Global, U.S. electronics supply chains see healthy midyear business conditions

Broad global & U.S. electronic supply chain growth

The first quarter of this year was very strong globally, with growth across the entire electronics supply chain. Although Chart 1 is based on preliminary data, every electronics sector expanded –  with many in double digits. The U.S. dollar-denominated growth estimates in Chart 1 have effectively been amplified by about 5 percent by exchange rates (as stronger non-dollar currencies were consolidated to weaker U.S. dollars), but the first quarter global rates are very impressive nonetheless.

Walt Custer Chart 1

U.S. growth was also good (Chart 2) with Quarter 1 2018 total electronics equipment shipments up 7.2 percent over the same period last year. Since all the Chart 2 values are based on domestic (US$) sales, there is no growth amplification due to exchange rates.

Walt Custer Chart 2

We expect continued growth in Quarter 2 but not at the robust pace as the first quarter.

Chip foundry growth resumes

Taiwan-listed companies report their monthly revenues on a timely basis – about 10 days after month end. We track a composite of 14 Taiwan Stock Exchange listed chip foundries to maintain a “pulse” of this industry (Chart 3).

Walt Custer Chart 3

Chip foundry sales have been a leading indicator for global semiconductor and semiconductor capital equipment shipments. After dropping to near zero in mid-2017, foundry growth is now rebounding.

Chart 4 compares 3/12 (3-month) growth rates of global semiconductor and semiconductor equipment sales to chip foundry sales. The foundry 3/12 has historically led semiconductors and SEMI equipment and is pointing to a coming cyclical upturn. It will be interesting to see how China’s semiconductor industry buildup impacts this historical foundry leading indicator’s performance.

Walt Custer Chart 4

Passive Component Shortages and Price Increases

Passive component availability and pricing are currently major issues. Per Chart 5, Quarter 1 2018 passive component revenues increased almost 25 percent over the same period last year. Inadequate component supplies are hampering many board assemblers with no short-term relief in sight.

Walt Custer Chart 5

Peeking into the Future

Looking forward, the global purchasing managers index (a broad leading indicator) has moderated but is still well in growth territory.

Walt Custer Chart 6

The world business outlook remains positive but requires continuous watching!

Walt Custer of Custer Consulting Group is an  analyst focused on the global electronics industry.

POST A COMMENT

Easily post a comment below using your Linkedin, Twitter, Google or Facebook account. Comments won't automatically be posted to your social media accounts unless you select to share.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

NEW PRODUCTS

Leak check semiconductor process chambers quickly and reliably
02/08/2018INFICON,a manufacturer of leak test equipment, introduced the UL3000 Fab leak detector for semiconductor manufacturing maintenance teams t...
Radiant Vision Systems announces new automated visual inspection system
11/06/2017Radiant Vision Systems, a provider of high-resolution imaging solutions for automated visual analysis of devices and surfaces, an...
SEMI-GAS Xturion Blixer enables on-site blending of forming gas mixtures
10/03/2017The Blixer provides a cost-effective alternative to purchasing expensive pre-mixed gas cylinders by enabling operators to blend ...