Wafer Shipments Forecast to Set New Highs Through 2021

Total wafer shipments in 2018 year are expected to eclipse the all-time market high set in 2017 and continue to reach record levels through 2021, according to SEMI’s recent semiconductor industry annual silicon shipment forecast. The forecast of demand for silicon units for the period 2018 through 2021 shows polished and epitaxial silicon shipments totaling 12,445 million square inches in 2018; 13,090 million square inches in 2019; 13,440 million square inches in 2020, and 13,778 million square inches in 2021 (see document attached).

"As new greenfield fab projects continue to emerge for memory and foundry, silicon shipments are expected to remain strong for 2019 and through 2021," said Clark Tseng, director of Industry Research & Statistics at SEMI. "Silicon demand will continue to grow as semiconductor content increases in mobile, high-performance computing, automotive, and Internet of Things applications.

*Shipments are for semiconductor applications only and do not include solar applications

Source: www.semi.org

 

Taiwan Suppliers Remain Cautious about Orders for New iPhones

Despite the iPhone XR slated for launch in the latter half of October, Taiwan-based suppliers engaged in the Apple supply chain remain cautious about orders for the new iPhone series for the rest of 2018, according to industry sources.

If sales of the upcoming iPhone XR, which will be priced lower than the XS models, fail to stimulate the overall demand for iPhones, said the sources, Apple may slow down its pace of orders.

Suppliers for the new iPhones are expected to post weak sales for the fourth quarter of 2018, the sources noted. TSMC, for example, will likely generate lower-than-expected revenues in the fourth quarter, which may prompt the foundry to revise downward its sales guidance for all of 2018, the sources continued.

Largan Precision, another Apple supplier specializing in camera lens, disclosed recently that shipments are expected to decrease in October and drop further in November. Order visibility for December is still unclear, the company also warned.

In addition, the ongoing U.S.-China trade war will likely have a negative impact on the overall smartphone demand, which is already decelerating, in the fourth quarter of 2018, according to the sources.

Source: www.digitimes.com

 

Cautious Outlook for SEMI Equipment Sales

Tokyo-based Disco's group operating profit looks set to drop 14% on the year to around 34.5 billion yen ($308 million) for the nine months through Dec. 31, while sales are on track to fall 5% to around 120 billion yen.

While demand for chips remains strong as data use soars, the semiconductor industry is turning bearish on capacity investments. South Korea's Samsung Electronics, the world's largest maker of NAND flash memory, is considering a short-term reduction in chip-related spending, while Taiwan Semiconductor Manufacturing Co., the top contract chipmaker, lowered its capital spending budget in July.

Disco's machines for dicing and grinding silicon wafers are not selling well amid these investment cutbacks.

Investors are punishing equipment supplier's shares. At the close of trading Tuesday in Tokyo, Disco's stock price was down 28% this year. Japanese industry leader Tokyo Electron had tumbled 29%.

Smartphone-related business is also slumping. Growth in demand for phones has slowed as consumers wait longer to replace their devices, seeing few new features. Disco has not logged the big gains in equipment sales to Chinese smartphone makers that it saw last year.

Blades and other replacement parts are a silver lining. Unlike complex machines, they can be mass-produced at low cost. With high operating rates, chip fabrication plants in South Korea and North America continue to buy Disco parts in large quantities.

For the six months ended in September, Disco looks set to report a 20% fall in operating profit to 23 billion yen, compared with a projected 26% decline. Sales to South Korean and American chipmakers were higher than expected.

Sales likely dropped 8% to 80 billion yen, less than the forecast 9% decline. Disco based its initial full-year earnings guidance on an assumed exchange rate of 100 yen to the dollar, and a weaker Japanese currency boosted the results. Half-year results are due out on Oct. 30.

For the last three months of 2018, operating profit is expected to stay roughly flat from the preceding quarter.

Prices of some NAND flash memory chips have fallen about 40% from the peak of the industry's so-called supercycle in 2017. DRAM prices are also softening.

As chipmakers introduced new technology to innovate last year, growth in production yield slowed, leading to supply shortages. Those problems have been overcome this year, creating an oversupply that has pushed prices down.

"The business environment in semiconductors has worsened since three months ago," said Shinji Asai at Sumitomo Mitsui Asset Management in Tokyo, adding that the correction looks likely to last into 2019.

Source: www.nikkei.com

 

Taiwan IT Sales Grow Again, but Clouds Hang over Bellwether

Taiwan's information technology sector, a closely watched bellwether of the global market, showed a 9.7% year-on-year increase in revenues for September. But signs of a slowdown are emerging as trade tensions between Washington and Beijing escalate.

At 1.22 trillion New Taiwan dollars ($39.5 billion), combined revenues at 19 key Taiwanese IT companies hit a record for a September. Growth continued for a seventh straight month. Makers of iPhones and their parts posted notable upswings. Hon Hai Precision Industry, or Foxconn, reported a 29.6% jump in revenue. Taiwan Semiconductor Manufacturing Co., which produces chips for the Apple handsets, logged 7.1% growth.

Apple announced the high-end iPhone XS and other new offerings in September. The bulk of the handsets are assembled by Foxconn in China for shipment around the world. While big-name companies bolstered by iPhone demand led overall growth in the Taiwanese IT sector, 10 of the 19 players logged revenue declines for September.

Source: asia.nikkei.com/

 

Foxlink Moving Production Lines from China to Myanmar and Taiwan to minimize impact of US Tariffs and Rising Labor Costs

Taiwan-based connector maker Foxlink is shifting its manufacturing out of China, moving some production lines to Yangon, Myanmar and some back to Taiwan to minimize the impact of the U.S. tariffs and rising labor costs, according to a Chinese-language Commercial Times said.

Foxlink has already acquired lands and facilities in Yangon and is set to begin mass production in the second half of 2019 to mainly make lower-price products there, the paper said.

Foxlink is still evaluating its production lines in Taiwan and will be able to prepare them for production in 1-2 months, the report said. However, the supply from Taiwan will be limited and can only satisfy a small number of orders.

Source: www.digitimes.com

 

Global IT Spending to Grow 3.2% in 2019

Worldwide IT spending is projected to total $3.8 trillion in 2019, an increase of 3.2% from expected spending of $3.7 trillion in 2018, according to the latest forecast by Gartner, Inc.

“While currency volatility and the potential for trade wars are still playing a part in the outlook for IT spending, it is the shift from ownership to service that is sending ripples through every segment of the forecast,” said John-David Lovelock, research vice president at Gartner. “What this signals, for example, is more enterprise use of cloud services — instead of buying their own servers, they are turning to the cloud. As enterprises continue their digital transformation efforts, shifting to ‘pay for use’ will continue. This sets enterprises up to deal with the sustained and rapid change that underscores digital business.”

Source: www.gartner.com

 

Global Ranking of Branded SSD Module Makers for 2017

DRAMeXchange, a division of TrendForce, announces the global ranking of SSD module makers (NAND Flash manufacturers excluded) for 2017 based on the shipments of their own-branded SSD products in the channel market. Kingston, ADATA, and Tigo took the top three positions in the ranking, with market shares of 23%, 8%, and 7% respectively.

According to DRAMeXchange, the global shipments of SSD products in the channel market recorded a total of 55 million units in 2017, which represented a decrease of 3-4% compared with 2016 shipments. The total annual SSD shipments from all branded NAND Flash manufacturers (including Samsung, Toshiba, WDC, Micron, SK Hynix, Intel and so on) fell by nearly 10% YoY in 2017, whereas the total annual SSD shipments from all memory module makers grew by 2-3% YoY for the same year. Branded NAND Flash manufacturers jointly accounted for 40% of the global SSD shipments for 2017, while the other 60% was contributed by memory module makers.

The changing landscape in the SSD market is due to the undersupply of NAND Flash in 1H17, which was not eased until 2H17. Faced with the tight supply, the NAND Flash manufacturers made adjustments to their SSD product mixes and allocated more capacity to PC OEM and Server/Data Center OEM sectors, where the gross margins are higher.

Source: www.trendforce.com/

 

US Industrial Production up for 4th Straight Month in September

The U.S. Federal Reserve said industrial output in September had been held down “slightly” by Hurricane Florence, which drenched South and North Carolina in mid-September.

Source: www.federalreserve.gov/


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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