Good Start but Trade Wars Cloud the Horizon

CUSTER AND CUSTER

As we have written in recent columns 1Q’18 finished strongly with almost all sectors of the electronic supply chain showing good growth. Admittedly the dollar denominated growth rates in Chart 1 were amplified by exchange rate effects, but the start of 2018 was still quite good.
As the second quarter closed, the rate of expansion was slowing, especially in Europe where the Eurozone PMI had dropped sharply from its December 2017 peak (Chart 2). The USA by contrast is accelerating in many electronic sectors (Chart 3). Defense capital goods and electromedical, measurement & control equipment stand out.

Globally servers (Chart 4) and SEMI capital equipment (Chart 5) are doing well and the outlook for semiconductors remains strong based on the recent WSTS/SIA forecast (Chart 6).

However, there are clouds on the horizon. A brewing trade war is very worrisome.

Asked if there was a risk for the global economy, WTO Director-General Roberto Azevedo stated: “Absolutely. If the trade dispute escalates, there’s the risk of a global downturn and we’re already seeing signs that this downward process has already started.” He said it was crucial to maintain dialogue to avoid an escalation.

2018 started very well, but significant political/management rational thinking and action will be needed in the coming months.

End Markets

MOBILE COMMUNICATIONS
• Smartphone sales to end users grew 1.3% y/y to 455 million units in 1Q18. –Gartner
• Smartphone shipments are forecast to drop 0.2% in 2018 to 1.462 billion units and then grow roughly 3% annually from 2019 onwards with worldwide shipment volume reaching 1.654 billion in 2022. –IDC
• Indian smartphone market shipments grew 11% y/y to 30 million units in 1Q18. –IDC
• Taiwan handset (brand vendors & ODMs) shipments increased 17.5% y/y to 17.8 million units in 1Q18.
–Digitimes Research

COMPUTERS & PERIPHERALS
• Personal computing devices (traditional PCs [desktop, notebook, and workstation] and tablets [slate & detachable]) shipments are expected to decline at 1.8% CAGR from 408 units in 2018 to 386 units in 2022. –IDC
• Gaming PC shipments grew 10% y/y to between 21 million and 22 million units (including 6 million to 7 million notebooks and 15 million to 16 million desktops) in 2017, accounting for 9-10% of the overall

CUSTERPC market. –KGI
• Notebook computer shipments fell 1.4% y/y to 37 million units in 1Q18. –TrendForce
• Hardcopy peripherals shipments increased 1.7% y/y to nearly 23.8 million units in 1Q18. –IDC
• Enterprise storage market grew 34% y/y to $13 billion during the 1Q18. –IDC

NETWORK EQUIPMENT
• Server revenue grew 33.4% y/y to $16.7 billion in 1Q18 while shipments increased 17.3% to 3 million units. –Gartner
• Enterprise WLAN market revenues decreased 1.3% y/y to $2.2 billion in 1Q18. –IDC
• Ethernet switch market (Layer 2/3) revenue dropped 1.4% y/y to $6.3 billion in 1Q18. –IDC

INTERNET OF THINGS
• IoT systems sales are forecast to reach $94 billion in 2018. –IC Insights

MANUFACTURING 4.0
• Smart manufacturing market value is growing at a slightly above 15.4% CAGR from USD 152 billion in 2017 to USD 479 billion in 2023.
–Zion Market Research

ROBOTS & AUTOMATION
• Collaborative robots market is expected to grow at 47% CAGR from US$ 420 million in 2017 to US$ 9 billion by 2025. –Research and Markets
• Non-industrial robots are poised to exceed 75% of total revenue of $53 billion by the end of 2018. –Tractica
• China’s robot market reached US$6.3 billion in 2017, over a quarter of the US$23.2 billion global market.
–International Federation of RoboticsNorth American robotic market sales increased 22% y/y to 10,730 robots worth over $500 million in 1Q18. –Robotic Industries Association

SMART HOME
• Smart home market value will grow from $84 billion in 2017 to nearly $96 billion in 2018 and $155 billion in 2023. –Strategy Analytics
• Home automation and monitoring revenues will grow from an estimated $12 billion in 2018 to over $45 billion by 2023. –Juniper Research
• Smart speaker shipments grew 278% y/y to 9.2 million units in 1Q18.
–Strategy Analytics

TELEVISIONS
• TV shipments increased 7.9% y/y to 50.6 million units in 1Q18.
–IHS Markit

WEARABLES
• Wearable device shipments grew 1.2% y/y to 25 million units in 1Q18. –IDC
Automotive
AR & VR
• Augmented and virtual reality spending is forecast to grow at five year CAGR of 72% from $27 billion in 2018. –IDC
AI
• Artificial intelligence market value is expected to grow at 44% CAGR from $445 million in 2017 to $5.8 billion by 2024. –Allied Market Research

BATTERIES
• Automotive battery market is estimated to expand at 7.3% CAGR from USD 39.8 billion in 2017 to USD 65 billion by 2023. –Research and Markets
• Battery materials market will grow at 8.6% CAGR from USD 43.5 billion in 2018 to USD 66 billion by 2023.
–ReportsnReports
• Cathode materials market is projected to grow at 6.2% CAGR to $22 billion by 2023. –Research and Markets

CAMERA
• market is forecast to reach $14 billion by 2026. –BIS Research

ELECTRIC VEHICLES
• market will grow from 1.1 million in 2017 to 11 million by 2025 and 30 million by 2030.
–Bloomberg New Energy
• charging stations market is expected to grow at 42% CAGR from USD 5.3 billion in 2018 to USD 30 billion by 2023.
–ReportBuyer

INSTRUMENT CLUSTER
• market value will grow at 3.5% CAGR from USD 9 billion in 2018 to USD 10.7 billion by 2023.
– ReportsnReportsPOWER ELECTRONICS
• market 2018 will grow 4.7% CAGR from USD 5.6 billion in 2017 to over USD 4.44 billion by 2023. –market.biz

AUTOMOTIVE SENSORS
• Sensors market is expected to expand at 7.8% CAGR to USD 46 billion by the end of 2024 –Research Nester
• Image sensor market reached 104 million units in 2017, valued at $858 million with On Semi capturing 43% (about $369 million) of the market compared with Omnivision’s 25% (about $215 million) and Sony’s 9% (about $77 million). –Yole Development
• LiDAR market is forecast to expand at 28% CAGR from USD 454 million in 2017 to over USD 102 billion by 2023. –market.biz

AUTONOMOUS DRIVING
• Driver assistance systems market value is expected to grow at 21% CAGR from $25 billion in 2016 to $143 billion by 2025.
–Allied Market Research
• Semi-autonomous & autonomous truck market is projected to grow at 23% CAGR from estimated 260 thousand units in 2018 to 1,130 thousand units by 2025.
–MarketsandMarkets
• Smart transportation & market size is estimated to grow at 23% CAGR to USD 285 billion by 2024.
–Grand View Research

EMS, ODM & Related
Assembly Activity
Alternative Manufacturing, Inc. earned recertification as qualified manufacturer to IPC J-STD-001 AND IPC-A-610.
AWS Electronics achieved AS9100 Revision D accreditation.
Benchmark Electronics appointed Merilee Raines to Board of Directors.
Circuitronics named Tim Harmon, VP of Operations.
Dorigo Systems
• celebrated its 30th anniversary.
• added a 105,000 SF Corporate HQ in South Burnaby.
Electrica purchased a Mirtec MV-3 OMNI 3D AOI system.
Electronic Manufacturing Solutions Ltd moved into 15,693 SF facility in Newbury, UK.
Flex
• celebrated 25 years of success in Hungary with the inauguration new production line at its manufacturing operations in Zalaegerszeg.
• opened 9,427 SM Shanghai Design and Innovation center in Pudong, China.Foxconn/ Hon Hai
• set up a R&D center in Nanjing, China.
• invested an additional US$62 million to increase its stake in HMD Global.
Green Circuits merged with Power Design Services.
Horizon Sales hired Ken DeVries as Regional Sales Manager for Eastern Michigan, Northern Ohio, North Western PA, and N. Indiana.
Huawei set up a SMT line in partnership with Flex in Sriperumbudur, India.
Jabil
• (Green Point) opened a 2,000 SM optics technology innovation center in Haifa, Israel.
• expanded its Nypro healthcare manufacturing facility in Tiszaújváros, Hungary.
Kingfield Electronics’ Chesterfield manufacturing facility added a bespoke ISO class 8 cleanroom compliant to BS EN 14644-1:2015.
Leoni invested EUR 32 million for new production facility in Bulgaria’s Pleven region.
Libra Industries installed an Omron VT-S730 3D post reflow AOI system at its Mentor facility.
MC Assembly received DCAA
certification.
Naprotek installed the Quadra 5 flexible X-ray inspection solution from Nordson DAGE.
Plexus acquired a new 432,000 SF manufacturing facility in Penang, Malaysia.
Ryder Industries appointed Kingslea Chan, VP of Sales and Marketing.
Sanmina celebrated 25 years as a public company.
Season Group
• added Unicomp AX-8200HR X-Ray and Aleader ALD625Pro AOI machines to its UK site in Havant, Hampshire.
• U.S. operations obtained AS9100D certification.
SMART ELECTRONICS installed Glenbrook’s Jewelbox-70T in
Shannon, Ireland.
Wistron set up a factory in Bangalore, India to assemble iPhone SE and a second one in Noida, India via a JV with Optiemus Infracom for production of smartphones.
Zober Industries promoted Dave
Misher to VP of Sales.Zytek EMS is closing its factory in Milpitas, CA.
PCB Fabrication
AEM Unit disposed of a 2.34-hectare property in Sungai Petani, Kedah to Jyoto Works for RM10 million.
American Standard Circuits
• added an Accusystems Accu-Score AS-150 Max V-scoring machine.
• installed a Comac HRL-24-S hot roll laminator.
Amphenol Invotec implemented Orbotech’s Fusion 22XL AOI solution.
Hindley Circuits acquired Irridian Industrial Electronics.
IAC moved its contract PCB manufacturing business, IAC Electronic Manufacturing Services, to Newport, Wales
Jiangsu Difeida Electronics is planning to invest 1.5 billion yuan to achieve 4 billion annual output of PCBs in Dongtai, China.
Jiangsu Guangqian Electronics began building 150,000 SM plant in Dongtai Economic Development Zone, Jiangsu, China.
Merlin Circuit Technology
• added InCAM from Orbotech/Frontline PCB as its preproduction CAM solution.
• implemented XACT PCB registration system.
• transitioned from AS9100 Rev C to the latest Rev D.
NCAB Group began trading its shares on the main market of Nasdaq Stockholm.
New-Heart Technology purchased Ucamco’s Integr8tor software for its plant in Taiwan.
Printed Circuits added an Orbotech Paragon 8-watt laser direct imager and Fusion 22 automatic optical inspection machine with laser via inspection capabilities.
Prototron Circuit achieved ISO 9001–2015 certification.
Ronin8works is phasing out pilot operations at its plant in Richmond, British Columbia and is looking at the east coasts of Canada and the U.S. to set up a commercial-scale facility.
Shenzhen Xinye Circuit PCB factory was seized by Shenzhen Municipal People’s Committee of Habitat due to suspected environmental violations.
Tech Etch Board of Directors elected Richard Cammarano to serve as President/CEO.
Materials & Process Equipment
Conformal coatings market for PCBs will expand at 5.6% CAGR to US$14+ billion by 2026.
–Transparency Market Research
Chemical surface treatment market value is growing at 5.5% CAGR from $11 billion in 2017 to $15 billion in 2023. –Zion Market Research
Conductive glue market size is expected to cross USD 8.11 billion at CAGR of 11.2% by 2022.
–Market Research Future
Copper foil production value is forecast to grow from $5.3 billion in 2017 to $6.7 billion by the end of 2022. –QYResearch
Electrodeposited copper foils market value is forecast to grow at 11.6% CAGR from US$ 6.7 billion in 2017 to US$ 16 billion in 2025.
–Persistence Market Research
Photoresist market value is growing at 5.6% CAGR from USD 3 billion in 2016 to USD 5.2 billion by 2025. –MarketInsightsReports
Polyimide films market value is expected to grow at 9.5% CAGR to US$ 2.5 billion by 2022.
–Market Research Engine
Solder market value is projected to grow from $5.8 billion in 2016 to $5.9 billion by the end of 2023. –QYResearch
UV curable resins market is forecast to reach $5,400 million by 2023.
–P&S Market Research
3M sold substantially all of its communication markets division to Corning.
Arlon EMD achieved IPC’s QPL certification for 12 products.
Atotech introduced new acid copper processes –InPro Flex and Cupracid Flex to overcome technical barriers in FPCB manufacturing.
BASF started operations at new electronic-grade sulfuric acid (H2SO4) plant in Jiaxing, China.
DDM Novastar named Brian Osterhout, Director of Engineering.
Dow Chemical opened a new sales center in Toronto.
Elite Material expanded copper clad laminates monthly production capacity to 600,000 units to meet demand from investment clustering effect of PCB manufacturers in Huangshi City, Hubei Province of China.
Excellon acquired Industrial Electronic Resources.
Henkel purchased China Materialia Shanghai.
Invotec Engineering opened a regional office in Maple Grove, Minnesota.
IPTE
• added a new location in Alpharetta, Georgia.
• Germany appointed Rainer Krohmann, Sales Director for the DACH region (Germany, Austria and Switzerland).
ITEQ, TAIFLEX, Fulltech Fiber Glass are engaged in factory expansion projects of PCB upstream raw material plants to cope with increasing demand fromautomobiles, 5G communications, cloud storage servers and other products.
Jiangxi Copper Group developed China’s first circuit board copper foil for 5G communications.
Joshiyue Surface Technology invested 300 million yuan for over 31,000 SM building area outside of Xiantao City, Hubei Province in China.
Mycronic acquired MRSI Systems.
OMRON and Techman Robot formed strategic alliance to develop and sell collaborative robots.
Panasonic developed an ultra-low transmission loss circuit board material suitable for use in semiconductor packages and modules.
Sono-Tek Corporation appointed Brian Booth, Director of Electronics & Advanced Energy Business Unit.
SpecCoat opened its East Coast HQ in Billerica, Massachusetts.
Teledyne became the first in Europe to receive MIL-PRF-38535 Class Y aerospace certification.
Ventec International Group achieved IPC-4101/40 qualified products listing certification.
Viscom appointed Michèle Morner as Chairwoman of the Supervisory Board and elected Volker Paper as a member of the Supervisory Board.
Yamaha Motor opened an advanced technology center for robotics, AI and IT in Yokohama City, Japan.
Ynvisible opened an electrochromic inks development laboratory and commercialization facility in Freiburg im Breisgau, Germany.
ZESTRON purchased a new facility in Kanagawa, Japan.
Zhiyuan Electronic invested 1.1 billion yuan to expand its high-end CCL and adhesive wafer annual capacity to 11 million SM of copper-clad laminates and 22 million SM of bonding sheets in Anyang City.
Components

SEMICONDUCTORS

GLOBAL SEMICONDUCTOR
• sales increased 20.2% y/y to $37.6 billion in April 2018.
• market is forecast to grow 12.4% y/y in 2018 and 4.4% in 2019.
–SIA/ WSTS
• revenue is forecast to grow for the third consecutive year in 2018 to $450 billion, up 7.7% over 2017, after strong y/y growth of 24% in 2017. –IDC

GLOBAL SEMICONDUCTOR EQUIPMENT
• billings increased 59% y/y to a record $17.0 billion in 1Q18.
–SEMI
• is projected to grow at 14% y/y in 2018 and another 9% in 2019. –SEMI World Fab Forecast

SILICON WAFER
• shipments increased 7.9% y/y to record to 3,084 million square inches in 1Q18. –SEMI
• reclaim market is expected to grow 18% from $510 million in 2017 to $562 million by 2019. –SEMI

CHINA IC
• industry output value grew 20.8% y/y to CNY115 billion (US$18.1 billion) in 1Q18. –CSIA
• backend industry output value is forecast to exceed US$30 billion in 2018. –Digitimes Research
• design industry output value is forecast to exceed US$35 billion in 2018. –Digitimes Research
• North America-based semiconductor equipment manufacturers’ worldwide billings increased 26% y/y to $2.69 billion in April 2018 (3-month average basis). –SEMI
• • Taiwan’s IC industry output is forecast to grow 5.8% y/y to NT$2.4 trillion (US$80.5 billion) in 2018. –MIC
• Industrial semiconductor revenues grew by 11.8% y/y to $49.1 billion in 2017. –IHS Markit
• Embedded FPGA market value is projected to grow at 16.5% CAGR from $3 billion in 2017 to $9 billion by 2024. –Allied Market Research
• Smartphone applications processor market declined 5% y/y to US$20.2 billion in 2017, while the tablet AP market grew 3% to US$2 billion. –Strategy Analytics

SENSORS
• MEMS market value is forecast to grow at 17.5% CAGR to US$ 31 billion at the end of 2023. –Yole Développement
• Wearable sensors market value is growing at 38.8% CAGR from USD 149 million in 2016 to $2.9 billion by 2025. –Grand View Research

DISPLAYS, PANELS, MONITORS
• Taiwan’s LCD monitor shipments dropped 6.3% q/q to below 20 million units in 1Q18.
• Quantum dots market is forecast to grow at 63% CAGR from $734 million in 2016 to $22,000 million by 2023. –ResearchandMarkets

HUMAN MACHINE INTERFACE
• Eye tracking market value is expected to grow at 37% CAGR from $456 million in 2017 to $1,820 million by 2024.
–Allied Market Research
• Haptic touchscreen market will grow at a 14% CAGR from US$ 6.3 billion in 2016 to US$ 20.5 billion by 2025. –Insight Partners

LEDS
1.LED driver market is expected to reach grow at 15.5% CAGR to an estimated $16.1 billion by 2023. –Reportlinker

MEMORY AND STORAGE
• DRAM revenue rose by 5.4% q/q to record 23 billion in 1Q18. –TrendForce
• Mobile DRAM revenues increased 5.3% q/q to a record high of US$8.435 billion in 1Q18. –DRAMeXchange
• NAND flash industry revenue dropped 3% q/q to US$15.74 billion in 1Q18. –DRAMeXchange

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