Forecasts, Forecasts, Forecasts

1C U ST E R A N D C U S T E R -TOPA I

With all the major companies now having reported their calendar second quarter results we now estimate that 2Q’16 global electronic equipment revenues rose 0.8% in US dollars versus the same period in 2015 (Chart 1). Growth by sector of the electronic supply chain varied significantly with automotive and medical electronics producing double-digit growth and semiconductor manufacturing equipment moving into the next growth phase of its business cycle (Chart 2).

According to Ed Henderson electronic equipment growth will be modest in 2016 but is expected to improve next year with only Japan and Europe lagging in the rebound (Chart 3).

Based on recent WSTS and SIA forecasts semiconductor global semiconductor shipments will recover from a 3.2% decline this year to modest 2% growth in 2017 (Chart 4) and while SEMI equipment growth will be small in 2016 (Chart 5) we expect a significant upturn in 2017 based upon the recent performance of the companies in our SEMI equipment survey as noted in Chart 2.

Custer Consulting Group’s printed circuit board global sales forecast (Chart 6) looks to 1.3% growth this year with a likely modest improvement in 2017. Since this model is in U.S. dollars exchange rates had a big negative impact in late 2015 and early 2016 as weaker local currencies were converted to strong U.S. dollars.

Charts 7 & 8 summarize the thinking of various prognosticators regarding the 2016 and 2017 growth of the global supply chain.

2017 looks to be a modestly better year!

End Markets

Worldwide IT products and services revenues will grow from nearly $2.4 trillion in 2016 to more than $2.7 trillion in 2020. –IDC

2MOBILE COMMUNICATIONS

• Smartphone sales increased 4.3% y/y to 344 million units in 2Q’16. –Gartner

• Smartphone shipments are expected to expand 1.6% y/y to 1.46 billion units in 2016. –IDC

• India’s smartphone shipments expanded 3.7% y/y to 27.5 million units in 2Q’16, after declining in two successive quarters. –IDC

COMPUTERS & PERIPHERALS

• PC shipments are forecast to decline by 7.2% y/y in 2016 followed by another decline of 2.1% y/y in 2017. –IDC

• Notebook computer shipments are forecast to contract by 1.9% y/y in 2017, following an annual decline of 8% in 2016. –MIC

• Single board computer market will grow at a 5% CAGR from USD 1.9 billion in 2015 to over USD 2.9 billion by 2024. –Global Market Insights

• Tablet market shipments are expected to rebound in 2018 to 194 million units after declining in 2016 by 11.5% y/y to 183 million units. –IDC

• Tablet shipments dropped 13.2% y/y to 40 million units in 2Q’16. –Digitimes Research

CONSUMER ELECTRONICS

Rugged electronics market will at a 10% CAGR from US$11.4 billion in 2015 to USD 26 billion in 2024. –Transparency Market Research

INTERNET OF THINGS

• China’s manufacturing IoT spending will hit US$128 billion by 2020 as industry shifts from production to services. –IDC

• IoT sensors market is expected to grow at a 42% CAGR from USD 3.3 billion in 2015 to USD 38.4 billion by 2022 on increased demand from automotive, industrial & healthcare markets. –Research and Markets

AUTOMOTIVE

Automotive display panel shipments will rise at a 7.2% CAGR from 157 million panels in 2015 to 207 million panels in 2019. –Digitimes Research

ROBOTS/ AUTOMATION

3• Commercial drone market sales are expected to increase by 128% y/y to $3.4 billion by the end of 2016. –Valour Consultancy

• Domestic service robot market shipments will grow at a 17% CAGR from 5 million units in 2015 to more than 12 million units in 2020. –IHS Market

• Robotics market is growing at a 46% CAGR from $34 billion in 2016 to $226 billion by 2021 on growth from consumer robots, enterprise robots, autonomous vehicles, and unmanned aerial vehicles. –Tractica

• Robots orders to North American companies were 14,583 units in 1H’16, valued at approximately $817 million and shipments to North American customers reached 13,620 units, valued at $838 million. –Robotic Industries Association

WEARABLES

Wearable device shipments grew 26% y/y to 22.5 million units in 2Q’16. –IDC

Wearable health sensors market is estimated to grow at a 43% CAGR to $48.6 million by 2018. –Research and Markets

OTHER

• Artificial intelligence revenue will grow from $644 million in 2016 to $37 billion by 2025. –Tractica

• Flexible electronics market will grow at slightly above 21% CAGR from USD 5.1 billion in 2015 to USD 16.5 billion by 2021. –Zion Market Research

• Virtual reality market will grow from $970 million in 2016 to $30 billion in 2020 and augmented reality will expand from $500 million in 2016 to $91 billion in 2020. – RnRMarketResearch

EMS, ODM & Related Assembly Activity

India’s mobile handset assembly rose 185% in value terms to 54,000 crore in 2015-16 from 19,000 crore in 2014-15.

Cemtrex fully integrated its recent acquisition of Periscope.

Cicor

• dissolved positions of head of AMS and ES divisions.

• appointed Alexander Hagemann, CEO.

Compal Electronics

4• began making 60,000 Le 2 smartphones per month at its 200,000 SF assembly facility in Greater Noida, India.

• sold its LCD TV assembly plant in Poland to Vestel Ticaret.

Creation Technologies expanded its value analysis/value engineering services for mitigating risk caused by supply base consolidation.

DS Electronics purchased a fourth KISS- 103 selective soldering machine from ACE Production Technologies in Tempe, Arizona.

Egypt’s ministry of Communications, MCIT and Techno jointly established country’s first factory to manufacture smart home appliances, mobile phones and LED devices.

Enics appointed Peter Back, GM for Enics Malmö business unit and Anders Hynén, GM of Enics Västerås business unit.

Foxconn

• and Xiaomi set up 65,000 SF assembly plant in Sri City, Andhra Pradesh, India.

• dissolved its Japanese unit that handled R&D on OLED panels.

• proportion of sales that were billed through Ireland in 2016 was 29.8%.

Gen3 Systems installed a second temperature & humidity test chamber at its UK testing facility.

Integrated Micro-Electronic

• acquired 76% stake in VIA Optronics for 47.4 million Euros (P2.46 billion).

• opened 30 million euro ($33.9 million) plant in the Serbian city of Nis.

Jabil Circuit hired and appointed Lisa Bahash, Sr. VP, Automotive and Transportation.

NEO Tech entered into an engineering and manufacturing partnership with Cephasonics for ultrasound products.

Plexus teamed up with Indiana

Integrated Circuits to develop a quilt packaging production assembly process.

Primus Technologies appointed Paul Cary, VP of Operations.

Rocket EMS’ former CEO, Craig Arcuri launched a new venture, bizremodel.com.

Sanmina

• Costa Mesa facility received AS9100C certification for aerospace and defense PCB manufacturing.

• SCI Technology secured IPC J-STD- 001 FS aerospace electronics certification.

Stadium Group’s Hartlepool, UK facility received ISO/TS16949 automotive quality certification.

Sunsel Systems Manufacturing moved into a 74,000 SF facility in Dartmouth, Nova Scotia.

VirTex appointed Jason Runge, Business Development Manager.

Z-AXIS hired Spiro Bourtis as Design Engineering Manager for contract electronics design services group and Daniel Damboise as Manufacturing Engineering Manager for contract manufacturing group.

PCB Fabrication

Automotive PCB market is expected to grow 8.3% y/y from $5.28 billion in 2015 to $5.72 billion in 2016 and expand another 8.2% y/y to $6.19 billion in 2017. –RnR Market Research

India imports about $1.2-1.3 billion PCBs (of which $400~500 million are pre-assembled in China for cellphone manufacturing); local PCB production is between $350 and $400 million per year. –Dr. Hayao Nakahara

Taiwan PCB production value is expected will rise 8.8% q/q from NT$133 billion in 2Q’16 to NT$144 billion (US$4.5 billion) in 3Q’16. –IEK

Amphenol Invotec commissioned a new Pluritec Inspecta combo HPL X-ray drill with complete automation from Viking Test in Tamworth, UK.

Cicor Technologies is celebrating the 50th anniversary of Cicorel.

Eurocircuits added a 1,980 M2 manufacturing facility in Hungary.

Firan Technology Group named Melinda Diebel VP and CFO, replacing retired Joseph Ricci.

ILFA invested in new alkaline etching line with recycling system and tin stripper line from SCHMID Group.

Printed Circuits, Inc. (PCi) hired Ed

Andrews as Director of Quality Systems.

Prototron Circuits appointed Debi Morris, Sales Manager for Northern California.

Sunstone Circuits added RF/ Microwave materials (high speed/ low loss) for 1 and 2 layer boards.

Materials & Process Equipment

Conductive inks market is projected to grow at 3.5% CAGR to $3.9 billion by 2021. –MarketsandMarkets

Electronics adhesive market is expected to grow at a 4% CAGR to an estimated $3.8 billion by 2021. –Lucintel

Electronics chemicals market revenues will grow from $28 billion in 2014 to $38 billion in 2021. –Frost & Sullivan

Encapsulation barriers and coatings will expand at a 26% CAGR from $61 million, presently to $192 million in 2021. –Smithers Apex

German machine vision industry achieved record sales of €2 billion in 2015; electronics industry was the second largest customer, accounting for about 13% of total revenue. –VDMA Machine Vision

PCB laminate prices have been rising as a result of popularity of electric cars in China. –Dr Hayao Nakahara

Silver-based Inks, pastes and antimicrobial coatings revenues will reach $7.5 billion by 2021. –n-tech

3M electronics and energy group sold its Austin, Texas campus.

Alpha Assembly Solutions’ VP of Energy Technologies, Ravi Bhatkal was re-elected to iNEMI Global Board of Directors for a second term.

Austin American Technology appointed Todd Rountree, Equipment Division Manager.

Avantor Performance Materials merged with NuSil Technology.

DDM Novastar received a custom pick & place machine order to design, build and commission a unique reel-to-reel in-line PCB assembly line.

DKN RESEARCH developed a new copper laminate to provide manufacturing capabilities using transparent flexible PCBs.

ESI appointed Michael Burger, President and CEO.

Intertronics introduced black opaque conformal coating that enhances PCB security.

iView and Forth Dimension Displays

entered collaboration to develop, manufacture and sell structured light projectors for Chinese 3D AOI market.

Keysight Technologies named Mark Wallace, Sr VP, Worldwide Sales.

Linde Group opened a new Electronics R&D Center in Taichung, Taiwan.

MicroChem purchased Conductive Compounds.

Nano Dimension

• opened an ink production facility in Ness Ziona, Israel.

• supplied its first DragonFly 2020 system designated for 3D circuitry and PCBs to a leading Israeli defense company.

National Instruments’ Board of Directors elected Alex Davern to replace retired CEO, James Truchard.

Nordson acquired LinkTech Quick Couplings.

Peter’s team acquired ELPEPCB printed circuit coatings in China, Taiwan and all countries of South East.

Technica USA hired Najib Khan as Product Manager of photoimaging products.

Unicomp Technology opened A 6,000 SF showroom and service support center in Oceanside, CA.

Ventec International Group doubled its B-series insulated metal substrate materials production capacity in Jiangyin, China.

Yamaha Motor IM Europe merged with Yamaha Motor Europe.

ZESTRON Europe appointed Paul Senac, Regional Sales Manager for the southern part of France.

Semiconductors & Other Components

Global semiconductor fab equipment spending is expected to increase 4.1% y/y to $37.5 billion in 2016 and another 10.6% to $41.4 billion in 2017. –SEMI

Semiconductor market is expected to contract 3.2% y/y to US$325 billion in 2016 and then expand 2.0% y/y to US$331 billion in 2017 and grow another 2.2% y/y to US$338 billion in 2018. –WSTS

China is aiming to raise its self-sufficiency rate for ICs to 40% in 2020 and to 70% by 2025. –Digitimes Research

China’s semiconductor capital equipment market increased 12% y/y to $4.9 billion in 2015. –SEMI / Semiconductor Equipment Association of Japan

European semiconductor distribution market sales grew by 2.15% y/y to 1.86 billion Euros in 2Q16. –DMASS

North America-based manufacturers of semiconductor equipment posted $1.79 billion in orders worldwide in July 2016 (on a 3-month average basis) and a book-to-bill ratio of 1.05. –SEMI

Taiwan’s semiconductor companies are expected to expand their revenues by 6% y/y from NT$2.27 trillion (US$71.5 billion) in 2016 to NT$2.4 trillion in 2017. –MIC

UK semiconductor sales contracted by almost 2% to €141m in 2Q’16 as a result of post-Brexit uncertainty. –DMASS

GaN semiconductor devices market will expand at 17% CAGR from US$871 million in 2015 to USD 3440 million by 2024. –Transparency Market Research

IoT semiconductor sales are expected to rise19% y/y in 2016 to $18.4 billion with a 19.9% CAGR between 2014 and 2019. –IC Insights

MCU sales will increase 4% y/y in 2016 to nearly $16.6 billion. –IC Insights

MEMS market is expected to grow at a nearly 12% CAGR to USD 20 billion by 2020. –Technavio

RF GaN revenue will reach nearly US$690 million in 2020 driven by base station and defense applications. –Strategy Analytics

System basis chip market is expected to grow at a 9.1% CAGR from $15.1 billion in 2015 to $28.4 billion by 2022. –MarketsandMarkets

WiGig 802.11ad IC shipments are forecast to grow from 180 million units in 2017 to 1.5 billion units in 2021. –ABI Research

SENSORS

• North America optical sensors market is estimated to grow at a 6.7% CAGR to $5.9 billion by 2018. –Research and Markets

• CCD image sensors market will grow at a 6% CAGR to $1.73 billion by 2018. –Research and Markets

• Fingerprint sensor shipments will increase from 400 million units in 2015 to over 700 million units in 2016, with nearly 300 million units of which to be shipped to the China market. –Digitimes Research

Mobile DRAM revenues increased 17.2% q/q to US$3.93 billion in 2Q16. –DRAMeXchange

PANELS/ MONITORS/ TOUCH SCREENS

• China LCD TV exports increased 14% y/y to 33 million in 1H’16. –Sigmaintell

• Fine Pixel Pitch LED display market will rise to $677 million in 2015 to $3,170 million by 2024. –Transparency Market Research

• LED flash production value is forecast to grow from US$744 million in 2016 to US$811 million in 2017. –LEDinside

• LED specialty lighting applications are forecast to expand from $4.4 billion in 2016 to $16.4 billion in 2020. –LEDinside

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