2016 Wrap Up and 2017 Outlook

 In

WALT CUSTER AND JOHN CUSTER-TOPAI

CUSTER AND CUSTER

WALT CUSTER AND JONATHAN CUSTER

2016 closed on a positive note for much of the world thanks to a combination of seasonal and real growth. However results varied by region and their end markets.


In the USA (Chart 1) total electronic equipment revenues grew 1.4% in 4Q’16 vs. 4Q’15 with performance varying significantly by equipment type. Components grew more, probably due to both inventory building and over ordering.


Europe (Chart 2) saw more widespread growth with semiconductor sales more in line with electronic equipment growth.


Globally semiconductor shipments have fluctuated much more than end market demand (Chart 3). Over ordering followed by excess inventory reductions is an ongoing issue.


World electronic equipment shipments (Chart 4) have been relatively flat in most regions except the consumer electronics driven (smartphones, PCs, etc.) areas of Asia/Pacific. For China and Taiwan the post-Christmas seasonal slowdown is now well underway.


Looking forward 4Q’16 was the third success quarter of global electronic equipment (modest) growth (Chart 5). The current expansion has been muted by the lack of a high volume product expansion. Automotive, medical and 5G wireless devices & base stations offer promise but they are not yet generating the volumes of the past computer and cell phone expansions.


Chart 6 shows our still very preliminary estimate for 4Q’16 end market growth. We’ll update this information as more companies report their fourth quarter financials.


Keep watching the numbers but don’t equate the current lofty semiconductor growth with a long term end market expansion.


If you want regular updates consider or Daily News and Business Outlook subscription products. E-mail walt@custerconsulting.com or jon@custerconsulting.com for details.

End Markets

MOBILE COMMUNICATIONS

• Smartphone shipments increased 6.9% y/y to 429 million units in 4Q’16 and grew 2.3% y/y to 1.47 billion units shipped in FY16. –IDC

• China’s smartphone shipments increased 12.8% y/y to 182 million units in 4Q’16, accounting for 43.3% of global total. –Digitimes Research

• Smartphone shipments to China grew 5.3% y/y to 124 million units in 4Q’16. –Digitimes Research

• Mobile communication antenna market is expected to grow at over 10% CAGR to USD 47.5 billion by 2021. –Technavio

• Smartphone installed base will grow from 4 billion in 2016 to more than 6 billion smartphones in use by 2020. –IHS Markit

COMPUTERS & PERIPHERALS

• All-in-one PC shipments fell 4.8% y/y to 12.1 million units in 2016; shipment volume is expected to increase 1.5% y/y in 2017. –Digitimes Research

• Industrial PC market will grow at a 6.2% CAGR to 4.7 Billion USD by 2022. –Markets and Markets

• PC gaming hardware market will grow at 6% CAGR through 2019 from $30.3 billion in 2016. –Jon Peddie Research

• Tablet market shipments declined 20% y/y to 53 million units in 4Q’16 and dropped 15.6% y/y to 175 million units for FY16. –IDC

• World’s top-six graphics card suppliers’ sales (excluding Nvidia) totaled US$159 million in 2016. –Digitimes

NETWORK EQUIPMENT

• IT infrastructure products (server, enterprise storage, and Ethernet switches) total spending for deployment in cloud environments will increase by 18% in 2017 to reach $44 billion. –IDC

• Power line communication systems market is projected to expand at 18% CAGR to $14 billion by 2022. –Allied Market Research

AUTOMOTIVE

• Automotive electronics market will surpass USD 290 billion by 2024. –Hexa Research

• Automotive cockpit electronics market is expected to expand at a 12% CAGR from USD 31 billion in 2013 to USD 62 billion by the end of 2020. –Persistence Market Research

• Car electronics and communication accessories market is anticipated to grow at a 5.7% CAGR to US$ 101 billion by the end of 2024. –Persistence Market Research

INTERNET OF THINGS

• Internet of Things market is expected to expand from U$598 billion in 2015 to $724 billion by 2023. –Research Nester

• Connected things endpoint spending will increase from almost $1.7 trillion in value for 8.4 billion units in 2017 to $3 trillion in value for 20.4 billion units in 2020. –Gartner

• Connected Internet of Things devices will increase 15% y/y to 20 billion in 2017. –IHS Markit

• Low power wide area connections are set to exceed 2G, 3G and 4G and become the leading technology for IoT connectivity, with 1.4 billion connections by 2022. –Machina Research

ROBOTS/AUTOMATION

• North American robotics market orders reached record 34,600 robots valued at $1.9 billion in 2016 and shipments grew 10% y/y to 30,875 robots valued at $1.8 billion. –Robotic Industries Association

• Collaborative robotics market will grow from US$95 million in 2014 to US$1 billion by 2020. –MIC

• Drone market revenue will increase from over $6 billion in 2017 to more than $11.2 billion by 2020. –Gartner

• Industrial robot shipments will expand at average 16% y/y growth rate through 2021, reaching over $30 billion in 2020 and nearly $45 billion in 2025. –ABI Research

• Robotic vision and force sensing market is expected to reach over $16 billion by 2027. –IDTechEx

WEARABLES

• Smart wearable devices shipments are expected to expand from 94 million units in 2016 to 120 million units in 2017. –MIC

• Smartwatch shipments grew 1% y/y to record 8.2 million units in 4Q’16; Apple Watch had 63% market share. –Strategy Analytics

• Wearable technology market will grow at 15% CAGR to $52 billion by 2022, dominated by headwear & eyewear product segments. –RnRMarketResearch

OTHER

• Global Consumer electronics market revenues will reach US$ 3 trillion by 2020 from an estimated US$ 1.45 trillion in 2015. –Future Market Insights

• Electronic equipment repair service market is expected to grow at 8.5% CAGR from US$77 billion in 2016 to US$147 billion in 2024. –Transparency Market Research

• Global defense spending rose to $1.57 trillion in 2016. –IHS Markit

• Indian electronics and hardware industry is expected to grow at a 13-16% CAGR to US$ 112 to US$ 130 billion by 2018. –ASSOCHAM-Ernst & Young

EMS, ODM & Related Assembly Activity

ACDi achieved AS9100 certification.

American Power Conversion installed an ACE KISS-102 selective soldering system in Philippines.

Applied Technical Services added a Seica Flying Probe Tester.

Assel expanded its production facility by 800 M2 in Poland.

AWS Electronics completed transition to the new ISO 9001:2015 standard.

Cemtrex set up an instruments & electronics manufacturing facility in India.

Colonial Assembly and Design received IPC J-STD-001 and IPC-A-610 Qualified Manufacturers Listing.

Colonial Electronic Manufacturers appointed Alfred Mucci III to Business Development Manager for New England regions.

ELRAD International added a Viscom S3088 Ultra Gold 3D AOI solution to its Slovenian factory.

Enics acquired PKC Electronics.

First Electronics is building a 35,100 SF EMS factory in Chandler, Arizona.

Flex added an 11,000 M2 production facility in Tczew industrial park in Poland.

Hanza filed for company restructuring of its subsidiary, Hanza Finland.

Incap expanded its manufacturing facility in Tumkur, India by over 2,000 M2.

Kitron’s subsidiary in Kaunas, Lithuania completed certification audit for IRIS-the International Railway Industry Standard.

LACROIX Electronics appointed Frank Weiss, GM of its German facility.

Lenovo announced a new patent-pending low temperature solder process developed to improve PC manufacturing by conserving energy and increasing reliability.

MB Elettronica received International Railway Industry Standard and ISO-TS certifications at its 4000 M2 factory in Cortona, Italy.

Motherson Sumi acquired PKC Group.

Oppo plans to begin operations at new SMT facility in Greater Noida, India in 2017.

PDR Americas is celebrating its 30-year anniversary of the development of the first pioneering IR system.

Pegatron

• China subsidiary, Pegaglobe acquired two factory buildings with total floor area of 69,188 M2 in Kunshan, China.

• shifted its business group (that handles small-to-medium-size motherboards and graphics card design, manufacturing and services for its system integrator clients) to its motherboard brand subsidiary ASRock.

Pricol inaugurated its new plant in Pune.

Saline Lectronics installed a Nikon Metrology XT V 160 Varian 1313Dx X.Tract PCB inspection system.

SMTC named Ed Smith, interim President and CEO after Sushil Dhiman resigned.

Speedboard Assembly Services appointed Andy Thwaites, Sales & Business Development Director and Kate Morris, Marketing Coordinator.

Wistron set up an assembly plant in Bengaluru tech hub, which will solely focus on iPhones.

Zentech Manufacturing added sub-Class 5 cleanroom operating environment in Baltimore, Maryland.

Zollner Elektronik expanded with a new warehouse in Vác, Hungary.

PCB Fabrication

Flexible Printed Circuit Boards market is anticipated to expand at a 10.4% CAGR to $27 billion by 2022. –Allied Market Research

PCB design software market will grow at a 13% CAGR from US$ 1,410 million in 2016 to US$ 4,755 million by 2026. –Future Market Insights

All Flex hired Steven Bowles as Senior Engineer

American Standard

• added two LENZ RLG 550-2 two spindle routing machines.

• named John Bushie, Director of Technology.

Aspocomp appointed Lee Burnette, Sales Manager for North America.

Beta Layout added a 3D-MID production line.

Brandner PCB invested in a new photoplotter from First EIE.

Cirexx installed a third Excellon Cobra laser machine.

Cirtech named John Stine, VP of Operations.

Coast to Coast Circuits began offering single sided PCBs in Rochester, New York.

Elmatica employed Patryk Fedorowicz as Technical Engineer in Poland.

IPC President and CEO, John Mitchell was elected to NAM’s Council of Manufacturing Associations Board of Directors.

Lenthor Engineering’s Internal Quality Engineer, Vicki Amaral, received ISO 9001:2015 Internal Assessor certification.

Mentor Graphics CEO, Walden Rhines was named IEEE Fellow.

PNC added Juki KE-3020VXL and the KE-3010XL pick & place machines.

Printed Circuits Inc. purchased a Keyence IM-6225 instant measurement system.

Prototron Circuit achieved MIL-PRF-31032 qualification.

Saturn Electronics installed a new 4-spindle Mania Micronic 86 drilling machine.

Schweizer Electronic appointed Nicolas-Fabian Schweizer and Marc Bunz to manage operations, sales & marketing, global supply chain and division systems groups after supervisory board revoked appointment of Maren Schweizer as member and chairperson of management board.

Trackwise manufactured a 10meter/30foot 6 layer flexible PCB for improved harness technology.

TTM opened a RF Center of Excellence in Stafford Springs, Connecticut.

Materials & Process Equipment

Conductive inks and pastes market will reach nearly $1.7 billion in 2026 at current metal prices. –IDTechEx

Electronics adhesives market will expand 12% y/y to US$ 4.5 billion Value in 2017. –Future Market Insights

Epoxy resins market will grow at 7% CAGR from USD 7.1 billion in 2014 to USD 10.5 billion by 2020. –Zion Research

Extruded plastics market is projected to grow at a 4.7% CAGR from US$184 billion in 2016 to US$290 billion by 2026, driven by electrical & electronics segment. –Research and Markets

Glass fiber textile market is forecast to grow at a CAGR of 5.2% from 2015 to 2020. –Lucintel

Machine vision system market is expected to grow at 8.7% CAGR from $10.6 billion in 2015 to $18.7 billion by 2022. –Allied Market Research

Thermal management materials market (including die-attach, substrates, baseplates/PCBs, and encapsulants) will grow at a 6% CAGR from US$2 billion in 2015 and to US$3.2 billion in 2021. –Yole Développement

AIM Solder appointed James Bates to Regional Sales Manager

Aismalibar significantly increased their production capacity for their line of Flextherm conformable IMS laminates.

AMS opened a SMT Center of Competence in Singapore.

Atotech acquired Pegastech plating on plastics technology.

Balver Zinn Group hired Henk Mathijssen as Area Sales & Support Manager.

Circuit Check and ASSET InterTech formed collaboration for boundary-scan test solutions.

Curtiss-Wright acquired Para Tech Coating.

DELO Industrial Adhesives named Robert Saller, a member of its Management Board.

Dymax Europe appointed Christoph Gehse, Managing Director.

Ecoclean UK moved to a new location in Warwick, UK.

Ellsworth Adhesives Europe purchased TRB’s Lord structural adhesives business.

Entegris expanded capacity in South Korea and introduced a new platform for advanced gas purification that improves wafer yields for semiconductor and LED applications.

ESI reorganized its management team from a business unit to a functional structure, relocated sales, service and operations leadership positions to Asia, closed facilities in Montreal, Canada, and Napa, CA and downsized its Sunnyvale, CA facility.

Fuwei Films expects that recently signed annual sales contract from Eternal Electronic Material will increase total polyester film (base film for dry films) for PCB sales by 34.5% in 1Q’17.

Great Lakes Solutions opened a new 11,000 SF Pilot Plant at the company’s South Plant facility in El Dorado, Arkansas.

Hanwha Techwin acquired SAMSUNG C&T Automation.

IBL Technologies is celebrating its 30-year anniversary in 2017.

Indium Corporation hired Seth Homer as Product Manager for Engineered Solders – IGBT and Jim Hisert as Applications Manager.

Insulectro

• implemented PumaFast™ inventory program to ensure in-stock deliveries.

• purchased a 38,000 SF distribution center in San Jose, California.

Keysight Technologies

• acquired Ixia.

• named Mark Wallace, Sr. VP., Worldwide Sales.

KIC

• hired Bill Kazmierowicz as R&D Manager.

• is celebrating its 40th year anniversary in the thermal processing business.

LPKF named Florian Roick, Strategic Product Manager.

MacDermid Enthone Electronics Solutions released the M-Copper EF process.

Nordson Corporation acquired ACE Production Technologies.

Panasonic commercialized low-loss thin flexible laminate for multi-layer flexible circuits that has bonding sheets that can be kept under room temperature.

Schleuniger acquired GiIT.

SMTXtra launched new corporation, SMTXtra USA, based in Maryville, Tennessee.

Sono-Tek Corporation promoted Brian Booth from Regional Sales Manager to Senior Territory Manager in addition to his position as Fluxer Product Manager.

Taiyo Holdings became an equity-method affiliate of DIC.

Veeco bought Ultratech.

Ventec

• installed a Pasquato TE 15 prepreg slitter/sheeter, a dedicated vacuum packer, Kitagawa diamond blade saw and two Excellon Mark V driller/router machines at its Chicago, Illinois facility.

• UK Facility achieved Aerospace Supplier Quality System (AS9100 Rev C) re-certification.

Components

Semiconductor industry sales increased 1.1% y/y to $339 billion in 2016. –SIA

Semiconductor revenue is forecast to grow 7.2% y/y to $364 billion in 2017 after growing 1.5% y/y in 2016. –Gartner

Semiconductor assembly and testing services market value is projected to grow at 5.8% CAGR through 2021 from US$ 24.7 billion in 2016. –Reportlinker

Semiconductor industry acquisitions value fell from record $103 billion in 2015 to $99 billion in 2016. –IC Insights

Semiconductor production equipment market will grow at a 7% CAGR from USD 37 billion in 2016 to USD 52 billion by 2021. –Technavio

Top 25 semiconductor vendors combined revenue grew 7.9% y/y to $340 billion in 2016. –Gartner

Top eight semiconductor customers in 2016 were Samsung ($31.6 billion), Apple ($30 billion), Dell ($13.3 billion), Lenovo ($12.8 billion), Huawei ($9.9 billion), HP ($8.5 billion), HP Enterprises ($6.2 billion) and Sony ($6.1 billion). –Gartner

Silicon wafer area shipments increased 3% y/y to 10,738 MSI in 2016. –SEMI

China’s IC production (including foreign companies) represented 11.6% of its $112 billion IC market in 2016. –IC Insights

3D IC and 2.5D IC packaging market will grow at 38.3% CAGR to 170 billion USD by 2022. –Markets and Markets

3D semiconductor packaging market will grow at a 16% CAGR to $9 billion by 2022. –Research and Markets

Automotive power semiconductors market will increase from $5.5 billion in 2016 to more than $8.5 billion in 2022 –IHS Markit

Automotive semiconductor market value will grow at 4.8% CAGR to USD 37 billion by 2020. –ReportsnReports

Chip on Flex market is estimated to grow at ~4.43% CAGR to USD 1795 million by 2021. –Market Research Future

Flip-Chip interconnect technology market will grow at 8.8% CAGR from $27.2 billion in 2016 to $41 billion in 2021. –BCC Research

IGBT and Super Junction MOSFET will expand at 11.6% CAGR from US$4.8 billion in 2012 to US$10.1 billion by 2019. –Transparency Market Research

IoT chip market is expected to expand at a 13.2% CAGR from USD 5.75 billion in 2015 to USD 14.8 billion by 2022. –Research and Markets

Microcontroller market will grow at an 8.4% CAGR from $8.6 billion in 2015 to $15.7 billion by 2022. –Allied Market Research

Neuromorphic chip market is estimated to grow at a 20.7% CAGR from US$ 1.6 billion in 2016 to US$ 10.8 billion by 2026. –Future Market Insights

Power semiconductors market revenue (which includes discretes, power modules and power ICs) will increase 7.5% y/y from $5.5 billion in 2016 to more than $8.5 billion in 2022. –IHS Markit

Silicon Photonics market is expected to reach USD 918 million by 2025: Rapid Emergence of Commercial & Consumer Electronics Applications. –Research and Markets

Smartphone fingerprint sensor application & technologies market sales grew at a 210% CAGR from 23 million fingerprint sensors units in 2013 to 690 million in 2016. –Yole Développement

System in Package technology market is anticipated to grow at a 9% CAGR to $30 billion by 2022. –Globally-Allied Market Research

Wafer level packaging market will grow at 21.5% CAGR to $7.8 billion by 2022. –Allied Market Research

Sensors

• 3D sensor market is poised to grow at around 17.4% CAGR to $12 billion by 2025. –Research and Markets

• Bio-electronics and biosensors market size is forecast to grow at over 10% CAGR from USD 11.4 billion in 2013 to over USD 25 billion by 2023. –Global Market Insights

• Biometrics hardware and software revenue will grow at a 23% CAGR from $2.4 billion in 2016 to $15 billion by 2025. –Tractica

• Collision avoidance system market will reach USD 19 billion by 2025. –Grand View Research

Displays, Panels, Monitors

• Taiwan LCD monitor shipments decreased 0.6% y/y to 80.8 million in 2016, accounting for 65% of the global total. –Digitimes Research

• Display controller market is expected to grow at 9.7% CAGR from $17.3 billion in 2015 to $32 billion by 2022. –RnR Market Research

• Handset-use panel shipments grew 4.9% y/y to 2.9 billion in 2016. –CINNO Research

• LCD TV shipments increased 1.6% y/y to 220 million in 2016. –WitsView

• OLED panel production capacity will grow at a 52% CAGR from 7.5 million M2 in 2016 to 40.4 million M2in 2021. –DSCC

• TV panel area demand is forecast to expand 8% y/y to 143 million M2 in 2017, contributing to a 6% growth in the overall display market. –IHS Markit

• TV panel shipments decreased 3.5% y/y to 260 million units in 2016. –WitsView

Memory and Storage

• DRAM and NAND flash market is expected to grow to US$110 billion in 2021 from $77 billion in 2016. –IC Insights

• Embedded non-volatile memory market is expected to reach USD 472 million by 2022. –Grand View Research

• Nano RAM market will see a 62.5% CAGR between 2018 and 2023 and associated embedded systems market will grow from $4.7 million in 2018 to $218 million in 2023. –BCC Research

Human Machine Interface

• Human machine interface market is expected to grow at a 9% CAGR to USD 5.9 billion by 2022. –MarketsandMarkets

• Haptics technology market is poised to grow at around 17.6% CAGR to $31.8 billion by 2025. –Research and Markets

• Multi-touch technology market will expand at around 17.2% CAGR to $23 billion by 2025. –Research and Markets

LED Lighting

• LED lighting market is expected to grow at 13.7% CAGR to US $92.4 billion by 2022, while shipments expand at 21% CAGR to 14 billion units. –Research and Markets

• Africa LED and OLED displays and lighting products market is expected to expand at a 17.8% CAGR through 2026 from US$ 685 million in 2015. –Research and Markets

Printed, Flexible and Organic Electronics

• Printed, flexible and organic electronics market will grow from $29 billion in 2017 to $73 billion in 2027. –IDTechEx

• Thin and ultra-thin films market revenue will expand at a 15% CAGR from USD 33 billion in 2015 to USD 115 billion in 2024. –Transparency Market Research

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