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EPTE Newsletter: Is the Global Electronics Industry Improving?

The end of July is quickly approaching as I write this column. The impact of COVID-19 on the global economy remains uncertain, and tensions between the U.S. and China heated up last week. Electronic companies can’t forecast business trends with this uncertainty in the market.

The Japanese PCB industry had a slow start in 2020 but showed strong gains in February and March. Rigid build-up circuit boards, the core products in the industry, led in growth with an increase of 57% during the first quarter, comparing year over year. We had hoped that these results would remain strong during the pandemic. Unfortunately, business slowed down during April, declined significantly during May, and continues to decrease.

Why the choppy market? Industry analysts believe the upswing during the first quarter came from the replenishment of the supply chain in China. EMS companies ordered a lot of high-density circuits used in smartphones. Once the out-of-stocks were fixed in the supply chain, business slowed down for circuit manufacturers.

The PCB industry in Taiwan looks different compared with last year. The decline in January was serious compared to other years, but the business declined during the Chinese New Year was negligible. Monthly revenue posted a positive growth (3.8%), comparing year over year for the same period. The growth rates for rigid circuits are more stable than flexible circuits. This was expected because most demand for printed circuits comes from mobile devices, particularly smartphones. Global shipments of smartphones continue to decrease for the last four years, and Taiwanese PCB manufacturers are slowly finding new customers remain profitable.

The market trends of the global semiconductor industry are not very understandable. Shipments have significantly dropped since the end of 2018 and rebounded during the first half of 2019. Global markets bear very different results (Figure 1).

Figure 1: Monthly shipments of semiconductors by region in billions of dollars.

The largest semiconductor-producing country in the world is China. Their market has been volatile since 2018. Business dropped during the first quarter but rebounded quickly. This volatile market makes it difficult to forecast sales for the rest of the year. The markets in Europe and Japan are stable at low levels. The North American market is somewhat stable, and other Asian countries are declining slowly.

Forecasts for our industry are all over the place. Global demands for semiconductor devices are declining, and the COVID-19 pandemic may negatively impact the market. Still, several manufacturers are planning large investments to increase manufacturing capacities, and many customers are increasing purchases to hedge against any supply line disruption.

With all this uneasiness, predictions and forecasts are the equivalent of a coin toss. Let’s be optimistic and hope for a great outcome!

Headlines

1. TIT (technical college in Japan) 7/9

Succeeded in making large crystalline semiconductors on plastic films with high speed by simple dipping process that could be available for the RTR process.

2. TPCA (PCB industry organization in Taiwan) 7/15

June PCB shipments increased 2.2% from May and 5.6% from the same month of the previous year. The total of the first half of 2020 increased by 3.8%.

3. JPCA (PCB industry organization in Japan) 7/17

May PCB shipments declined 10.1% from April but increased 1.0% from the same month of the previous year. Rigid build-up boards had a sharp drop.

4. TSMC (semiconductor manufacturer in Taiwan) 7/21

Will increase the investment remarkably in 2020. The company expects big growth for 3 nm/5 nm processes due to 5G devices by 2021.

5. TDK (device manufacturer in Japan) 7/21

Developed a new heat-resistant capacitor using a modified polypropylene film that is available at 125°C.

6. TIT (technical college in Japan) 7/21

Discovered a superconductor thin-layer structure of LiNbO2 that becomes a transparent conductor.

7. Nexperia (module supplier in Japan) 7/27

Unveiled a new discrete flat no-lead (DFN) package for automobile applications.

8. Onkyo (audio manufacturer in Japan) 7/27

Co-developed a new Android TV TCL QLED TV 8K X 915 with TCL Electronics Holding.

9. Asics (sport shoe manufacturer in Japan) 7/27

Developed new smartshoes with an acceleration sensor and a Bluetooth device to measure running conditions for athletes.

10. Yano Research (market research company in Japan) 7/28

Forecasts a stable growth of the power semiconductor market from 2021 through 2025. The decline in 2020 could be half of 2009.

Dominique K. Numakura is the managing director of DKN Research LLC. Contact haverhill@dknreseach.com for further information and news.