A Modestly Better Outlook

screen-shot-2016-12-05-at-12-02-04-pmCUSTER AND CUSTER-TOPAI

The third quarter of this year closed on slightly more upbeat data and promising news extended into early 4Q’16. October’s global PMI leading indicator rose to its highest level since October 2014 (Chart 1). Most major countries (Chart 2) saw a PMI increase in October with only S. Korea of the major electronics producers still experiencing a manufacturing contraction (PMI<50).

Electronic equipment revenues increased globally (and modestly) in the third quarter. Based upon company 3Q’16 financial releases through mid-November third quarter 2016 sales were up 1.5% compared to the same quarter in 2016 (Chart 3). As a caution some large electronics producers closed their quarter in October rather than September so this growth estimate is still preliminary.

Regionally the “fall busy season” peaked in Asia/Pacific in October and consumer-driven monthly sales are now heading down to their normal post-holiday winter contraction (Chart 4). The rest of the world’s electronic equipment production is flat with China dominating and S. Korea struggling a bit.

3Q’16 sales growth by sector is given in Chart 5. While this information is still preliminary, notice how automotive, SEMI equipment and medical electronics drove the third quarter electronic equipment sales increase.

Semiconductor sales rebounded globally in September (Chart 6) with chip shipments to N America (Chart 7) recovering from a year-long downward “correction.”

Based upon the latest IPC estimate of 2015 global printed circuit production, $58.6 billion of PCBs were produced worldwide last year (Chart 8) with N. America’s share down to 4.9%. Exchange rates (weaker non-US currencies converted to stronger dollars) tempered the dollar-denominated 2015 PCB world total.

Looking forward, global PCB sales peaked seasonally in October and are now headed down to their normal winter trough (Chart 9).

Global electronics demand is marginally better as 2016 closes but be aware of seasonality in consumer driven markets. Target the higher growth sectors given in Chart 5.

End Markets

screen-shot-2016-12-05-at-12-02-13-pmWORLD

• Global IT spending will expand 2.95% y/y to $3.5 trillion in 2017. –Gartner

• Global flexible electronics market will grow at a 25% CAGR from $5.4 billion in 2016 to $20.7 billion. –Research and Markets

• U.S. holiday forecast says 68% will buy tech (such as wearable tech, VR headsets, drones and digital assistant devices) and technology sales will increase 3.1% y/y to $36 billion in 2016. –Consumer Technology Association

MOBILE COMMUNICATIONS

• Smartphone shipments increased 1.0% y/y to 363 million in 3Q’16. –IDC

• Smartphone shipments are expected to grow 7.2% y/y to 1.42 billion in 2016 and expand another 7% y/y to 1.52 billion units in 2017. –Digitimes Research

• China smartphone market grew 5.8% y/y to 115 million units in 3Q’16. –IDC

• India’s smartphone market shipments expanded by over 20% y/y to more than 30 million units in 3Q’16. – Canalys

• 5G equipment market is expected grow at more than 32% CAGR through 2020. –Technavio

• Smartphone VR headset shipments will increase around 240% from 16.8 million units in 2016 to 60 million by 2021. –Juniper Research

COMPUTERS & PERIPHERALS

• PC shipments declined 5.7% y/y to 69 million units in 3Q’16. –Gartner

• Notebook shipments are expected to drop 7.2% y/y to less than 150 million units in 2016 and then decline by another 0.2% y/y to 146 million units in 2017. –Digitimes Research

• Tablet market shipments declined 14.7% y/y to 43 million units in 3Q’16. –IDC

• Motherboard industry declined 10.4% y/y to 29 million units in 1Q’16. –Market Research Hub

• LCD monitor shipments will decrease at a 2.6% CAGR from 120 million units in 2017 to 108 million in 2021. –Digitimes Research

• Chinese IT market will expand 2.3% y/y in 2017; enterprise infrastructure hardware market is expected to grow 7.3% in 2017. –IDC

NETWORK EQUIPMENT

China’s networking market grew 27% y/y to US$ 60 million and switch market grew 19.8% y/y to US$1.24 billion in 1H’16. –IDC

screen-shot-2016-12-05-at-12-02-22-pmAUTOMOTIVE

• Automotive electronics control unit market is expected to reach $54.7 billion by 2023. –Global Market Insights Inc.

• ADAS (advanced driver assistance system) production value will reach US$35 billion in 2018 with demand hitting 355 million units. –Digitimes Research

CONSUMER

• China’s color TV sales increased 8.9% y/y to 12 million units in 3Q’16. –All View Cloud Data Technology

• Taiwan LCD TV shipments increased 4.7% y/y to 9.6 million units in 3Q’16. –Digitimes Research

• Taiwan LCD TV makers (ODMs, OEMs and OBMs) shipments will increase 6.4% y/y to 37.7 million units in 2017 and account for 17.2% of the global total. –Digitimes Research

• HDR TV shipments are expected to expand from more than 4 million units in 2016 to over 30 million units by 2020. –IHS Markit

• TVs shipments grew 5.8% y/y to 57.2 million units in 3Q’16. –WitsView

• 8K TV sales will increase from fewer than 1,000 units in 2016 to more than 300,000 units in 2018 and about one million units in 2019. –IHS

3D PRINTING

• 3D printer shipments are expected to grow 108% to 456 thousand units in 2016, more than doubling the 219 thousand units shipped in 2015. –Gartner

• 3D Printing of electronic devices revenues will expand from more than $420 million in 2022 to $2.8 billion by 2025. –SmarTech Publishing

INTERNET OF THINGS

China’s business IoT market is expected to grow at a 13.3% CAGR to US$361 billion (RMB2.4 trillion) by 2020. –IDC

ROBOTS/ AUTOMATION

• Cognitive systems & artificial intelligence revenues will grow at a 55% CAGR to $47 billion in 2020. –IDC

• Professional service robot revenue reached $2.6 billion, with around 20,000 units shipped in 2015; unit-shipment will rise at 46% CAGR from

2015 to 2020. –IHS Markit

screen-shot-2016-12-05-at-12-02-31-pmWEARABLES

• Wearable Technology market will expand from over $30 billion in 2016 to over $40 billion in 2018, more than $100 billion by 2023, before slowing to 11% growth to over $150 billion by 2026. –IDTechEx

• Smartwatch shipments declined 52% y/y to 2.7 million units in 3Q’16. –IDC

MEDICAL

Medical electronics market will have 5.4% CAGR to more than USD 4.4 billion by 2022. –MarketPublishers.com

OTHER

• Haptic (kinesthetic communication) technology market is on trajectory to grow at 16.2% CAGR to USD 19,549 million by 2022. –RNR Market Research

• Power electronics market is expected to expand at a 6.2% CAGR from $12,872 million in 2015. –P&S Market Research

• Printed electronics market will grow at a 22.4% CAGR from USD 3.13 billion in 2015 to USD 12.1 billion by 2022. –MarketsandMarkets

• Security-related hardware, software, and services revenues are forecast to expand at an 8.3% CAGR from $74 billion in 2016 to $102 billion in 2020. –IDC

EMS, ODM & Related Assembly Activity

Electronics assembly value is expected to grow from $1.3 trillion in 2015 to approximately $1.6 trillion in 2020 and contract-manufacturing industry will grow from $430 billion in 2015 to $580 billion in 2020. –Research and Markets

Cloud electronic design automation market will grow at a 6.9% CAGR from 2016 through 2020. –MarketStudyReport.com

Indian Electronic System Design and Manufacturing market is projected to grow at a 24% CAGR from USD 70 billion in 2014 to USD 400 billion by 2020.

Almaz set up an electronics assembly plant in Phakalane, Botswana.

ALTRON purchased six MV-7 OMNI 3D AOI machines from MIRTEC.

Caltronics Design & Assembly purchased a MV-6 OMNI 3D AOI machine from MIRTEC.

Celestica

• opened a Global Business Services office in Penang, Malaysia.

• former facility at 7400 Scott Hamilton Drive in Little Rock, Arkansas was acquired by a local investment group.

Cirtronics added a Viscom S3088 ultra blue AOI system to each production line in Milford, New Hampshire.

Continental Automotive USA added two GOEPEL electronic X-ray inspection systems in Seguin, Texas.

ControlTek hired Dennis Griffin as Test Engineer.

Creation Technologies achieved USA Food and Drug Administration Unique Device Identifier compliance for Class I, Class II and Class III medical screen-shot-2016-12-05-at-12-02-40-pmdevice labeling across its global operations.

Enics Eesti expanded its manufacturing plant in Elva, Estonia by 4,000 M2.

Flex and RIB Software formed a JV for an international web-based platform for construction project management, linking design to supply and execution.

Flex

• appointed Kal Patel as Sr VP of Digital Health.

• sold its Morgan Hill machining and assembly facility to NxEdge.

Foxconn/ Hon Hai

• and Alibaba Cloud entered a R&D partnership for servers.

• and Sharp are setting up AMOLED capacity in China.

• plans to invest up US$5 billion to set up 10-12 production sites in India by 2020.

• subsidiary, Jusda and SK Holdings C&C signed a strategic cooperation agreement to set up a supply chain management JV named FSK.

• is investing in Micro LED technology R&D through its cooperation with Sharp, Nichia.

• partnered with ARM to create a chip design center in Shenzhen, China.

• to integrate 3D printing into R&D through CTC Electronic collaboration.

• subsidiary, Ennoconn acquired 29.4% stake in S&T AG.

• subsidiary JUSDA and SK Holdings C&C established a JV global logistics business based on artificial intelligence and robotics.

GTK opened new cable assemblies and box build manufacturing facility in Craiova, Romania.

INERTEC installed Scienscope International X-SPECTION 6000 at its demo lab in Kreuzwertheim, Germany.

Inventec plans to expand production capacity for servers in Mexico and the Czech Republic and for PCs and smart terminal devices in India in 2017 and is evaluating the feasibility of setting up a factory in Indonesia.

ISC Engineering received IPC/WHMA-A-620 certification as Qualified Manufacturer.

Jabil will begin offering its internally-

developed supply chain management software available for subscription in 1Q’17.

Kloudpad plans to set up a digital tablet manufacturing unit in Tamil Nadu, India.

Kongsberg Gruppen sold its stake in Kitron.

Libra Industries promoted William Redmon to Design Manager.

MARCO MANUFACTURING celebrated its 20th anniversary.

National Technical Systems opened its newly expanded 32,000 SF test and inspection facility in Longmont, Colorado.

Plexus became a full member of Electronic Industry Citizenship Coalition.

Rocket EMS expanded its operations in San Jose, California.

Salcomp inaugurated its new plant in Noida, India.

Sanmina acquired MPSTOR.

Scanfil closed its factory in Biatorbagy, Hungary.

Season Group received TS16949 standards certification in Reynosa, Mexico.

SMS appointed Jeff Clifford, Head of Business Development.

Sparton purchased a POWERFLOW N2 system from Kurtz Ersa North America.

Spinnaker Contract Manufacturing purchased and installed a HR600/2 Repair/Rework system from Kurtz Ersa North America.

Stadium Group expanded its wireless commercial team at the company’s Regional Design Centre in Kista Science City, Stockholm.

Target Corp. filed for receivership.

TechniSat began providing EMS services at its facility in Siemianice, Poland.

Uartronica added three SMD-Lines from Juki Automation.

Unigen hired Kristen Young as Director of Sales for EMS.

WABCO added a Viscom S3088 SPI and S3088 ultra 3D inspection prototype line in Hanover, Germany.

Wistron plans to build a smart devices plant for the Indian market.

Xenoa added a new high precision

SMD Printer to augment its Samsung surface mount assembly line and 14 zone reflow oven.

PCB Fabrication

World PCB market decreased 2.7% in 2015 vs. 2014 in US dollars (calculated at fluctuating exchange rates but increased 2.0% in real terms) to an estimated $58.6 billion in value in 2015. –IPC

PCB design software market is expected to grow at a 12.9% CAGR from US$ 1,410 million in 2016 to US$ 4,755 million by 2026. –Future Market Insights

ACB Group was acquired by Edmond de Rothschild Investment Partners.

All Flex

• added a library of videos about flexible circuitry on its website, www.allflexinc.com.

• installed a MicroCraft M Series Flying Probe tester.

America II launched major new portfolio of ‘value-add’ services, including design, failure analysis, prototyping and PCB manufacturing.

Badve Engineering and PVI entered cooperation to design and manufacture automotive controls sensors, PCBs for accelerator pedals and clutch assemblies for automotive applications.

Cirexx began commercially offering line of flexible circuit products that employ DuPont Pyralux high temperature HT material.

Eltos installed a high temperature press from Bürkle.

Fineline Global bought Exception VAR.

iFastPCB expanded its rigid flex specifications and PCB prototyping capabilities.

Lenthor Engineering

• appointed Salina Galindo-Luna, Production Control Manager.

• completed the installation of a Hitachi ND-6N210E 6 head drilling system.

• was named a JPL Flight Programs approved vendor for both rigid-flex and flex PCB fabrication.

Merlin Flex invested in a Schmoll Laserflex machine.

Molex developed the capability to print high-performing silver flexible circuits on economical polyester substrates with traces as narrow as 0.13mm (.005”) and spacing as small as 0.13mm (.005”).

RUWEL International added an InfinityLine from SCHMID.

Saturn Electronics installed a Camtek Phoenix HDI AOI system.

Shenzhen Kinwong Electronic purchased and installed numerous Orbotech Sprint 200 systems.

WUS Printed Circuit is developing a large IP in Vietnam.

Materials & Process Equipment

Conductive polymers market is expanding at an 8% CAGR from USD 3.1 billion in 2014 to USD 6.75 billion by 2020. –A to Z Research

Electrically conductive coatings market is projected to grow at 8% CAGR to USD 19 billion by 2021. –Research and Markets

Electronic chemicals and materials market will expand at 6.1% CAGR from $43.5 billion in 2015 to $64 billion by 2022. –Research and Markets

Electronics ceramics & electrical ceramics market size is estimated to expand at a 4.9% CAGR to USD 12 billion by 2021. –MarketsandMarkets

Epoxy resin market is growing at a 6.9% CAGR from USD 7.5 billion in 2015 to USD 11.2 billion by 2021. –Zion Research

Fluid dispensing equipment market value will grow to $10.3 billion by 2024. –Grand View Research

Glass fiber market is expected to grow at a 5.3% CAGR to $8.9 billion by 2020. –Lucintel

Quantum dots will enable a market for devices and components worth over $11 billion by 2026. –IDTechEx Research

Vertical cavity surface emitting laser market will grow at a 22.3% CAGR from US$775 million in 2015 to US$4,730 milChart

lion by 2024. –Transparency Market Research

ACE Production Technologies launched their new corporate website at www.ace-protech.com.

Achat Engineering (Achat5) is doubling production space at its headquarters in Lengede, Germany.

AIM appointed Dean Luo, National Sales Manager, China.

Cabot expanded conductive and engineering thermoplastics manufacturing capabilities in Pepinster, Belgium.

COHERENT acquired ROFIN-SINAR Technologies.

Ferro purchased Electro-Science Laboratories.

Gen3 Systems

• appointed Chris Hunt, CTO.

• launched new website: www.gen3systems.com.

Huntsman plans to commercialize a new graphene-enhanced epoxy resin.

Insulectro hired Bill Linse as Technical Account Manager.

Kurtz Ersa North America

• hired Gustavo Perez for their field service engineering team in Guadalajara, Mexico.

• opened a new demo & technology center in Guadalajara, Mexico.

Lamar Group was placed in provisional liquidation.

MacDermid

Enthone Electronics Solutions released direct current acid copper plating process, MacuSpec HT 360.

Performance Solutions completed a major expansion at its 30,000 SF facility in Hiratsuka City, Japan.

Manz partnered with Eiko Electronic to offer an integrated one-stop solution in PCB production.

Nordson celebrated its 62nd anniversary.

Semiconductors & Other Components

GLOBAL SEMICONDUCTOR

• sales increased 11.5% q/q to US$88.3 billion in 3Q’16. –SIA

• sales will increase 0.2% in 2016 and a 4.6% in 2017. –International Business Strategies

• capital spending is projected to decline 0.3% y/y to $65 billion in 2016 and then increase 7.4% to $69 billion in 2017. –Gartner

SILICON WAFER

• area shipments increased 0.9% q/q to 2,730 million square inches in 3Q’16. –SEMI

• (polished and epitaxial silicon) shipments will grow from 10,444 million square inches in 2016 to 10,642 million square inches in 2017 and 10,897 million square inches in 2018. –SEMI

200mm capacity is expected to reach 5.5 million wafers per month by 2020. –SEMI

DRAM module sales declined 10.4% y/y to US$7.9 billion in 2015. –DRAMeXchange

Fan-in wafer-level packaging market is expected to grow at almost 10% CAGR to USD 4.75 billion by 2020. –Technavio

Flip Chip market is expected to grow at a 9% CAGR to $46 billion by 2022. –Research and Markets

G.Fast chipset market is expected to grow at a 117% CAGR from USD 41 million in 2016 to USD 4,200 million by 2022. –MarketsandMarkets

GaN power market is forecast to grow from less than $10 million in 2015 to $280 million in 2021. –Yole Développement

Government/military IC market is forecast to be $2.5 billion in 2016, but represent only 0.8% of the total IC market ($290.0 billion). –IC Insights

Handset baseband IC market decreased 2% y/y to US$10.5 billion in 1H’16. –Strategy Analytics

High-brightness LED production value will increase at a 3.7% CAGR from US$13.2 billion in 2017 to US$15.3 billion in 2021. –Digitimes Research

IC foundry output value will rise at 5.2% CAGR from US$50.7 billion to US$66.6 billion in 2021. –Digitimes Research

IC market forecast was raised to 1% growth from negative 2% in 2016 by IC Insights and

IC unit volume shipment growth rate forecast was increased from 4% to 6%.

LED market is expected to grow at a 19.8% CAGR from USD 28.9 billion in 2016 and reach USD 71.4 billion in 2021. –Scalar Market Research

Occupancy sensor market is forecast to increase at a 20% CAGR to $3 billion by 2018. –Research and Markets

Photonics market size is estimated to grow at an 8.4% CAGR to USD 724 billion by 2021. –Markets and Markets

Power discretes and modules products both declined about 10% y/y in 2015 and are forecast to grow at a 3% CAGR through 2020. –IHS Markit

RFID technologies market will expand at an 18.6% CAGR from $16.2 billion in 2016 to $38 billion by 2021. –Research and Markets

Smartphone application processor market grew 3% y/y to US$10 billion in 1H’16 while tablet AP sector declined 34% to US$889 million. –Strategy Analytics

System-in-Package market will grow at a 10.3% CAGR from 2016 through 2020. –MarketStudyReport.com

Flat-panel display equipment spending will rise 89% y/y to US$12.9 billion in 2016, reach US$13 billion in 2017 and then decline slightly to US$11.8 billion in 2018. –IHS Markit

Flexible AMOLED market will rise at a 70% CAGR from $4.9 billion in 2016 to $40.8 billion in 2020.