Different Strokes for Different Continents … The Importance of Local End Markets

WALT CUSTER AND JOHN CUSTER-TOPAI

WALT CUSTER AND JOHN CUSTER-TOPAI

World manufacturing growth dropped to zero in May based upon the global purchasing managers index (Chart 1). But results varied significantly by country (Chart 2). In general the Asian countries including powerhouse China were contracting while the USA and Europe were expanding.


Chart 3 shows electronic equipment shipments by month for key countries/regions. The contraction in China coupled with its normal seasonal downturn versus stability in Europe and the United States is obvious.


Why the big differences? A key reason is the end markets served. The SE Asian markets are heavily dependent on volume consumer products where growth has waned. In recent years smartphones have been the big driver but their growth has slowed while PCs, media tablets and digital cameras have contracted (Chart 4).


The USA and Europe are dependent on other end markets – instruments and controls, defense and for Europe automotive electronics.


Automotive was the only growth sector in a rather dismal first quarter of this year (Chart 5). This combined with instrument and control equipment bolstered Europe.


In the USA military electronics orders are climbing (Chart 6) and the electromedical, measurement & control equipment sector continues is steady upward pace (Chart 7).


Looking forward there is no emerging high volume consumer market on the horizon to fill the gap caused by weaker smartphone, PC and media tablet orders. Autonomous cars, the Internet of Things and wearables are “futures” but their volumes have not yet developed.


Screen Shot 2016-07-06 at 5.52.50 PMThe bottom line is that business conditions vary by geography and by end markets served. At present Asia is struggling while the USA and Europe are benefitting from more stable demand.

End Markets

MOBILE COMMUNICATIONS

• China smartphone imports grew 2% y/y to 102.6 million units in 1Q’16. –IDC

• Smartphones sales to end users increased 3.9% y/y to 349 million units in 1Q’16. –Gartner

• Smartphone shipments are expected to grow 3.1% y/y in 2016 to 1.48 billion units in 2016 and continue to grow to 1.84 billion in 2020. –IDC

COMPUTERS & PERIPHERALS

• Indian tablet shipments grew 1.3% y/y to 0.86 million units in 1Q’16. –IDC

• Embedded computing market is estimated to grow at a 6.2% CAGR to $237 billion by 2022. –Allied Market Research

• Notebook shipments are forecast to fall 7.4% y/y to 127 million units in 2016 and tablet shipments will decrease 11.1% y/y to 184 million units. –MIC

• PC shipments are expected to decline 7.3% y/y to 256 million units in 2016. –IDC

• Traditional PCs (desktops and notebooks) shipments will fall from 343 million units in 2012 to an estimated 232 million units in 2016. –Gartner

• Tablet shipments are forecast to decline 9.6% y/y in 2016 and then return to growth in 2018 driven by emergence of detachables and ongoing need for slates. –IDC

• Enterprise storage systems factory revenue declined 7.0% y/y to $8.2 billion during 1Q’16. –IDC

CONSUMER ELECTRONICS

• Set-top box shipments grew 4.8% y/y to 353 million units in 2015. –IHS

• Smart TV shipments will expand from 109 million units in 2016 to 134 million units in 2020. –IHS

PRINTERS

• Large format printer shipments grew 1.2% y/y to 81,700 units in 1Q’16. –IDC

• Production printer shipment value increased 1.4% y/y to nearly $1.2 billion for 10,983 units in 1Q’16. –IDC

INTERNET OF THINGS

Residential IoT device shipments’ revenues are expected to total more than $682 billion from 2016 to 2026. –Navigant Research

AUTOMOTIVE

• Automotive electronics market value is anticipated to grow from USD 185 billion in 2015 to USD 353 billion by 2023. –Global Market Insights

• Autonomous vehicle sales will grow from nearly 600,000 units in 2025 to 21 million in 2035. –IHS

Screen Shot 2016-07-06 at 5.53.00 PMNETWORK EQUIPMENT

• Ethernet switch market revenue grew 1.4% y/y to $5.5 billion in 1Q’16 and the enterprise & service provider router market revenue grew 3.3% y/y to $3.5 billion. –IDC

• Server market revenue declined 2.3% y/y to $13 billion, while shipments grew 1.7% y/y to 2.7 million in 1Q’16. –Gartner

• Server market revenues decreased 3.6% y/y to $12.4 billion and shipments decreased 3% to 2.2 million units in 1Q’16. –IDC

ROBOTS/ AUTOMATION

• North American robotics market orders reached 7,406 robots valued at approximately $402 million in 1Q’16. –Robotic Industries Association

• Camera drones market is forecast to grow from $2 billion in 2016 to $21.5 billion by 2022. –Radiant Insights

WEARABLES

Wearables shipments increased 67.2% y/y to 19.7 million units in 1Q’16. –IDC

EMS, ODM & Related Assembly Activity

Taiwan’s contract electronics makers output is expected to fall 5.4% y/y to NT$2.16 trillion (US$66.26 billion) in 2016 on weaker-than-expected iPhone sales, HTC’s troubles, ZenFone delay and Chinese supply-chain competition. –MIC

Asteelflash

• started production at its newly built 113,020 SF facility in La Soukra, Tunisia.

• Mexico received its ISO/TS 16949 certification.

Cemtrex acquired Periscope.

Coriant added a SMT Quattro Peak L Plus, full-convection-reflow-soldering-system in Berlin, Germany.

Deswell Industries relocated its corporate HQ in Macao, China.

DfR Solutions appointed Billie Early, Program Manager.

Screen Shot 2016-07-06 at 5.53.14 PMEG Industries

• entered two-year, US $36 million manufacturing contract to make Flic for Shortcut Labs.

• plans to expand PCBA capacity in Thailand to 15 lines.

EPE added an Aegis MES software system.

Esprit Electronics appointed Clive Matthews, Senior Account Manager.

Fideltronik laid-off more than 50% of the staff in Herrljunga, Sweden.

Firstronic installed its third CX Model inline vapor phase reflow system from IBL Technologies.

Flex entered strategic partnership with Vantage Point Analytics.

Screen Shot 2016-07-06 at 5.53.08 PMFoxconn/ Hon Hai

• acquired SMART Technologies.

• and Intel entered 5G mobile communications cooperation.

• Kunshan factory “reduced employee count from 110,000 to 50,000 with automation implementation.

• purchased Microsoft’s smartphone facility in Bac Ninh province, Vietnam.

• subsidiary, FIH Mobile is building a handset factory for Huawei Technologies in China’s Guizhou Province.

• subsidiary, Kunshan Nano New Material established a R&D center in Skolkovo, Russia.

• subsidiary, Asia Pacific Telecom plans to form a new robotics company in 3Q’16.

HansaMatRIX purchased building site for a new facility at the Riga International Airport business area, which will be the largest product development (hardware) accelerator in Baltic and Nordic countries.

Hayakawa moved to larger premises in Wrexham, Wales.

Luster Industries named Gary How, Managing Director.

NexPCB entered India through partnership with Revvx.

Plexus relocated its Neenah Design Center to downtown Neenah, Wisconsin.

Spectron Electronics (Lindsay, Ontario) terminated operations.

Vexos Shenzhen China facility achieved ISO 13485:2003 registration.

PCB Fabrication

Automotive PCB market is expected to grow from $5.2 billion in 2015 to $7.5 billion in 2020. –Dr. Hayao Nakahara

Top 10 automotive PCB makers in 2015

US$ Million

1. Chin Poon. . . . . . . . . . . . . . . . . . 545

2. TTM. . . . . . . . . . . . . . . . . . . . . . . . 430

3. CMK. . . . . . . . . . . . . . . . . . . . . . . 420

4. Meiko. . . . . . . . . . . . . . . . . . . . . . .419

5. KB PCB Group. . . . . . . . . . . . . . 300

6. Nippon Mektron. . . . . . . . . . . . . 290

7. KCE Electronics. . . . . . . . . . . . . 265

8. Tripod. . . . . . . . . . . . . . . . . . . . . . 225

9. AT&S. . . . . . . . . . . . . . . . . . . . . . . . 191

10. WUS Group. . . . . . . . . . . . . . . . . .158

–N.T. Information Ltd

Alba Elettronica added a Nuvogo 800 DI exposing solution from Orbotech and InSight PCB software from Frontline (an Orbotech company).

American Standard Circuits installed a 2nd Orbotech Sprint 120 inkjet printer.

APCT Holdings acquired Tech Circuits and sister company, Source Technologies.

Beta LAYOUT installed an additive manufacturing system from EOS.

Eltek Chairman of the Board, CEO and controlling shareholder, Yitzhak Nissan, increased his holdings in the company to 56.6%.

Eurocircuits

• opened a1,980 M2 building in Eger, Hungary.

• is celebrating 25th anniversary.

EuroTech received AS9100C aerospace industry certification for PCB manufacturing.

Gardien Group named Adams Yin, VP of Operations for its Taiwan business.

Graphic

• expanded its plant on the Lords Meadow Industrial Estate in Crediton, UK.

• was purchased by Italian mid-market private equity firm Quadrivio sgr, which also owns Somacis.

IPC released IPC-9121, troubleshooting PCB fabrication processes.

Merlin Circuit Technology achieved full UL recognition and approval for the manufacture of complex HDI and sequential lamination PCBs using Isola I-Tera MT40 laminates and prepregs.

Methode Electronics expanded its factory in Imriehel, Malta by 1,250 M2 in order to diversify its services to printed circuit boards.

Micropack India received Nadcap accreditation QML status for its rigid and flex-rigid printed circuit boards.

Multek completed ISO/TS16949:2009 quality accreditation for its high layer count factory at its new Zhuhai automotive division.

Printem received U of T Inventions of the Year award for new instant point and click PCB manufacturing process.

RayMing Technology purchased new testing equipment for its factory in Shenzhen, China.

Summit Interconnect

• named Clay Swain Vice President of Sales & Marketing.

• recently acquired KCA Electronics and Marcel Electronics International by HCI Equity Partners.

Sunrise Electronics installed a Camtek Gryphon solder mask/ legend printer, a Lenz 1+1 driller router and a MASS via fill and planarization system.

Sunstone Circuits added an Optek VideoMic VSM non contact 3-axis coordinate measurement system.

Materials & Process Equipment

Conductive polymers market will grow at an 8% CAGR to 6.75 billion by 2020. –marketresearchstore

Potting compound market will expand at a 3.7% CAGR to 3.1 billion USD by 2021. –MarketsandMarkets

Surface mount technology market is expected to grow at a 9.84% CAGR between 2015 and 2020. –RNR Market Research

UV curable resins market will grow at a 9.4% CAGR. –Research and Markets

Advanced MP Technology appointed Andy Ting, APAC Sales Director.

A-Gas Electronic Materials moved to 20,000 SF facility at Rugby, Warwickshire, UK.

AIM Solder

• appointed Andres Rojas to Technical Marketing Engineer.

• technical support team received IPC-A-610 certification.

Balver Zinn and Spectro Analytical Instruments jointly developed an application that utilizes SPECTROCHECK for tin solder bath analysis.

Danutek hired Szabolcs Csoka as AOI technical specialist.

Distrelec Group appointed Christina Aqvist, CEO.

DowDuPont named Edward Breen, CEO, Howard Ungerleider, CFO and Marc Doyle, COO of Specialty Products business.

Electrolube promoted Bruce Ward to Sales Manager East Coast of North America.

Electronic Coating Technologies received UL certifications for conformal coating 29814.

FRX Polymers and China’s Shengyi Technology Company jointly developed low dielectric loss copper clad laminate formulation for printed circuit boards.

Henkel

• Adhesive Technologies and ContiTech Elastomer Coatings entered cooperation to develop products that can be produced using cost-effective roll-to-roll processing.

• developed thermally conductive Technomelt solution that combines heat dissipation and encapsulation capabilities.

Heraeus & Songwon are jointly developing and marketing high-end specialty chemicals for the electronics industry.

Indium’s Sr. Product Manager for Semiconductor and Advanced Assembly Materials, Andy Mackie was named to IMAPS Global Business Council Steering Committee.

Intertronics opened a Technology Center in Kidlington, Oxfordshire, UK.

Jenoptik created a technology campus in Rochester Hills, Michigan for metrology and laser machines for the North American automotive industry.

OK International moved into its 100,550 SF world HQ in Cypress, California.

Palomar Technologies subsidiary, SST International hired Matt Vorona as Regional Sales Manager for North America and Europe.

PDR hired Dan Kelsey as National Sales

Manager for Rework, X-Ray, and HALT/HASS divisions.

Photo Stencil moved into a 35,200 SF facility in Golden, Colorado.

SMT appointed Florian Graf, Sales Director Europe/Germany.

Speedprint and Europlacer co-located to new facility in Glauburg, Germany.

Taiyo America Director and COO, Tadahiko Hanada was promoted to President.

Uyemura

• appointed Robert Coleman, UIC Midwest Sales Manager.

• named David Rund, UIC Technical Service Engineer for Northern California and Pacific Northwest and April LaBonte, Technical Service Engineer for Southern California.

Vitronics Soltec is celebrating 100 years of innovation and service to the soldering and PCB industry.

Semiconductors & Other Components

Worldwide semiconductor projected annual sales will decrease 2.4% to US$327 billion in 2016 and then increase 2% in 2017 and grow another 2.2% in 2018. –SIA/WSTS

Semiconductor equipment billings decreased 13% y/y to US$8.3 billion in 1Q’16; bookings fell 2% y/y to $9.4 billion. –SEMI

Semiconductor fab equipment is expected to grow 1.5% y/y in 2016 and 13% in 2017: 19 new fabs and lines are forecasted to begin construction in 2016 and 2017. –SEMI

Worldwide silicon wafer area shipments decreased 3.8% y/y to 2,538 million square inches in 1Q’16. –SEMI

European semiconductor distribution market sales grew 8.4% y/y to record 1.93 billion Euros in 1Q’16. –DMASS

North America-based semiconductor equipment manufacturers posted $1.59 billion in worldwide orders and $1.59 billion in bookings in April 2016 (3-month average basis). –SEMI

Taiwan IC design industry output value is expected to increase 7.4% y/y to NT$571 billion (US$17.4 billion) in 2016. –Digitimes Research

Industrial semiconductor revenues rose less than 1% in 2015 to US$41.9 billion. –IHS

MEMS component market will grow at an 8.9% CAGR from $11.9 billion in 2015 to $20 billion in 2021. –Yole Developpement

RF power semiconductor market is expected to grow at a 15.4% CAGR from USD 10.6 billion in 2015 to USD 31.26 Billion by 2022. –Markets and Markets

Wireless semiconductors grew almost 4% y/y to $56 billion in 2015. –IHS

x86 and ARM server-class microprocessor revenue will increase 1.3% y/y to $13.9 billion in 2016, while server microprocessor market unit shipments will increase 3.5% to 22.9 million units. –IDC

DRAM revenues declined 16.6% q/q to US$8.56 billion in 1Q’16. –DRAMeXchange

NAND flash vendors combined revenues declined to US$8.06 billion in 1Q’16. –DRAMeXchange

Panels/ Monitors/ Touch Screens

China LED production value increased 23.1% y/y to CNY109.7 billion in 1Q’16. –GGII

China’s TFT-LCD materials demand is estimated to grow at nearly 31.6% y/y to 250 tons in 2016. –Sigmaintell Consulting

AMOLED annual capacity will grow 16.5% y/y from 5.9 million SM in 2016 to 14.4 million SM in 2019. –WitsView

Plastic and flexible OLEDs market will grow from $16 billion in 2016 to $57 billion by 2026. –IDTechEx

Smartphone panel shipments grew 7% y/y to 440 million units in 1Q’16. –Sigmaintell

TFT-LCD large-size (above 9-inch) panel shipments will decrease 5% y/y to 656 million in 2016. –IHS

CUSTER AND CUSTER-TOPAI

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