Minimal Global GrowthContinues but iPhone Cutbacks Impact Asian Supply Chain
A mid-January Wall Street Journal noted that “companies that make parts for Apple Inc. are warning of lower first-half revenues, in a sign of slowing sales of the latest iPhones.” Similar reports are pervasive.
The September iPhone “production bubble” in China/Taiwan that masked a broader industry slowdown appears to now have reversed, component demand has dropped and Apple’s entire smartphone supply chain is feeling pain. On this note what is the outlook for early to mid-2016?
World growth continues to be tepid as the global PMI leading indicator remains barely in expansion territory (Chart 1). However results vary by region with Europe and Japan accelerating, China still in the doldrums and the USA recently moving to contraction (Chart 2).
2015 ended with a sharp downturn in China’s electronics output (Chart 3) due to a combination of normal seasonality, a weaker economic climate and Apple reportedly cutting back on its iPhone 6 orders. Subdued business conditions are likely at least through early2016.
Weakening commodity prices reflect stagnant industrial activity as oil prices are at a 12-year low and copper’s cost has dropped to 2009 levels (Chart 4). Lower demand for “volume” consumer electronics (PCs, media tablets) and the slower growth of smartphones have removed robust growth from the electronics sector.
The 2016 semiconductor outlook is for modest single-digit growth. Global chip shipments are projected to rise only 1.3% this year followed by 3.1% in 2017 (Chart 5) and semiconductor capital spending will likely decline (Chart 6).
Custer Consulting Groups printed circuit forecast now points to a 1% drop in PCB sales this year Chart 7).
2016 looks to be a challenging year. Keep watching the monthly numbers for signs of change.
from US$1.21 billion in 2015 to US$2.29 billion in 2020. –LEDinside
Robot installations increased roughly 15% y/y to 264,000 units in 2015. –IFR
China’s industrial robot demand is expected to reach 95,000 units in 2016. –TrendForce
Wearable device market shipments will expand 44.4% y/y from 80 million units in 2015 to 111 million units in 2016. –IDC
China’s wearable device market increased 472% y/y to CNY12.58 billion in 2015. –MIIT
EMS, ODM & RELATED ASSEMBLY ACTIVITY
China accounted for 38% of electronics equipment production in 2015.
Aztech Group appointed Lee Thiam Seong, Interim CFO and Fock Zhen Qian, Financial Controller.
Bestronics added Panasonic SMT equipment, 3D X-Ray and AOI systems to its newly opened second building in Silicon Valley.
Beyonics Technology opened a 27,000 M2 electronics manufacturing campus in Kulaijaya in Johor, Malaysia.
Chemigraphic acquired CRS Electronics.
Circuitronics completed its 2015 external audit for ISO 9001:2008.
ControlTek added a Stratasys U-Print SE Plus 3D printer in Vancouver, Washington.
Dongguan Huabel Electronic Technology deployed FactoryLogix across their entire facility, which includes 31 SMT lines.
EG Industries invested RM30 million to build a new manufacturing facility in Sungai Petani, Kedah.
EPE Corporation purchased a Pillarhouse Jade MKII selective soldering machine.
Exception EMS added a Rehm Vision XS Nitro oven to its UK facility.
Firstronic added new conformal coating lines in both Grand Rapids, Michigan and Juarez, Mexico.
Foxconn/ Hon Hai
…injected US$120 million into its subsidiary Icreate Investment in the Cayman Islands, for robot development.
U.S. consumer technology industry will reach a record-setting $287 billion in retail revenues ($224 billion wholesale) in 2016 with catalysts being wearables, virtual reality and drones. –CTA
Taiwan’s cell phone shipments fell 12% y/y to 2.26 million units in 3Q’15. –IDC
Smartphone shipments increased 7.7% y/y to 332 million units in 3Q’15; total 2015 shipments rose 10.1% y/y to 1.326 billion units. –Digitimes Research
COMPUTERS & PERIPHERALS
Desktop shipments are projected to decline 7% y/y in 2016 after falling 15% y/y in 2015. –Digitimes
Notebook shipments are expected to decline between 5-6% in 2016 from 163 million units in 2015. – MIC
Thin and terminal client market declined 6.7% y/y to 1.26 million units in 3Q’15. –IDC
DIY (Do it yourself) motherboard shipments fell 21.7% y/y to 54 million units in 2015. –Taiwan makers
PANELS/ MONITORS/ TOUCH SCREENS
Force sensing module shipments are expected to grow 317% y/y to 461 million units in 2016. –IHS
Transparent displays market value will grow to US$1 billion in 2016, US$2.2 billion in 2019 and US$2.7 billion in 2020. –Digitimes Research
INTERNET OF THINGS
New connections will grow at a 15.9% CAGR from 1.7 billion in 2015 to nearly 3.1 billion in 2019. –IC Insights
Spending will grow at a 17% CAGR from US$699 billion in 2015 to nearly US$1.3 trillion in 2019. –IDC
Display systems will grow at more than 11% CAGR to $18.6 billion by 2021, driven by connectivity, infotainment, and safety. –IHS
LED market will grow at an 8% CAGR in Guiyang City, China.
…received 10-year VAT waiver from Andhra Pradesh government for mobile telephone manufacturing facility in Sri City.
…began making smartphones, tablets, and IoT devices for Smartron in India.
built its first European big data R&D and design center in Czech Republic.
…spun off its Foxconn Interconnect Technology unit in a Hong Kong IPO worth at least $1.5 billion. –IFR
…appointed Charlie Barnhart to its Board of Directors.
…installed four XPM3m 1030 reflow soldering systems from Vitronics Soltec.
Interconics invested in Yamaha SMT equipment from Altus Group.
Inventec was the largest server ODM/OEM in 2015, with global market share of about 30%. –EDN
Ktech launched contract manufacturing company iXT Manufacturing Solutions.
Nortech Systems is celebrating its 25th anniversary in 2016.
Plexus Penang-Riverside manufacturing facility in Malaysia achieved International Railway Industry Standard certification.
Promex hired Rosie Medina as Director of Sales and Marketing.
QCG purchased three pick & place machines and a reflow oven.
SMTA appointed Tanya Martin, Director of Operations.
Steiner Elektronik invested in a new Smartflow 2020 selective coating machine from ERSA.
Texcel Technology added a Europlacer Iineo pick & place machine, a DEK screen printer and a Koh Young 3D paste inspection system.
Variosystems (Suzhou, China) received ISO/TS 16949:2009 certification.
PCB & MCM EDA revenue decreased 5.9% to $162.4 million in 3Q’15. –EDA Consortium Reports
India’s PCB output reached $280 million in 2015. –Dr. Hayao Nakahara
Japanese PCB makers invested over $1.3 billion in fiscal year 2015. –Dr. Hayao Nakahara
American Standard Circuits added an Orbotech Paragon 9800 LDI system, Sprint 120 Inkjet legend printer and complete Frontline InPlan and InSolver preproduction Engineering solutions to its Chicago production facility.
Cirexx installed a Micro-Vu Excel 501um measuring center.
GGP Schaltungen GmbH entered insolvency proceedings.
International Electronic Components is celebrating its 50th anniversary in 2016.
Mektec Group acquired 50% shareholding in enmech Weinheim and enmech Pécel, Hungary.
Microtek Laboratories was acquired by National Technical Systems.
PCB Technologies received NADCAP accreditation.
Servatron entered the aerospace industry with three-year test and assemble contract with AvtechTyee.
Synergy Engineering was acquired by Tiger Synergy.
Tripod Technology had a fire at its PCB production facility in Taoyuan, Taiwan.
Zeng Ding Technology subsidiary, Heng Sheng Electronics Technology had a fire at its PCB factory in Jiangsu, China.
Materials & Process Equipment
Copper clad laminate output grew 7.1% y/y to 760 million M2, of which 520 million M2 were produced in China. –ReportBuyer
Electronic chemicals and materials market will grow at a 5.9% CAGR from $22.9 billion in 2015 to $30.5 billion by 2020. –BCC Research
U.S. assembly plants equipment capex will increase 4% y/y to $3.5 billion in 2016. –Capital Equipment Spending Survey
AGY Holding expanded its S-2 Glass and L-Glass specialty glass fiber capacity in Aiken County, North Carolina
AIM Solder UK acquired Geo. W Neale Ltd & Manufacturing.
Air Products spun-off its materials technologies business to Versum Materials.
Aqua Klean Systems is celebrating its 20th year in business in 2016.
ASM Assembly Systems became the world’s largest maker of SMT equipment in 2015.
CriticalPoint Capital acquired Rogers Corporation’s electronic materials division and renamed it Arlon EMD.
DuPont cut 1,700 jobs in Delaware ahead of Dow merger.
Ellsworth Adhesives Europe earned AS9120 certification.
Fulltech Fiber Glass invested US$16 million to set up a plant in China to produce fiberglass yarn and fabric products.
Juki Automation Systems promoted Bill Astle to GM, Carlos Eijansantos to Director of Sales, Western Region and Chris Guest to Director of Sales, Eastern Region.
KISCO acquired Specialty Coating Systems.
Komax purchased Thonauer Group.
Lagercrantz bought Nikodan Conveyor Systems.
MicroCare appointed Rick Hoffman, Eastern Regional Sales Manager.
Nano Dimension received grant approval to support the company’s development of a 3D PCB printer from the Israeli Office of the Chief Scientist at the Ministry of Economy.
OK International is celebrating its 70-year anniversary.
Panasonic developed a soft and flexible polymer resin film for stretchable electronics.
PCI Sales and Marketing appointed Patrick Charest, North American Technical Sales Manager.
Platform Specialty Products named Rakesh Sachdev, CEO.
SEHO Systems is celebrating its 40-year anniversary in 2016.
…added its global HQ in Silicon Valley, USA and a customer coating center in Zhuhai, China.
…appointed Donald Cunningham as Chief Commercial Officer.
Techcon Systems is celebrating its 55-year anniversary.
Ventec International added two Pasquato TE 15 prepreg slitter/sheeters to its Fullerton, California facility.
Semiconductors & Other Components
Worldwide semiconductor revenue decreased 1.9% y/y to $333.7 billion in 2015. –Gartner
Semiconductor equipment sales are projected to grow from $37 billion in 2015 to $38 billion in 2016. –SEMI
Semiconductor industries are expected to see weak growth until around 2020 when “revolutionary” products will begin to start hitting the market. –IHS
German semiconductor market grew 5.7% y/y to EUR 11.7 billion in 2015. –ZVEI
North American semiconductor equipment industry posted $1.24 billion in orders worldwide in November 2015 (3-month average basis) and a book-to-bill ratio of 0.96. –SEMI
Taiwan’s semiconductor industry is expected to grow 2.4% in 2016. –MIC
IC design industry output is forecast to fall 8.5% y/y to US$80.5 billion in 2016. –TRI
IoT market will boost MCU shipments from 150 million in 2015 to 1.3 billion units by 2020. –ABI Research
MEMS foundry outsourcing market is expected to increase at a 3.7% CAGR from $686 million in 2014 to $860 million in 2020. –P&S Market Research
Flexible devices market, manufactured by R2R technologies, will grow at a 13.9% CAGR from $14.6 billion in 2015 to $28 billion by 2020. –R2R Technologies
Printed, flexible and organic electronics are projected to grow from $26.54 billion in 20