By Walt Custer, Custer Consulting Group
Strong year-end 2017 electronic equipment sales
2017 ended on a high note from an end market perspective thanks to:
- Geographically broad economic strength and new products
- Record high December electronic equipment production and shipments in China/Taiwan
- Peak electronic equipment production in the Eurozone in November
- A 4Q upturn in U.S. bookings and shipments of electronic equipment
Based upon preliminary data, mobile phones including the Apple iPhone X were major contributors to the fourth-quarter 2017 strength in Asia/Pacific. Foxconn registered all-time record sales in December.
By comparison, personal computer sales were flat when adjusted for normal seasonality.
Early information indicates that December global equipment revenues were up almost 24 percent over December 2016 and up 3 percent sequentially over November 2017.
Resilient semiconductor supply chain
Semiconductors and SEMI equipment have a strong growth in this current business cycle (Chart 2), mainly due to strong memory demand and price increases for chips, and also robust capital equipment spending to increase memory chip capacity.
By November this sales growth appeared to be plateauing (but at record levels).
On a 3/12 basis (Chart 3) world growth was:
|Taiwan Chip Foundries
Despite a likely moderation of the current SEMI equipment and chip growth rates, this current business cycle has been robust and prolonged. End market electronic equipment demand remains strong and new volume markets are emerging. However SEMI equipment and semiconductor sales are much more volatile than electronic equipment, so the current landscape could change quickly.
The global PMI is an excellent short-term leading indicator. It was at an all-time record high in December, pointing to an unseasonably strong first quarter of 2018. Keep watching the business cycles for any signs of abrupt change. Currently we are on a high plateau but conditions could change quickly.