Tough First Quarter… Recovery later this Year?

The entire world electronic supply chain experienced a downturn in the first quarter of 2016. Chart 1 compares 3/12 growth rates (3 months vs. the same 3 months a year earlier). Values <1 indicate a decline. Printed circuit boards are near “break even” but semiconductor shipments, electronic equipment sales and the PMI leading indicator are all negative. Based upon this chart we won’t see positive growth until mid to late 2016 (excluding normal seasonality).


4Q’15 finished with declines for many sectors of the global electronic supply chain. Chart 2’s U.S. dollar denominated growth rates are calculated from combined company revenues by sector as given in the company financial reports. Both unfavorable exchange rates and general market weakness contributed to these declines.


Semiconductor shipments (a good measure of electronic assembly activity) weakened significantly in February (Chart 3). The N American dip was likely made worse by order/inventory corrections. China/Taiwan was hit with normal seasonality, a February Chinese New Year shutdown and weaker Apple iPhone orders.


Per Chart 4 SE Asian electronics demand partially recovered in March but China/Taiwan electronic equipment shipments in March 2016 were still down 2.4% compared to March 2015 (but up sequentially 27% compared to February 2016). The large Taiwan-listed ODMs (Chart 5) felt the first quarter pain –experiencing a 1Q’16/1Q’15 revenue decline of 5.9%.


The strong dollar continues to negatively impact global electronic equipment growth rates – as weaker currencies are converted stronger dollars. Chart 6 compares world electronic equipment growth calculated at both constant 2015 and fluctuating currency rates.


Looking forward there are pockets of global market strength. Server demand is strong (Chart 7) and the medical electronics and datacom sectors are still expending.

2016 will be a challenging year but hopefully the worst is now behind us.

End Markets

Screen Shot 2016-04-13 at 6.06.56 PMGlobal IT spending will decline 0.5% y/y to $3.49 trillion in 2016. –Gartner

MOBILE COMMUNICATIONS

PCs, tablets, ultramobiles and mobile phones combined shipments will increase 0.6% y/y to 2.4 billion units in 2016. –Gartner

COMPUTERS & MEDIA TABLETS

• Tablet market shipments will decline from more than 207 million units in 2015 to below 140 million in 2021. –ABI Research

• India’s tablet shipments dropped 10% y/y to 0.86 million units in 4Q’15. –IDC

• Middle East and Africa PC market shipments fell 28.7% y/y to 3.2 million units in 4Q’15. –IDC

• Taiwan vendors shipped 1.08 million notebooks and 1.44 million desktops in 4Q’15. –IDC

MEMORY & STORAGE

• Converged systems’ new storage capacity increased 26.9% y/y to 1,547 petabytes in 4Q’15, while revenue increased 8.3% to $10.6 billion. –IDC

• HDD shipments dropped 17% y/y to 469 million units in 2015 and are expected to fall to below 400 million units by 2019. –The Information Network

• Purpose-built backup appliance factory revenues grew 4.1% y/y to $1.05 billion in 4Q’15; and PBBA annual capacity increased 23.1% to 3.30 exabytes. –IDC

• EMEA external storage systems value fell 7.5% y/y to US$2.08 billion in 4Q’15 as total FY’15 revenues dropped 8.5% to just over US$7 billion. –IDC

DEFENSE

U.S. defense electronics market value is projected to decrease 24% from $14.8 billion in 2016 to $11.2 billion in 2025. –Forecast International

AUTOMOTIVE

Auto electronics production value totaled NT$156 billion (US$4.81 billion) in 2015. – IEK

NETWORK EQUIPMENT

• Cloud IT infrastructure spending grew 22% y/y to $29 billion in 2015. –IDC

• Ethernet switch and router market will expand from USD 14.85 billion in 2015 to USD 16.83 billion by 2020. –Technavio

• EMEA x86 server revenues grew 5% y/y to US$3.9 billion in 4Q’15, while shipments fell 1.6% y/y to 625,000 units. –IDC

• India x86 server market shipments grew 19.2% y/y 157 thousand units in 2015. –IDC India

• Taiwan-based ODMs/OEMs accounted for 91% of the volume of 9.68 million servers and server motherboards shipped globally in 2015. –IDC

ROBOTS

Industrial robotics market will grow at a 7% CAGR from USD 25.7 billion in 2013 to USD 40 billion by 2020. –Grand View Research, Inc.

EMS, ODM & Related Assembly Activity

Top 50 EMS companies’ revenue grew 3.2% y/y to a new high of $273 billion in 2015. –Manufacturing Market Insider

EDA industry revenue declined 1.9% y/y to $2065 million in 4Q’15; PCB & MCM revenue decreased 6.2% to $165 million. –EDA Consortium

Screen Shot 2016-04-13 at 6.07.05 PMBK Industriebeteiligungs and Consulting acquired Becom.

Challenger Solutions purchased a Delta 6 flexible robotic coating/dispensing system and an Ersascope 2 Plus inspection system.

Circuit Check acquired manufacturing, sales and support rights for TSL AFS 500 series in-circuit board handlers from Elite Interfaces.

Cogiscan hired Janis Knight as Inside Sales Coordinator.

EDA Consortium became the Electronic System Design Alliance.

EPE Corporation added a Teradyne Javelin 1004 flying probe test system.

Foxconn/ Hon Hai

• acquired Sharp for $3.5 billion.

• plans to invest US$1.65 billion in China-based handsets, optical lenses, glass products, automation systems and robots subsidiaries.

• appointed Sakai Display Products’ chairman Katsuaki Nomura to Executive VP of Sharp.

Hanza installed a VERSAPRINT S1-2D solder paste printer in Poland.

Incap added 2,000 M2 to its production facilities in Tumkur, India.

Ionics EMS and Concepcion Industrial entered collaboration to develop a new generation of smart appliances and products using IoT technology.

Jabil Circuit’s subsidiary Jabil Wolfe leased 110,000 SF in San Jose, California.

LG Electronics entered an agreement with GDN Enterprises to set up a low-end smartphone manufacturing line in India.

Mack Technologies added six Universal Instruments’ Fuzion Platform machines to its Massachusetts and Florida manufacturing operations.

MX Electronics Manufacturing appointed Jeffrey Nicholas, VP of Operations.

New Kinpo Group is building another facility in Batangas, Philippines.

Norautron expanded in Poland with the addition of a new 8,400 M2 subsidiary Norautron SA.

PARPRO acquired Cal Quality Electronics.

PKC established a wiring harness joint venture with Anhui Jianghuai Automobile.

Screen Shot 2016-04-13 at 6.10.23 PMSMT achieved ISO 13485 medical certification.

SMTC’s Chihuahua, Mexico, facility received ISO 14001 environmental certification.

Tekmart Integrated Manufacturing Services acquired Sanyo Plastics operation in Tijuana, Mexico.

Vexos entered into prototype, manufacturing and full box build strategic partnership agreement with cms electronics for North America, Europe, and Asia.

VS Industry acquired a 12.1% stake in Seeing Machines for £6.7 million.

PCB Fabrication

American Standard Circuits appointed Dave Olson, VP of Operations.

Aspocomp Group’s Board of Directors re-elected Päivi Marttila as Chairman of the Board and Kaarina Muurinen as Vice Chairman.

Firstronic invested $1.85 million in new equipment and added 50 new jobs in Grand Rapids, Michigan.

Printed Circuits Inc. (PCi) purchased QVI SprintMVP 800 optical measuring machine from Ram Optical.

Pro-Tech Interconnect Solutions received military certification, MIL-PRF-31032/MIL-PRF-55110.

Prototron Circuit appointed Victor Dominguez to its Quality Team.

Materials & Process Equipment

Conductive inks and paste business demand will grow from 1,800 tons in 2016 to 2,200 tons by 2026. –IDTechEx Research

Global industrial lasers market was $10.8 billion in 2015. –Optech Consulting

Global surface vision and inspection market is expected to expand at an 8.9% CAGR from US$1,250 million in 2012 to US$2,310 million in 2019. –Transparency Market Research

AIM Solder’s Juarez, Mexico facility received C-TPAT certification.

ASYS Group moved its US HQ from Suite B1 to Suite D at its current address in Suwanee, Georgia.

Electrolube invested in a thermal shock chamber that has a working temperature range from -65°C to +200°C.

Henkel Adhesive Technologies appointed Benoit Pouliquen, Corporate Sr. VP and Global Head of the Electronics business.

Indium Corporation promoted Tim Hults to Global Accounts Manager.

Screen Shot 2016-04-13 at 6.11.00 PMInsulectro promoted Jane Ark to Product Coordinator.

Isola’s Chandler, Arizona facility was damaged by a first-alarm hazardous-materials fire.

KMG acquired Nagase FineChem.

Kurtz Ersa North America hired Aarón Horacio Cantú Montes as a Field Service Engineer in Mexico.

Machine Vision Products launched new website at www.machinevisionproducts.com.

Sono-Tek promoted Bennett Bruntil to Director of Electronics & Advanced Energy “E&AE” division.

Teledyne acquired Frontline Test Equipment.

Uyemura appointed Robert Coleman, Midwest Sales Manager, and Joanna Rafalowicz, Quality Assurance Specialist.

Semiconductors & Other Components

Semiconductor market will grow 0.3% y/y to $341 billion in 2016. –SIA

Semiconductor revenue declined 2.3% y/y to $334.8 billion in 2015. –Gartner

Semiconductor wafer-level manufacturing equipment market declined 1% y/y to $33.6 billion in 2015. –Gartner

South-East Asia fab equipment Capex will grow from US$1 billion in 2015 to US$1.8 billion in 2016; test equipment sector is projected to increase from US$530 million in 2015 to US$580 million in 2016. –SEMI

Fabless IC sales reached $84.2 billion in 2015 with US maintaining 62% market share. –IC Insights

Flip Chip technology market is forecast to expand at 7.1% CAGR from USD 19 billion in 2015 to USD 31.3 billion by 2022. –MarketsandMarkets

Industrial semiconductor market will grow at an 8% CAGR from $43.5 billion in 2014 to $59.5 billion in 2019. –IHS

MEMS devices and production equipment market will increase at an 11.5% CAGR from $12.8 billion in 2015 and $21.9 billion by 2020. –Research and Markets

OE automotive semiconductors revenues totaled USD 28.2 billion in 2015. –Semicast

Optoelectronics, sensors/actuators and discretes market sales will grow 5% y/y in 2016 to record-high of $70.2 billion, after increasing 3% in 2015 to $66.6 billion. –IC Insights

RF gallium nitride device market is expected to grow a 14% CAGR through 2020 from close to $298 million in 2015. –Yole Developpement

Position sensor market will grow at a 6.1% CAGR to $5.85 billion by 2022. –RnRMarketResearch

Sensors for drones and robots are expected to double in value from $350 million in 2015 to $709 million by 2021. –Yole Developpement

Wireless sensor revenue is expected to grow from $188 million in 2016 to $745 million in 2025. –Navigant Research

Wireless charging receiver market shipments grew more than 160% y/y to 144 million units in 2015. –IHS

PANELS/ MONITORS/ TOUCH SCREENS

• Handset-use touch panel shipments decreased 15% q/q to 371 million in 1Q’16 and shipments for touch panels used in smaller-than 11-inch tablets fell 29% q/q to 49 million –Digitimes Research

• LED market value declined 3% y/y to US$14.3 billion in 2015 due to a price war among the LED manufacturers. –TrendForce

• Quantum dot display market is expected to reach USD 3.96 billion by 2022. –Grand View Research

• China-based makers’ touch panel shipments increased 17.2% y/y to an estimated 167 million in 1Q’16. –Digitimes Research

• China’s LCD TV sales declined 6.7% y/y to 9 million LCD TVs in January-February. –AVC

• India’s LCD TV market reached 2.6 million units in 4Q’15. –IHS

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