Taiwan/China Update

September sales have been released by Taiwan-listed electronics companies, many of which manufacture in China.

  • Manufacturing growth is stagnating both on the China mainland and Taiwan (Charts 1 & 2).
  • Electronic equipment output is undergoing its normal autumn “busy season” as September 2018 OEM sales rose 14.3% compared to September 2017 and increased 24.2% sequentially compared to August 2018 (Chart 3).
  • ODM sales driven by Foxconn were up 10.4% in September 2018 vs. 2017 and up 25.3% sequentially from August 2018 (Chart 4).  In 3Q’18 vs 3Q17 ODM revenues climbed 12.9% (Chart 5).
  • Semiconductor shipments to Asia/Pacific are in balance with manufacturing growth on a 3/12 basis (Chart 6).
  • Network equipment shipments are near a 13-year high (Chart7) and industrial computer sales are strong (Chart 8).
  • Package and test revenues are at an all-tie high (Chart 9).
  • Foundry sales have recovered and are mirroring global semiconductor shipments (Chart 10).
  • Memory revenues have plateaued (Chart 11).
  • After a huge increase passive component shipments appear to have peaked and may be correcting downward (Chart 12).
  • Solar/photovoltaic equipment demand has flattened (Chart 13).
  • Printed circuit boards and CCL (PPB laminate) revenues are at 10-year highs (Chart 14).

Sources:
www.markiteconomics.com for PMI data and company financial report for sales data

 

Europe Update

  • Eurostat has released August European production data:
  • Growth of the European electronic supply chain is given in Chart 15.
  • Industrial production growth has flattened (Chart16).
  • Purchasing managers indices vary by country (Chart 17) but as a whole Eurozone manufacturing growth has dropped sharply from its December 2017 Chart 18).  Growth continues but at a much slower pace.
  • The German PMI has dropped sharply (Chart 19) and France’s PMI has also declined (Chart 20).
  • The Eurozone 28 (Eurostat C26) production index is erratic and as noted in earlier columns has significant historical discontinuities (Chart 21).
  • Communication equipment production is flat (Chart 22).
  • Instruments and appliances for measuring, testing and navigation remains the strongest equipment sector (Chart 23).
  • Electromedical equipment production has strengthened (Chart 24).
  • Motor vehicle output plunged in August (Chart25).
  • Aerospace production is at a record high (Chart 26).
  • Semiconductor shipment growth for Europe appears to be outgrowing end market demand on a 3/12 basis (Chart 27).
  • Chart 28 shows the 3/12 growth of key members of the European supply chain.  SEMI equipment is highly volatile and is now contracting (Chart 28).
  • Chart 29 summarizes 3Q’18 vs. 3Q’17 growth by sector.

Sources:
Eurostat, SEMI, SIA and Markit Economics

 

Global Foundry Industry to grow at 6% CAGR in next five years,

The production value of the global foundry industry is expected to grow by a CAGR of 6.2% to reach US$82 billion in 2023, the final year of a five-year forecast period, driven by chip demand for mobile devices, automotive, IoT and high-performance computing applications in the AI and upcoming 5G era, according to Digitimes Research.

Industry leader TSMC began to make chips using 7nm FinFET process technology in the first half of 2018, and started generating revenues from the node process in the third quarter. TSMC will see sales generated from 7nm FinFET process technology account for over 10% of company revenues in all of 2018, Digitimes Research estimated.

TSMC is expected to enter volume production of chips using its second-generation 7nm FinFET technology utilizing EUV in the first quarter of 2019, Digitimes Research said. Rival Samsung Electronics will also have its 7nm node with EUV get ready for volume production in the first quarter of 2019, Digitimes Research indicated.

In addition, TSMC and other major pure-play foundries will continue expanding fab capacities through 2023, when the top-4 vendors will see their combined capacities reach 67,078,000 8-inch equivalent wafers annually representing a CAGR of 6.8% in the five-year forecast period, Digitimes Research said.

www.digitimes.com/

 

Taiwan Server Makers Under Pressure to Speed up Move-out from China

Taiwan-based server motherboard makers are likely to be required by their clients to accelerate their plans to move production back to Taiwan or other sites outside China, according to industry sources.

Many Taiwan-based ODMs in the IT industry running production in China have already been making plans to move some of their manufacturing lines out of the country following the Trump administration's decision to impose extra tariffs on China-made products.

But their clients are likely to want them to speed up the relocation following a recent Bloomberg report that claimed China implanted spy chips on Supermicro's server boards made in the country, the sources said.

Companies named in the Bloomberg report, including Apple, Amazon and Supermicro, have all dismissed the spy chip claims.

The bulk of Supermicro server motherboards are manufactured by Taiwan-based ODMs' plants in China, and the US-based company accounted for a 11.7% share of the global server motherboard market in the second quarter of 2018, according to Digitimes Research.

According to Digitimes Research, Supermicro currently outsources 35% of its server motherboard orders to Shanghai-based Universal Scientific Industrial (USI), an affiliate company under the ASE Technology Holding; 30% to Wistron; and 20% to Orient Semiconductor Electronics (OSE). Supermicro makes the remaining 15% at its own affiliate Compuware Technology.

Taiwan-based Wistron said it can make necessary adjustment in accordance with clients' demand as it has production bases in a number of locations globally. According to information available on the company's website, Wistron has production facilities in Czech Republic, Mexico and McKinney, Texas.

Taiwan-based Inventec, a major server motherboard supplier worldwide, said that it has actually kicked off an expansion project at its plant in Taoyuan, northern Taiwan since September in response to requests from its clients in North American asking the company to move part of its production back to Taiwan even before the trade war starting to escalate.

The first-phase capacity ramp-up at its Taoyuan plant is to complete in October, said the company, adding that it also has production lines in Mexico which can also be modified to meet changing situations.

Shipments to the US, mostly clients in the cloud datacenter sector, account for 20-25% of Inventec's total server motherboard shipments.

www.digitimes.com/

 

Printed Circuit Board Industry Statistics, Trends and Analysis

As the U.S. dollar has gained strength against global currencies in recent years, lower import sales and cheaper foreign printed circuit boards have created shifts in this industry. In the United States, about $4 billion in revenues are generated by the PCB industry each year. Since 2013, however, the industry has seen a -2.7% annual decline in revenues within the U.S. market.

Although manufacturers provide about 21,000 direct employment opportunities in the U.S., fewer than 500 firms are now active in this industry.

The PCB industry in China is a very different story. The industry there earns revenues to the tune of $95 billion per year. Since 2013, it has seen an annual growth rate of 8.4%. About 2,500 firms are active within the Chinese segment of the PCB industry, creating about 700,000 direct jobs.

Interesting Printed Circuit Board Industry Statistics

  1. In 2014, the global printed circuit board industry was valued at $65.5 billion. It has been growing each year since 2012, when a decline of $700 million affected the global industry. (Statista)
  2. Operating revenues in China topped $60 billion for the first time in 2016 for the PCB industry. (Statista)
  3. North American shipments for the PCB industry are up 10.8% in 2018, compared to the year before, according to July figures. Bookings increased by 4.9% over the year before, while order growth was up 11.7%. (IPC)
  4. By 2020, the Asia-Pacific region for the printed circuit board industry is expected to account for 85% of total sales. Demand from India, Malaysia, Japan, and Taiwan is expected to supplement the rising demand levels found in China. (Technavio)
  5. The global market for printed circuit boards is expected to grow at 6% through 2021, especially as devices that work with the Internet of Things continue to be adopted by households around the world. (Technavio)
  6. About 30% of the rigid PCB shipments in North America each year are destined to the military and aerospace markets. In August 2016, that figure reached a peak of 45.7%. (IPC)
  7. The U.S. market has seen positive order growth for 13 consecutive months as of July 2018. Positive year-over-year sales reached 10 consecutive months at the same time, while sales growth remained above parity for the 17th consecutive month. (IPC)
  8. Based on geography, China controls 43% of the printed circuit board industry. The next largest share belongs to South Korea, at 16%, then Hong Kong, at 14%. Japan controls an 11% market share. In comparison, the North American share of the industry is just 5%. (Toradex)
  9. 37% of the PCB industry is focused on standard multilayer products. 18% of the industry involves flexible circuits. IC substrate and HDI each control 15%, while rigid 1-2 sided printed circuit boards account for 11% of industry revenues. (Toradex)
  10. About $7.5 billion of the PCB industry comes from the production of flexible printed circuit boards that are manufactured in China. (TMR Analysis)
  11. About 2% of the PCB industry is focused on producing boards that are above 18 layers. In comparison, boards that are 4 layers control about 13% of the PCB market. (Research Gate)
  12. The average thickness of a PCB is between 0.5mm to 0.7mm under current production standards. Within the next 10 years, the average thickness is expected to decrease to just 0.4mm. Next-generation microprocessors may even work with 0.3mm PCBs. (Toradex)
  13. 90% of the PCB industry uses the contact imaging process for production today. This process creates fine lines with better conductor geometry than other manufacturing methods. (Toradex)
  14. Because multiple materials can be printed on the same layer of a PCB, thick film technology allows each product to offer a wide resistance range. Current processes allow for 20 ohm to 10 Mohm. (Toradex)

Printed Circuit Board Industry Trends and Analysis

  • The PCB industry may have seen steady declines over the past five years, but times are changing. With three-month rolling averages for orders and sales having a book-to-bill ratio greater than 1, this indicates that demand is greater than supply. That is an indicator that future growth is likely. Although semiconductor sales for the industry peaked in Q4 2017, the indexes have been in positive territory for the last 24 months.
  • There is also a 3/12 rate of change for new orders in the United States for electronics, which continues to push sales upward and keep the industry strong.
  • Strong orders from China will continue to boost the global industry as well, with 2018 offering 7% growth for the market by itself.
  • Although the printed circuit board industry works with mature markets, it also provides the fuel for innovative new electronic products. Continued innovation in the equipment and manufacturing services sectors for electronics will keep this industry growing in the next 5-year period, with total values forecast around $70 billion for PCBs.

https://brandongaille.com/14-printed-circuit-board-industry-statistics-trends-analysis/

 

Worldwide PC Shipments Experienced Flat Growth in 3Q’18 (Charts 30-33)

CPU Shortage Could Bring New Challenges to PC Market, but Won’t Impact Demand

Worldwide PC shipments totaled 67.2 million units in the third quarter of 2018, a 0.1 percent increase from the third quarter of 2017, according to preliminary results by Gartner, Inc. The global market has shown modest stability for two consecutive quarters.

EMEA, Asia/Pacific and Japan experienced growth in the third quarter of 2018, while the U.S. and Latin America declined. Latin America showed the steepest decline of 8.5 percent after showing some stabilization earlier in 2018. However, these results are in line with Gartner’s expectations in view of CPU supply constraints for the rest of the year.

“The PC market continued to be driven by steady corporate PC demand, which was driven by Windows 10 PC hardware upgrades. We expect the Windows 10 upgrade cycle to continue through 2020 at which point the upgrade demand will diminish,” said Mikako Kitagawa, principal analyst at Gartner. “Despite the third quarter typically showing strong consumer PC sales due to the back-to-school season, weakness in consumer PC demand continued, offsetting the strong sales in the business market.”

“Although the third-quarter results did not show any material impact, the Intel CPU shortage could influence the PC market moving forward with price increases and changes to the vendor landscape. While this shortage will have some short-term impacts, Gartner does not see any lasting impact on overall PC demand. Current expectation is that the shortage will continue into 2019, but Intel will prioritize the high-end CPU as well as the CPUs for business PCs. In the meantime, AMD will pick up the part of the market where Intel cannot supply CPUs.”

Lenovo secured the top spot in the worldwide PC market with growth of 10.7 percent, driven by regained traction in the commercial market and its joint venture with Fujitsu. HP Inc. dropped to the second position but recorded its fourth consecutive quarter of year-over-year shipment growth. HP showed strong desktop shipment growth, which indicated strong demand among corporate buyers.

www.gartner.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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