October PMI Leading Indicators
Signs of slowing global manufacturing growth are widespread.
- Global Purchasing Managers index is at its lowest point since last December. Growth continues but at a decelerating rate (Chart 1).
- U.S. PMIs appear to have peaked (Chart 2).
- Eurozone PMI continues to plunge (Chart 3) however it still remains in expansion territory (PMI>50).
- China PMIs (Chart 4) are at zero manufacturing growth level (PMI=50).
- Japan improved (Chart 5) but Taiwan moved into contraction (Chart 6) and South Korea growth weakened (Chart 7).
Source: www.markiteconomics.com
Source: www.instituteforsupplymanagement.org/
3Q’18 Global Electronic Equipment and EMS/ODM Growth (first estimate)
Here is our VERY preliminary estimate of 3Q’18 electronic equipment and EMS/ODM growth based on a combination of actual third quarter company financial results and our estimates for those that have not yet reported.
- Electronic equipment shipments rose 6% in 3Q’18 vs. 3Q’17 but have been sequentially flat in the first three quarters of 2018 (Chart 8).
- Both global electronic equipment and semiconductor shipment growth has peaked (Chart 9).
- The 3/12 growth rate of world electronic equipment sales dropped sharply in the third quarter (Chart 10).
- EMS/ODM growth held at near 10% in 3Q’18 vs. 3Q’17 (Chart 11).
These estimates will be updated as more companies report their third quarter financial results.
Source: Custer Consulting Group
Global Semiconductor Sales in September Up 13.8% (Charts 12-16)
Q3 sales are highest on record, 4.1% more than previous quarter, 13.8% higher than Q3’17
The Semiconductor Industry Association (SIA) announced worldwide sales of semiconductors reached $122.7 billion during the third quarter of 2018, an increase of 4.1% over the previous quarter and 13.8% more than the third quarter of 2017. Global sales for the month of September 2018 reached $40.9 billion, an uptick of 2.0% over last month’s total and 13.8% more than sales from September 2017. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.
“Three-quarters of the way through 2018, the global semiconductor industry is on pace to post its highest-ever annual sales, comfortably topping last year’s record total of $412 billion,” said John Neuffer, president and CEO, Semiconductor Industry Association. “While year-to-year growth has tapered in recent months, September marked the global industry’s highest-ever monthly sales, and Q3 was its top-grossing quarter on record. Year-to-year sales in September were up across every major product category and regional market, with sales into China and the Americas continuing to lead the way.”
Regionally, sales increased compared to September 2017 in China (26.3%), the Americas (15.1%), Europe (8.8%), Japan (7.2%), and Asia Pacific/All Other (2.4%). Sales were up compared to last month in the Americas (6.0%), China (1.8%), and Europe (1.2%), but down slightly in Asia Pacific/All Other (-0.1%) and Japan (-0.6%).
Source: www.semiconductors.org
Asian Chip Share Rout Provides Strong Indication of Tough 2019
Semiconductor industry braces for slowdown as trade war creates overhang
When President Jason Wang of United Microelectronics Corp. said that the world’s No. 3 contract chipmaker would keep a “very cautious” outlook on demand at least until early 2019, he was actually taking the words out of many investors’ and tech executives’ mouths amid the great uncertainties that have been brought by the escalating trade conflict between the world’s two leading economies.
As if by prior agreement, executives from U.S. chipmaker Texas Instruments and French-Italian chip provider STMicroelectronics have also warned of softening demand for the current quarter. Meanwhile, American microchip provider Advanced Micro Devices and Swiss-listed optical chipmaker AMS, a key supplier to Apple and Huawei, both gave lackluster forecasts for the upcoming holiday season.
These views have mirrored by memory chipmaker Nanya Technology cutting spending for 2018 and Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s biggest contract chipmaker, last week lowering its full-year growth goal for the third time this year.
Manish Bhatia, executive vice president of American chip provider Micron Technology, joined in. “We have actually lowered NAND flash memory capex in the 2019 fiscal year that began last month compared with fiscal 2018,” Bhatia said in Taiwan at the opening event for a new facility, when asked whether the biggest U.S. memory chip provider would also cut spending to reflect market woes. Bhatia did not specify numbers. “We are responding to market conditions and we will continue to be flexible looking forward,” the executive said. Micron last month forecast that it would spend around $10.5 billion in fiscal 2019.
The cautious views from executives across the semiconductor industry—which acts an indicator of the broader tech sector—confirm an increasing pessimism about short-term electronics demand and a slowdown in investment that will cool a year-long tech super cycle. This fear has quickly spread across the chip supply chain, with related stocks taking a hit as investors retreat from the stock market to avoid political-related risk.
The current downwards trend in chip share prices could also have broader economic and market implications, according to analysts.
“It’s likely that we are just seeing the beginning of the market turmoil as the semiconductor industry is often a leading indicator,” said James Wei, an analyst at Yuanta Investment Consulting. “The market could likely stay very volatile going into 2019 – with a tough and challenging year ahead when there are few growth catalysts but plenty of uncertainty.” Micron has seen its share price drop more than 40% since its recent peak in May, while its smaller rival Nanya Technology’s shares retreated more than 55% over a similar timeframe. The shares of South Korean memory chip groups Samsung Electronics and SK Hynix have also fallen more than 12% and 19%, respectively, since July 26.
Source: www.nikkei.com
Tight supply of Notebook MLCCs to Ease
Intel’s CPU shortages, which have caused disruption to notebook makers’ shipments since the second half of 2018, will help relieve the tight supply of notebook-use MLCCs, according to industry sources.
Source: www.digitimes.com
Commercial Manufacturing Robot Revenues Forecast to Grow from US$166 million in 2018 to US$22 billion by 2027
The industrial robotics sector is seeing robust growth as manufacturers increasingly embark on the journey of automation. The revenues of commercial robots in manufacturing are forecast to grow from US$166 million in 2018 to US$22 billion by 2027, according to ABI Research, a market-foresight advisory firm providing strategic guidance on the most compelling transformative technologies. The newest trend is complementary robotics technologies that put mobile robots on the factory floor. Made up of automated guided vehicles (AGVs) and autonomous mobile robots (AMRs), these robots will complement existing robotic arms in factories that are increasingly becoming more autonomous and smarter.
There has been plenty of debate within the industry on the different benefits of AGVs and AMRs. While AGVs are a much cheaper precursor to AMRs, they require floor markers to guide their movement and are more ideal in greenfield deployments. For those wanting infrastructure-free navigation and flexible production line, AMRs represent the future standard. Seegrid and MiR are the two leading suppliers of AMR to the manufacturing sector. Ultimately, manufacturers will benefit from either of these solutions as they can push carts and deliver parts within or between the factories, optimizing workflows, minimizing workplace hazards, and freeing up valuable staff resources.
“The advancements in machine vision, simultaneous localization and mapping (SLAM), swarm intelligence, and sensor fusion are making it possible for mobile robots to operate in unstructured environments such as the factory warehouse and the assembly area,” said Lian Jye Su, Principal Analyst at ABI Research. “These technologies are being supported by many cameras and sensors, such as LiDAR and radar. Moving forward, the robot can benefit from the integration of deep learning algorithms with sensor fusion and swarm intelligence.”
In addition, as factories undergo digital transformation, more factories will start to adopt smart manufacturing platforms. With this development, the value proposition of cloud robotics becomes more relevant. Nonetheless, there are still many challenges related to the adoption and deployment of cloud robotics. Data security, data analytics, and the power of cloud computing will have to be in place before connecting any robot to an industrial cloud platform.
As robotic technologies continue to mature, different vendors are starting to engage in ecosystem play. Universal Robot, the world’s largest collaborative robot arm vendor, has its own ecosystem called UR+, which features over 50 partners in grippers, accessories, and software platforms. This is further augmented by the acquisition of MiR, an AMR vendor, by Teradyne, Universal Robot’s parent company, in April 2018. Teradyne currently owns both collaborative robotic arm and AMR technology under one roof, providing an end-to-end solution for manufacturers.
“The Industrial factory embrace of collaborative robots, AGVs, and AMRs indicates that manufacturers are also embracing versatility and modularity. The increasing number of stock keeping units (SKUs) and short product life cycles necessitate the deployment of robotics solutions that can be retrained and redeployed for different manufacturing processes and factory layouts,” Su concluded.
Source: www.abiresearch.com
Global Smartphone Shipments declined 6% y/y to 355 million units in 3Q’18 as the Leading Vendor and the Largest Market Face Challenges (Chart 17)
According to preliminary data from the International Data Corporation (IDC) Worldwide smartphone vendors shipped a total of 355.2 million units during the third quarter of 2018 (3Q18), resulting in a year-over-year decline of 6.0%. This was the fourth consecutive quarter of year-over-year declines for the global smartphone market, which raises questions about the market’s future. IDC maintains its view that the market will return to growth in 2019, but at this stage it is too early to tell what that growth will look like.
While the overall smartphone market has declined for four straight quarters, two things stand out as major factors in the third quarter. Samsung, the largest smartphone vendor in terms of market share, accounting for 20.3% of shipments in 3Q18, declined 13.4% year-over-year in the quarter. And secondly, China, which is the largest country market for smartphone consumption, accounting for roughly one third of global shipments, was down as well for the sixth consecutive quarter.
Samsung had a challenging quarter with shipments down 13.4% to 72.2 million units shipped. The market share leader continues to feel pressure from all directions, especially with Huawei inching closer to the top after its second consecutive quarter as the number two vendor. In addition, growing markets like India and Indonesia, where Samsung has held leading positions for many years, are being changed by the rapid growth of Chinese brands like Xiaomi, OPPO, and vivo.
Meanwhile, China’s domestic market, which represents roughly one third of all smartphones consumed, has been in decline since the second quarter of 2017, and 3Q18 was the sixth consecutive quarter where the market sees contraction. China was down 11% in the first half of 2018 (1H18), and the challenges continued into 3Q18. Overall IDC expects this decline to decelerate with the market returning to flat growth in 2019.
“China’s domestic market continues to be challenged as overall consumer spending around smartphones has been down,” said Ryan Reith, program vice president with IDC’s Worldwide Mobile Device Trackers. “High penetration levels, mixed with some challenging economic times, have slowed the world’s largest smartphone market. Despite this, we believe this market will begin to recover in 2019 and beyond, driven in the short term by a large, built up refresh cycle across all segments, and in the outer years of the forecast supported by 5G migration.”
“The race at the top of the market continues to be a heated one as Huawei once again slipped past Apple to the second position,” said Anthony Scarsella, research manager with IDC’s Worldwide Quarterly Mobile Phone Tracker. “Although Huawei may have beat out Apple in Q3, the holiday quarter could have Apple as the market leader thanks to the launch of three new bezel-less devices. No matter who leads in the overall market the holiday quarter should be an exciting one with a wide selection of new flagship devices available. With the new iPhones, Mate 20, Pixel 3, V40, Note 9, and OnePlus 6T, we can expect consumers will have a plethora of options when upgrade time approaches. The vast selection of high-priced handsets should move ASPs in a positive direction come next quarter.”
Smartphone Company Highlights
Samsung had a very challenging quarter with smartphone shipments down 13.4% from 3Q17, with overall volumes of 72.2 million. While this was still enough to maintain the top market share position, the company does continue to lose share. The launch of the Galaxy Note 9 was successful and the device continues to build in shipments. However, Samsung’s bigger challenge is the ground they are losing at the mid-range and low-end. Recent announcements of revamping the product portfolio to bring new features and awareness to non-flagship models could possibly help this slide. Samsung will most likely look to new A-Series devices to fill the gaps left in the mid-tier across numerous markets.
Huawei landed in the number two position for the second straight quarter. While its share was down slightly from last quarter’s 15.9%, overall the company should be pleased with shipping 52.0 million handsets and grabbing 14.6% of the overall market. From a product perspective, its P-series and recent update to its Mate-series are keeping it as competitive as ever at the top of the market. And its Honor brand, which is primarily marketed toward a younger audience and online sales, has continued to do well in many markets.
Apple’s newest iPhones helped push third quarter shipments to 46.9 million units, up 0.5% from the 46.7 million units last year. Apple once again launched three new devices at its Fall event, as the new 6.5-inch iPhone XS Max and 5.8-inch iPhone XS were joined by the more affordable iPhone XR in the Apple line-up. The new XS Max and XS continue off the success from last year’s iPhone X but bring a new screen size option with more power and increased performance to the table. And Apple has once again improved the camera, upped the storage, and added a new faster processor via the A12 Bionic chip, which is the first 7-nanometer chip for Apple. Older iPhones, such as the 6S, 7, and 8, all received price cuts late in the quarter, which will balance the iPhone portfolio across all price tiers for the holiday quarter. The older SE and iPhone X from last year have been dropped from the Apple line-up. The fourth quarter will include shipments for the vastly popular iPhone XR, which have not been counted in IDC’s Q3 figures.
Xiaomi once again grew its share to a new company high capturing 9.7% of all smartphones shipped worldwide in 3Q18. Xiaomi continues its global expansion with market share gains in countries where it has been growing it presence, including India and Indonesia, and making headway into European markets like Spain where it continues to cause disruption. Its Redmi 5A, Redmi 5 Plus, and Redmi Note 5 have continued to do well, with the newer Redmi 6/A/Pro successors ramping up quickly.
OPPO like Samsung saw shipments decline year over year, although on a much smaller scale. Despite that, OPPO remained the number 5 vendor in terms of market share with 29.9 million shipments in 3Q18, down 2.1% from a year ago. Like a few of its competitors that continue to climb the smartphone ladder, OPPO is beginning to gain global attention for some of its newer flagship devices that have come with highly marketed launch events. Designs on the Find X and R17 products are raising the bar for OPPO, and in return they are continuing to see their user ASPs increase.
Global PCB Industry Achieved Estimated 13.9% Real Growth in 2017 - the Fastest Growth since Recovery Year of 2010
IPC’s World PCB Production Report for the Year 2017, published last week, shows how the global PCB industry achieved an estimated 13.9% real growth in 2017 – the fastest growth since the recovery year of 2010 – and what the industry’s global footprint looks like today. The report provides current estimates of PCB production value by country, region and product category, with commentary about industry trends and historical data.
According to the report, China’s share of world PCB production continued to grow in 2017, accounting for more than half of world production value. Production in Taiwan and Japan declined as ages of world production in 2017 due to continued off-shore investment. The greatest growth in the proportion of world PCB production in 2017 was seen in Vietnam and Thailand. Growth in Thailand’s industry, coupled with the continuing decline in the U.S. industry share, caused Thailand to move ahead of the United States and become the fifth-largest PCB-producing country in 2017.
Despite its declining share, the value of U.S. PCB production grew an estimated 5.9% in real terms in 2017. Although just 3.9% of world PCB production is done in the United States, U.S.-based companies own 6.5% of global production. Despite evidence of a small on-shoring trend, most large U.S. companies still produce a substantial share of their PCBs outside the United States.
The World PCB Production Report is IPC’s longest-running annual study, now in its 40th year. It is a definitive source of data on global PCB production, developed by a team of leading PCB industry analysts.
The new report is available for download in IPC’s online store. Single-user prices are $475 for IPC members and $950 for nonmembers. Multi-user licenses are also available.
Source: www.ipc.org
U.S. Third Quarter Electronic Supply Chain Growth
After steady growth through most of the year, domestic electronic equipment orders flattened in August and September (Chart 18).
Chart 19 summarizes the annualized (2/12) and 3-month (3/12) growth of the domestic electronic supply chain.
Chart 20 compares 3Q’18 vs 3Q’17 growth by sector.
Source: Custer Consulting Group based on U.S. Census Bureau, SIA and SEMI data.