2Q’19 Global Electronic Supply Chain Growth by Sector
- Based on still incomplete data due to some unreleased 2Q’19 financial reports, we now estimate that second quarter global electronic equipment sales declined 0.9 percent versus the same quarter last year (chart 1).
- Chart 2 provides our current estimate of second-quarter growth by sector of the electronic supply chain. While this information is still based on a combination of actual company financials and Custer estimates, it highlights some second-quarter weaknesses, including semiconductors, SEMI capital equipment, PCB capital equipment, automotive, data storage, instruments, and controls and passive components. Many of these groups are “working through” the current business cycle downturn.
As noted last week, these growth estimates will be updated weekly as more companies report their 2Q’19 financials.
Source: Company financial reports with Custer Consulting Group analyses
July PMI Leading Indicators
- July Purchasing Managers Indices have now been released by most major countries and regions (chart 3)
- Global PMI dropped to the lowest level since 2012 (chart 4)
- USA – both the ISM and IHS values are at 4-year lows (chart 5)
- Europe remains in manufacturing contraction (charts 6 & 7)
- Most of Asia (chart 8) with the exception of Vietnam is at or near contraction. Japan (chart 9), China (chart 10), Taiwan (chart 11) and South Korea (chart 12) are all near zero manufacturing growth
Source: www.markiteconomics.com, www.instituteforsupplymanagement.org
World Smartphone Shipments declined 2.3 percent Y/Y in 2Q’19 (Chart 13)
Worldwide smartphone shipments declined 2.3 percent year-over-year in the second quarter of 2019 (2Q19) for the strongest quarterly performance since 2Q18, according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker. Smartphone vendors shipped a total of 333.2 million phones in 2Q19, which was up 6.5 percent over the previous quarter.
Challenges were seen across many markets, with China and the United States experiencing the sharpest quarterly declines. However, the declines in China during the first half of 2019 have been less severe than the second half of 2018, suggesting some recovery is underway in the world’s largest single market. Asia/Pacific (excluding Japan and China) continued strong momentum from 2018, with shipments up more than 3 percent in the quarter fueled by growth across India and many Southeast Asian markets.
“Despite a lot of uncertainty surrounding Huawei the company managed to hold its position at number two in terms of market share,” said Ryan Reith, program vice president with IDC’s Worldwide Mobile Device Trackers.
“When you look at the top of the market – Samsung, Huawei, and Apple – each vendor lost a bit of share from last quarter, and when you look down the list the next three – Xiaomi, OPPO, and vivo – all gained,” Reith said. “Part of this is related to the timing of product launches, but it is hard not to assume this trend could continue.”
The vendor landscape at the top of the market continues to get stronger while the struggles for local OEMs and old school industry names got worse. In 2Q19, the top five vendors accounted for 69 percent of the total market volume, and the top 10 vendors accounted for 87 percent.
This trend is making the vendor playing field for smartphones look more and more like the PC market. With 5G beginning to unfold in many markets around the world, the challenges are sure to increase for any vendors without strong consumer mindshare.
“Although the overall market remains in decline, the performance in the second quarter indicates that demand is starting to pick up as the market begins to stabilize again,” said Anthony Scarsella, research manager with IDC’s Worldwide Quarterly Mobile Phone Tracker.
“A key driver in the second quarter was the availability of vastly improved mid-tier devices that offer premium designs and features while significantly undercutting the ultra-high-end in price. Combine this with intensified and generous trade-in programs across major markets and channels and upgrading now makes more sense to consumers.”
Source: www.idc.com
Global Server Shipments Increased 12.8 Percent Q/Q in 3Q ‘19
Global server shipments are expected to increase 12.8 percent sequentially in the third quarter of 2019, but shipments for all of the year are likely to drop, according to Digitimes Research.
Source: www.digitimes.com
Gartner: World Smartphone Sales Will Decline 2.5 Percent Y/Y to 1.5 Billion Units in 2019
Worldwide sales of smartphones to end users will total 1.5 billion units in 2019, a 2.5 percent decline year over year, according to Gartner, Inc.
However, Gartner analysts expect smartphone sales to grow again in 2020, driven by broader availability of 5G models and the promotion of 5G service packages in various parts of the world by communications service providers (CSPs). Analysts also expect the first 5G Apple iPhone to launch in 2020, which should entice iPhone users to upgrade.
“Lengthening smartphone replacement cycles and a ban on Huawei accessing technology from U.S.-based suppliers weakened demand for smartphones in the first half of 2019,” said Annette Zimmermann, research vice president at Gartner. “We expect demand to get even weaker in the second half as replacement of high-, low- and mid-end smartphones continues to slow, due to low value benefits.”
Gartner forecasts that sales of 5G smartphones will top 15 million units in 2019, which will represent less than 1 percent of total smartphone sales in that year.
Source: www.gartner.com
World Tablet Market Shipments Declined 5.0% Y/Y to 32.2 Million Units in 2Q ‘19 (Chart 14)
The worldwide tablet market declined 5.0 percent year-over-year during the second quarter of 2019 as global shipments fell to 32.2 million units, according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker.
Tablet Company Highlights
Apple led the market and managed to increase its share compared to last year as the iPad maker gained four percentage points year-over-year. The launch of the detachable iPad Air in 2Q18 helped Apple to double its detachable tablet shipments. Meanwhile, slate iPads declined 7.5 percent year-over-year as the new iPads were unable to maintain the same momentum of upgrades as those launched in 2018.
Samsung continued to hold the second position and managed to grow its share though this was simply because the market declined at a faster pace than Samsung’s own tablet shipments. Although the company is the last bastion of premium Android tablets, the majority of its shipments were comprised of the lower-end E and A series.
Huawei managed to hold the third position and maintain its share despite the political headwinds. However, given the rising tensions between the U.S. and China, Huawei’s future as a mainstay of the tablet market remains uncertain.
Amazon.com shipments have always been very seasonal and this quarter was no different. The company substantially increased its shipments in 2Q19 as it geared up for Prime Day in July. Its refreshed models also helped provide an uplift for the retailer.
Lenovo rounded out the top five with 5.8 percent share and a 6.9 percent year-over-year decline. Despite the unfavorable figures, Lenovo managed to grow fairly well in mature markets such as the United States, Western Europe and Japan.
Source: www.idc.com
Infineon CEO Sees Semiconductor Recovery Only in 2020
German chipmaker Infineon expects the semiconductor industry to recover only in 2020, with no sign of recovery yet in the strategically important Chinese auto market, Chief Executive Reinhard Ploss said.
“The market environment remains challenging, cyclical pressures are persisting, and we continue to steer our course through what feels like the bottom of an ordinary semi downcycle,” Ploss told analysts on a conference call.
Infineon reported in-line revenue and profit in the fiscal third quarter and confirmed its earlier-reduced guidance that revenue would grow 5 percent in the business year to Sept. 30.
Source: www.reuters.com
North American PCB Shipments Rose 5.5% Y/Y in June; PCB Bookings Decreased 5.9% Y/Y (Charts 15-17)
IPC – Association Connecting Electronics Industries® announced the June 2019 findings from its North American Printed Circuit Board (PCB) Statistical Program. Sales growth in June remained positive while bookings slipped and the book-to-bill ratio returned to parity at 1.00.
Total North American PCB shipments in June 2019 were up 5.5 percent compared to the same month last year. Year-to-date sales growth as of June was 11.0 percent. Compared to the preceding month, June shipments increased 10.7 percent.
PCB bookings in June decreased 5.9 percent year-over-year, bringing year-to-date order growth down to 2.4 percent. Bookings in June were up 3.2 percent from the previous month.
“The North American PCB industry continues to enjoy sales growth but at a slowing pace,” said Sharon Starr, IPC’s director of market research. “Order growth has also slowed, with the year-over-year growth rate dipping into negative territory in June for the third time this year. Declining order growth has put downward pressure on the book-to-bill ratio. The fact that the ratios have been at or near parity in recent months indicates that sales growth is likely to slow in the second half of the year.”
Source: www.ipc.org
Notebook Vendors Gearing Up to Launch 5G Models
Lenovo, HP and Dell are set to introduce their first 5G notebook models in the second half of 2019, while Apple will roll out its 5G MacBook series in the second half of 2020, according to industry sources.
Source: www.digitimes.com
Global 5G Phone Shipments to Top 100 Million Units in 2020
Global shipments of 5G-enabled smartphones are expected to exceed 100 million units reaching 150-200 million units in 2020, according to industry sources.
Source: www.digitimes.com
Huawei Technologies Revenue Rose in 1H’19 401 Billion Yuan
China’s Huawei Technologies said revenue in the first half of the year grew 23.2 percent – faster than a year ago – despite an intense U.S. campaign against it that ultimately became a trade ban from mid-May.
Unlisted Huawei, which only started disclosing quarterly results this year, said revenue in the first half rose to 401.3 billion yuan ($58.28 billion) from 325.7 billion a year ago, with smartphone shipments reaching 118 million units, up 24 percent.
Huawei’s supply chain was significantly disrupted when it was put on a trade blacklist by Washington in mid-May. The U.S. government alleges it is a national security risk as its equipment could be used by Beijing to spy, which Huawei has repeatedly denied. ($1 = 6.8860 Chinese yuan renminbi)
Source: www.reuters.com
Mobile Communication Base Station equipment output has increased significantly, driving the growth of upstream PCBs
5G base station maintains high prosperity, PCB demand continues to increase.
According to Sina Finance News, on June 26, World Mobile Communications Conference 2019 (MWC19), Huawei’s rotating chairman Hu Houkun said that as of now, Huawei has signed 50 5G commercial contracts worldwide, and 5G base stations have shipped in more than 15 global shipments.
Source: CPCA China Printed Circuit Association Press Release, www.cpca.org.cn
Second Quarter Revenue Growth
Here are historical revenue charts for:
- Global EMS and ODM 52 company composite (chart 18)
- 7 Large U.S. EMS companies (chart 19)
- Passive component manufacturers (chart 20)
Source: Company financial reports
