Rough First Quarter in Asia; Very Modest Global Growth Ahead

1Rough First Quarter in Asia; Very Modest Global Growth Ahead

The first quarter of 2016 was difficult especially in Asia. Using the Global Purchasing Managers’ Index as a measure of world manufacturing activity, growth had slowed to nil by February (Chart 1) with the sharp downturn in China, continued weakness in S. Korea and Taiwan and a recent slump in Japan being key culprits.

Chart 2 shows the PMI performance of some key electronics producing countries. PMI values less than 50 indicate a contraction. In February Europe was still growing, the USA was approaching “break even”, Japan was decelerating and many of the SE Asian countries were contracting.

1Q’15 global electronic equipment production “felt the economic pain.” China production (magenta line on Chart 3) was hit hard by a combination of normal post-Christmas seasonality, Chinese New Year shutdowns, weaker export demand and a reported 25% cut back in Apple iPhone orders. Taken together China’s electronic equipment output plunged to near its 2012 low.

Owing to their different end markets, Europe and the USA were not hit nearly as hard. In the USA military electronics orders rose in December and January (Chart 4) and the large instrument and control sector (Chart 5), although weakening a bit, still remained a major electronics outlet.

Global PCB shipments mirrored electronic equipment demand with Taiwan/China printed circuit sales dropping sharply in the first quarter of this year (Chart 6). Thanks to our friend and colleague Dr. Hayao Nakahara Chart 7 gives Naka’s recent global PCB forecast. It notes a slight downturn in 2015 vs. 2014 and then predicts very modest growth in 2016.

Busy conditions are very fluid. Keep watching the monthly statistics for changes in business conditions.

End Markets

2Worldwide IT spending will increase 2% y/y to $2.3 trillion in 2016. –IDC

MOBILE COMMUNICATIONS

• Smartphone sales grew 9.7% y/y to 403 million in 4Q’15. –Gartner

• Smartphone shipments will grow from 1.44 billion units in 2015 to 1.5 billion in 2016 and 1.92 billion in 2020. –IDC

COMPUTERS & PERIPHERALS

• PC shipments will decline 5.4% y/y in 2016 due to falling commodity prices and foreign currencies, high inventory levels and the ability to upgrade older hardware to Windows 10. –IDC

• Notebook PC shipments are expected to expand 0.4% y/y from 163 million units in 2015 to 163.7 million in 2016. –ABI Research

• Tablet shipments will drop 5.9% y/y to 195 million units in 2016. –IDC

• Tablet shipments fell 8.7% y/y to 46.7 million units in 1Q’16 and decreased 13.8% y/y to 65.3 million units in 4Q’15. –Digitimes Research

• Enterprise storage systems factory revenue declined 2.2% y/y to $10.4 billion during 4Q’15. –IDC

NETWORK EQUIPMENT

• Ethernet switch market (Layer 2/3) revenue increased 3.2% y/y to US$6.4 billion in 4Q’15. –IDC

• Network access control market revenue will expand at a 32% CAGR to USD 2.75 billion by 2020. –Technavio

• Optical hardware spending increased 10% y/y to $3.5 billion in 4Q’15. –IHS

• Server revenue increased 8.2% y/y to $15.1 billion in 4Q’15, while shipments grew 9.2% y/y to 2.95 million. –Gartner

• Service provider VoIP and IP multimedia subsystem revenue grew 31% y/y to $5.5 billion in 2015. –IHS

PANELS, MONITORS, TOUCH SCREENS

3• Flat-panel display equipment spending will reach $11.2 billion in 2016, rising to $11.6 billion in 2017. –IHS

• LCD TVs shipments fell less than 1% y/y to 224 million units in 2015; 4K TV shipment growth rose 173% to 32 million units. –IHS

• Large-size TFT-LCD panels shipments decreased 7.6% y/y to 217 million in 4Q’15. –IDC

• LTPS panel shipments increased 25.2% y/y to 784 million in 2015; expected to reach 1.0 billion units in 2016. –Sigmaintell Consulting

• Multi-touch technology (opaque & transparent) industry is expected to grow at a 16.2% CAGR from $4.64 billion in 2015 to $13.29 billion by 2022. –WiseGuyReports.com

• Quantum dot display component and lighting market will surpass US$2 billion by 2017, and reach US$10.8 billion by 2026. –toTouch Display Research

SEMI EQUIPMENT

• Semiconductor equipment sales fell 3% y/y to $36.5 billion in 2015. –SEMI

• Front-end fab equipment spending (including new, used and in-house) is projected to increase 3.7% y/y to US$37.2 billion in 2016 and will rise another 13% in 2017 to US$42.1 billion. –SEMI

4ROBOTS/ AUTOMATION

• Robotics and related services spending is growing at a 17% CAGR from more than $71 billion in 2015 to $135.4 billion in 2019. –IDC

• Collaborative robot market sales are expected to increase from 21,719 units in 2016 to 135,952 units in 2020. –Robot Report

• Drones and robotics technologies investment for transmission and distribution is expected to total nearly $16.2 billion from 2015 to 2024. –Navigant Research

• North American robot imports grew 10% y/y to 28,049 robots (valued at $1.6 billion) in 2015. –RIA

• Asia Pacific robotics spending will grow at a 19% CAGR to US$93 billion in 2019. –IDC

• China’s camera drone market will grow at a 68% CAGR to 3 million units by 2019. –IDC

LED LIGHTING

• LED light bulb shipments will grow 78.5% y/y to 3.227 billion units in 2016. –Digitimes Research

• LED lighting market will increase 4.1% y/y to an estimated US$34.64 billion in 2016, accounting for 31.3% of total lighting market. –Digitimes Research

WEARABLES

• Industrial wearable devices will expand at over 144% CAGR to more than USD 5 billion by 2019. –Technavio

• Smartwatch sales totaled 8.1 million units in 4Q’15 versus 7.9 million units sold for Swiss watch business. –Strategy Analytics

• Wearable device shipments are expected to grow 38.2% y/y to 110 million in 2016. –IDC

• Wearable device shipments will increase at a 36.9% CAGR from 85.0 million units in 2015 to 559.6 million units by 2021. –Tractica

• Wearables market shipments increased 126.9% y/y to 27.4 million units in 4Q’15; FY15 shipments grew 171.6% y/y to 78.1 million units. –IDC

SMART CARDS

• Smart card market is expected to grow at a 7.4% CAGR from US$ 7.25 billion in 2014 to US$14.17 billion by 2023. –Transparency Market Research

• Biometric technologies market will grow at a 22.7% CAGR from $14.9 billion in 2015 to $41.5 billion by 2020. –SmartMetric

VIRTUAL AND AUGMENTED REALITY

• Virtual and augmented reality firms have netted $1.1 billion in venture funding since January 1, 2016.

• Virtual reality device shipments will grow at a CAGR of 84.5% to more than 50 million units by 2020. –ABI Research

EMS, ODM & Related Assembly Activity

China-based ODM’s LCD TV shipments increased 16.5% y/y to 35.8 million in 2015. –Sigmaintell Consulting

ABX Engineering completed ISO 9001:2008 and ISO 13485:2003 recertification.

Acromag hired Stacy Moore to lead a newly formed EMS division in Wixom, Michigan.

Averna acquired Test & Measurement Solutions.

Axiom Manufacturing Services appointed Martin Indge, Test Solutions and Development Manager.

Connect Group appointed Jeroen Tuik, CEO.

Creation Technologies installed an Aegis FactoryLogix solution across all ten of its global manufacturing locations.

EEI Manufacturing Services added an Universal Instruments FuzionXC2-37 platform in Clearwater, Florida.

EPE Corporation purchased Mentor Graphics’ Valor NPI software.

Expert Assembly Services added ultra-low RH component and PCB storage and drying by Super Dry.

Foxconn/ Hon Hai

• and Xiaomi are jointly setting up two manufacturing plants in India.

• began building devices for OnePlus in India.

• invested in Athentek.

• is setting up a mobile phone plant on its mothballed Sunkuvarchatram plant land in Chennai, India.

• integrated its server business into its telecom and China netcom business unit in to move towards IoT and robot industry development.

• is building an industrial park in Nanning, China to manufacture smart televisions and other electronics.

• plans to invest in Japan, Taiwan, US, India, China and the Czech Republic in 2016.

• subsidiary, Foxconn Interconnect Technology invested in Blu-Castle.

Hisense expanded its television factory in Rosarito, Mexico.

IKOR EMS achieved ISO 13485 quality system certification for medical device manufacturing.

Inovar installed four Vitronics Soltes XPM3 reflow soldering systems.

Integrated Micro-Electronics’ Analytical Testing and Calibration laboratory received ISO/IEC 17025 accreditation from Philippine Accreditation Bureau of the Department of Trade and Industry.

Kimball Electronics Romania achieved ISO 9001:2008 certification.

Leab Esti OÜ appointed Erki Hirv, CEO.

Lenze Americas deployed Digitaltest’s MTS 30 combinational in-circuit/functional test platforms.

Leoni closed its facility in Valaská Belá, Slovakia.

Libra Industries rehired Joel Wolnik as Production Manager.

MC Assembly appointed Jose Sierra, VP of Quality and Engineering.

Mentor Graphics launched Open Manufacturing Language initiative for internet of manufacturing standard for PCB assembly.

Midway Holding is looking to sell Onrox Group.

Pegatron

• closed its mobile phone repair facility in Breda, the Netherlands and moved operations to Czech Republic.

• plans to establish plants in India.

Ryder Industries named Henry Wu to COO, Nelson Tse to CFO, and Lawrence Chan, VP Marketing & Sales.

Sanmina became a key delivery partner for Nokia’s Data Center Services.

Scanfil Sweden sold entire share capital of its Karlskoga, Sweden subsidiary,

Southwestern Industries added an ECOSELECT 1 selective soldering machine from Ersa.

Stadium Group

• shifted its focus to design-led technologies.

• Dongguan, China facility passed ISO/TS16949 extended scope audit.

Sumitomo started new EMS subsidiary, Sumitomo Manufacturing Cambodia.

Surface Art Engineering purchased a Condor Flying Prober system from Digitaltest.

Universal Electronics added high-speed automated SMT equipment (including a DEK wide body printer, Universal Instruments Genesis SMT chipshooter, and Yestech AOI) in Whitewater and East Troy, Wisconsin.

Valtronic opened an office in the École Polytechnique Fédérale de Lausanne Innovation Park in Switzerland.

PCB Fabrication

Automotive industry flexible and printed electronics will reach $5.5 billion by 2026, primarily driven by the growth of technologies such as structural/in-mould electronics and OLED displays. –IDTechEx

Taiwan PCB makers captured approximately 30% of the world’s automotive

PCB market, which was about $5 billion in 2015. –Hayao Nakahara

Taiwan PCB production value increased 1.79% y/y to NT$573 billion (US$17.3 billion) in 2015. –IEK

U.S. PCB production was about $2,680 million in 2015, while Canada produced $230 million PCBs and Mexico accounted for about $17 million. –Hayao Nakahara

Alba Elettronica bought two micro-drilling machines from Pluriservice/ Pluritec.

American Standard Circuits

• became UL approved on Isola Polyimide P96 cores/P26 prepreg materials.

• earned ISO recertification.

Amitron promoted Thomas Massman to Director of North American Sales and Chris Thompson to National Sales Manager.

AT&S

• Austria listed on Austria blue chip index ATX.

• received certification for new IC substrate plant in China.

China Goldjoy sold its entire issued share capital of Charming Lion.

Circuits Imprimes de la Capitale was sold to Larisa Fedin and Pierre Dubois.

Cirexx developed a module to demonstrate their ECLIPS (Embedded Cooling Layer –Integrated Power System) technology.

EG Industries terminated its acquisition of Singyasin Holdings.

Electro Plate Circuitry (EPC) merged with Dragon Circuits (DCI).

Elite Advanced Technologies opened a new European subsidiary in Mol, Belgium.

FTG Circuits’ Chatsworth facility received MIL-PRF-31032 military certification.

Harwin designed and installed its largest ever assembly line, built in partnership with Festo.

Holaday Circuits added a Chemcut CC 8000 cupric chloride develop-etch-strip system in Minnetonka, Minnesota.

Integrated Technologies upgraded their automated surface mount line to a Europlacer iineo II and revamped their entire PCB area at their UK facility.

IPC

• awarded Patricia Goldman the Raymond E. Pritchard Hall of Fame Award. Congrats Patty!

• elected Joe O’Neil (Owner, OAA Ventures), as Chairman of the Board; Mikel Williams (President and CEO, Targus) Vice Chairman and Shane Whiteside (Executive Director, AvaSure), Secretary/Treasurer.

• opened an office in Brussels, Belgium.

ITL Circuits added an Excellon COBRA hybrid laser system in Markham, Ontario.

Lenthor Engineering installed two ESI 5335 UV laser-drilling systems.

Merlin Circuit Technology purchased a DRPP D2H800 reverse pulse rectifier.

Metro Circuits added a Chemcut CC 8000 cupric chloride develop-etch-strip system.

PNC installed a PIX Fully automatic screen printer, Pluritec GIGA 3200 three head routing equipment, DN-400 high volume lead-free wave solder machine and an Universal Genesis GI-07 pick & place machine.

PNE PCB formed multilayered PCB collaboration with JiangYou Starteam Electronic Technology.

Printed Circuits, Inc. (PCi) added a Polar CITS880s controlled impedance tester.

Prototron Circuit, Tucson, Arizona

• purchased an Orbotech Discovery 8200 AOI.

• hired Bro Craig as its sales representative for U.S. Southwest region.

San Francisco Circuits expanded its San Diego, California office.

Schweizer Electronic joined European Center for Power Electronics.

Speedy Circuits installed a Chemcut CC 8000 cupric chloride develop-etch-strip system.

Sunstone Circuits added an in-house ENIG process in its Mulino, Oregon manufacturing facility.

Würth Elektronik rebuilt its PCB production facility in Niedernhall, Germany that was damaged by a fire in December of 2014.

Materials & Process Equipment

China’s AOI equipment market was RMB 7.6 billion in 2015, accounting for 21% of global market. –Research and Markets

Acrylic adhesives in electronics are forecast to grow at 9.7% CAGR from $1073 million in 2014 to $1876 million by 2020. –Research and Markets

Epoxy resins market will grow at a 7% CAGR from US$ 7.1 billion in 2014 to 10.5 billion by 2020. –MarketResearchStore.Com

Photoresist market is expected to grow at a over 5% CAGR to USD 2 billion by 2019. –Technavio

Photoresists and photoresist ancillaries market will expand at a 6.2% CAGR from US$3 billion in 2013 to US$4.6 billion by 2020. –Transparency Market Research

3M Electronics Materials Solutions opened $150 million R&D lab in Maplewood, Minnesota.

Atotech (Malaysia) opened its RM50 million chemical plant in Penang, Malaysia.

DuPont and Dow picked Delaware for its HQ for DuPont Performance Materials.

Dupont named Randy Stone, President of Performance Materials.

Dymax appointed David Shaskey, Territory Sales Manager for Minneapolis region.

Ellsworth Adhesives Europe achieved ISO 14001 environmental management standard.

Epoxy Technology is celebrating its 50 year anniversary.

GIMA acquired Komax Medtech.

IEC is celebrating its 50th anniversary.

Indium Corporation promoted Sze Pei Lim to Regional Product Manager for Semiconductor Products in Asia and Jonas Sjoberg to Technical Manager for Asia.

Insulectro

• hired Chris Hrusovsky as VP of Sales for Chemistry.

• promoted Michelle Walsh to Director of Product Management.

ITW appointed Coco Zhang, Global Product Manager for Reflow Soldering Solutions.

JUKI Automation Systems named Thomas Kempf, Sales Manager for Germany.

Laird opened an engineering, design and manufacturing facility outside São Paulo, Brazil.

LPKF launched entirely new laser drilling and cutting system, MicroLine 5000, tailored to the needs of the flexible circuit industry.

Manncorp celebrated its 50th anniversary at 2016 APEX Expo.

Mitsui Chemicals commenced operations at its new Korean subsidiary, Mitsui Chemicals Korea.

Nano Dimension began trading on NASDAQ.

Nihon Superior celebrated its 50th anniversary.

Nordson

• Adhesive Dispensing Systems integrated a Keyence IM 6225 vision-based inspection system in Duluth, Georgia.

• incorporated CyberOptics’ advanced 3D MRS technology in its new 3D FX-940 Ultra AOI systems.

Park Electrochemical elected Matthew Farabaugh, Sr. VP and CFO.

Rehm Thermal Systems delivered its 4,000th reflow soldering system, a VisionXP+, to Diehl Controls in Wangen im Allgäu, Germany.

Scienscope

• appointed Don Jeka, Eastern Regional Sales Manager for USA.

• hired Fabian Ruvalcaba for position of Regional Manager for X-ray Sales in Mexico.

Smtxtra received ISO 9001:2008 certification.

SST International promoted Alex Voronel to Director of Global Sales.

Teledyne

• Labtech purchased a Ledia SB32 direct imager from Ucamco.

• LeCroy introduced new 25/50/100GE analysis platform.

Ventec International Group

• achieved AS9100 Revision C re-certification at its European HQ in the UK.

• appointed Chris Alessio, VP Sales & Operations, North America.

Viscom moved into new facility at its HQs in Hanover-Badenstedt, Germany.

Semiconductors & Other Components

Semiconductor market will increase 0.3% to US$336 billion in 2016 and expand another 3.1% to US$347 billion in 2017. –WSTS

Semiconductor unit shipments will climb at a 7.2% average to 1,022 billion devices by 2018. –IC Insights

Taiwan’s IC industry is expected to grow 2.4% y/y to NT$2.3 trillion (US$69 billion) in 2016. –IEK

FPGA market will expand at 7.41% CAGR to 7.23 billion USD by 2022. –Markets and Markets

GaN and SiC power semiconductor market will top US$1 billion in 2020, driven by increased demand from hybrid and electric vehicles, power supplies and photovoltaic inverters. –IHS

GaN power device market will grow at a 24.5% CAGR to 2.6 billion USD by 2022. –MarketsandMarkets

Inductor market will grow 5.5% CAGR from USD 3.05 billion in 2015 to USD 4 billion by 2020. –MarketsandMarkets

European semiconductor distribution sales grew 11.3% y/y to 1.75 billion Euros in Q4/CY15. –DMASS

German electronics components distribution market grew 7.7% y/y to 752 million Euros in 4Q’15. –FBDi e.V

Automotive semiconductor market will expand at a 5.8% CAGR to $48.8 billion by 2022. –Markets and Markets

Chip on board LED market to grow at 35% CAGR to more than USD 9 billion by 2020. –Technavio

MEMORY

• DRAM industry revenue fell 9.1% q/q to US$10.3 billion in 4Q’15. –DRAMeXchange

• Mobile DRAM revenues slipped 1% q/q to US$4.5 billion in 4Q’15. –DRAMeXchange

• NAND flash market decreased 2.3% q/q to US$8.3 billion in 4Q’15. –DRAMeXchange

• Non-volatile memory market is expected to grow at a 9.93% CAGR to USD 80.5 billion by 2022. –ReportsnReports

SENSORS

• Sensors market will grow at an 11.0% CAGR from $102 billion in 2015 to $113 billion by 2016 and $191 billion by 2021. –BCC Research

• Anti-collision sensors market will grow 17% CAGR to more than USD 10 billion by 2020. –Technavio

• CMOS image sensor market to grow at a 7.5% CAGR from USD 7.2 billion in 2013 to USD 10.2 billion by 2020. –Grand View Research

• U.S. optical sensors market is will grow at a 7.14% CAGR to $5 billion by 2018. –Research and Markets

• North America occupancy sensors market will grow 20.9% CAGR to $1.2 billion by 2018. –Research and Markets

Connector industry sales declined 6.1% y/y to $52 billion in 2015. –Bishop & Associates

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