narrowly ahead of last month’s total,” said John Neuffer, president and CEO, Semiconductor Industry Association. “Sales were up year-to-year across every major semiconductor product category and regional market, with the China and Americas markets leading the way with growth of greater than 20%.”
Memory Production Value Growth to Slow in 2019
The global DRAM and NAND flash sectors are expected to see their combined output value grow less than 30% in 2018, according to Digitimes Research. The growth will slow to a single-digit rate in 2019.
The output value of the global DRAM sector will reach a record high of nearly US$100 billion in 2018, buoyed mainly by robust demand for servers. Server shipments worldwide are forecast to climb over 15% in 2018, while memory content per box for servers continues rising.
SK Hynix has already put an increased focus on server DRAM products. The segment grew as a proportion of the company's total DRAM sales to 38.8% in the second quarter of 2018, up from 24% in the fourth quarter of 2016.
Micron Technology saw its server DRAM sales account for 29% of its overall DRAM revenues in the first half of 2018 compared with 22% in 2013.
Digitimes Research believes that DRAM suppliers will be striving to expand their presence in the server market where they are able to make more profits.
Samsung, SK Hynix to Defer Expansion Plans
Samsung Electronics and SK Hynix both intend to defer their capacity expansion plans, as a slowdown in customer demand will be dragging down DRAM and NAND flash memory prices through the first half of 2019, according to industry sources.
The global NAND flash market has remained in oversupply in the third quarter of 2018 despite the period being the traditional peak season, the sources said. Suppliers' continued ramp-ups of 64- and 72-layer 3D NAND flash output coupled with the limited demand growth due to the saturated notebook and smartphone markets are being identified as the factors bringing down the memory prices.
Meanwhile, the industry supply chain is flooded with substandard NAND flash chips, which have made a further negative impact on the memory prices, the sources noted. NAND flash contract prices are likely to fall by a larger-than-expected 10-15% sequentially in the third quarter and another 15% in the fourth, the sources said.
DRAM contract prices have also shown signs of falling, the sources indicated. The memory contract prices are expected to start falling in the fourth quarter as the market becomes oversupplied, the sources said.
NAND flash and DRAM memory prices will be under downward pressure through the first half of 2019, the sources pointed out.
Industry leader Samsung, which used to supply 3D NAND chips for its own SSDs and other products, has started shipping the memory externally in the third quarter of 2018, according to the sources. Samsung is also slowing down the pace of expanding its 3D NAND chip output, with new production capacity unlikely to go online until the first half of 2019, the sources said.
Samsung has also put on hold its plans to build additional new production capacity for 1ynm DRAM chips at its fabs in Hwaseong and Pyeongtaek, the sources continued. The chip vendor previously planned to build an additional 30,000 wafers monthly for DRAM memory starting the third quarter of 2018, the sources said.
In addition, SK Hynix has decided to slow down the pace of its new 3D NAND chip capacity expansion project, the sources noted.
Worldwide Wearables Market Up 5.5% Due to Emerging Markets
(Charts 26 & 27)
Growth continued in the global wearables market during the second quarter of 2018 as shipment volume reached 27.9 million units, up 5.5% from the previous year according to International Data Corporation (IDC). The market experienced similar gains in dollar value, growing 8.3% year-over-year to $4.8 billion in 2Q18 fueled by the continued popularity of smartwatches with their high price tags.
From a regional perspective, mature markets – comprising North America, Japan, and Western Europe – declined 6.3% year over year as these markets largely comprised basic wristbands last year, which have declined substantially since then and the growth in smartwatches has not been enough to offset the decline. Meanwhile, emerging markets, inclusive of Asia/Pacific (excluding Japan), Central and Eastern Europe, Middle East and Africa, and Latin America grew 14% year-over-year as basic wristbands are still in high demand (due to the low price) and smartwatches also gained traction.
"The decline in mature markets is by no means worrisome as these markets are in the midst of transitioning to more sophisticated wearables," said Jitesh Ubrani senior research analyst for IDC Mobile Device Trackers. "While the previous generation of wearables was focused on providing descriptive feedback like step counts, the current and upcoming generations are far more capable and are well on track to becoming prescriptive and diagnostic tools. Surrounding these smarter wearables is a constellation of technologies and service providers that includes app developers, telcos, component makers, healthcare institutions and more – each poised for growth in the coming years."
"Two key forces were at work during the quarter: stronger demand for smart wearables, and slower declines in the basic wearables market," said Ramon T. Llamas, research director for IDC's Wearables team. "Users have come to want more from their wearable devices, and smart watches have met that demand. Additionally, relative newcomers to the smartwatch market like Fitbit and several Chinese vendors have seen steady growth.
"Basic wearables have been in decline over the past several quarters, but that does not mean that they no longer have a place in the market," added Llamas. "There still exist multiple market segments that prefer simple and inexpensive wearable devices and this is where wrist-worn fitness trackers and hybrid watches are finding demand."
Over 380,000 Industrial Robots Sold Globally in 2017
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.
Worldwide Enterprise Storage Systems Revenue up 21.3% in 2Q’18
Total capacity shipments increased 70.7% y/y to 111.8 exabytes
According to the International Data Corporation (IDC), vendor revenue in the worldwide enterprise storage systems market increased 21.3% year-over-year to $13.2 billion during the second quarter of 2018 (2Q18). Total capacity shipments were up 70.7% year-over-year to 111.8 exabytes during the quarter.
Revenue generated by the group of original design manufacturers (ODMs) selling directly to hyperscale datacenters increased 31.7% year-over-year in 2Q18 to $3.3 billion. This represents 25.1% of total enterprise storage investments during the quarter. Sales of server-based storage increased 24.9% year-over-year to $3.8 billion in revenue. This represents 28.5% of total enterprise storage investments. The external storage systems market was worth slightly over $6.1 billion during the quarter, up 14.4% from 2Q17.
"Strong 2Q18 growth was driven by an ongoing infrastructure refresh cycle, investments in next-generation workloads, expanded use in public cloud services and data-driven initiatives," said Sebastian Lagana, research manager, Infrastructure Platforms and Technologies. "The growing data economy is a big part of the current market growth. Companies of all sizes are investing in platforms that support their need to ingest, process, and disseminate large volumes of data cost-effectively and without introducing new risks to the business."
World Ethernet Switch Market Increased 4.8% in 2Q’18, Router Market Down 2.5% (Charts 28 & 29)
The worldwide Ethernet switch market (Layer 2/3) recorded $6.7 billion in revenue in the second quarter of 2018 (2Q18), an increase of 4.8% year-over-year. Meanwhile, the worldwide total enterprise and service provider (SP) router market recorded $3.8 billion in revenue in 2Q18, decreasing 2.5% on a year-over-year basis.
