Cautious Industry Outlook But . . . World SEMI Equipment Growth Resumes!
Originally posted on SEMI.org blog
World Manufacturing Growth Flat to Start 2020 (Chart 1)
The December Global Purchasing Managers Index was in zero growth territory (PMI = 50). However, the various country components varied significantly. With IHS Markit PMI data as a gauge of manufacturing activity, following are how some key electronics-producing countries and regions finished 2019.
| December 2019 | November 2019 | Trend | |
| United States | 52.4 | 52.6 | Expanding at slower rate |
| China | 51.5 | 51.8 | Modest expansion |
| Eurozone | 46.3 | 46.9 | Contraction continues |
| Germany | 43.7 | 44.1 | Strong contraction continues |
| Japan | 48.9 | 48.4 | Mild, ongoing contraction |
| ASEAN | 49.8 | 49.2 | Contracting but at slower rate |
| Taiwan | 50.8 | 49.8 | Modest expansion |
| South Korea | 50.1 | 49.4 | Modest expansion |
To quote IHS Markit’s chief economist Chris Williamson:
- Global PMI rises to eight-month high in December
- Growth led by services, trade drag eases
- Employment, new orders and business expectations all lift higher
- U.S. leads rich-world growth, the U.K. and Japan contract, and Eurozone ekes out modest growth
- Broad-based emerging market expansion led by India
Source: www.markiteconomics.com
4Q’19 Global Electronic Equipment Shipments, Winter Seasonal Downturn Underway (Chart 2)
The very predictable seasonal winter slowdown is underway.
December 2019 world electronic equipment sales declined 4% sequentially from November 2019 and also dropped 6% versus December 2018.
We see this seasonal downturn every winter but this year’s decline appears to be overlaid with further industry contraction.
Source: Regional country and industry composite data analyzed by Custer Consulting Group
World Bank: Lower Global GDP Growth Outlook (Chart 3)
Global economic growth is forecast to edge up to 2.5% in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist, the World Bank said.
However mounting debt and slowing productivity growth are concerns.
Download the January 2020 Global Economic Prospects report
Electronic Industry Business Cycle – SEMI Equipment is Up! (Chart 4)
Chart 4 shows current 3/12 world growth rates of semiconductors, SEMI capital equipment and the Global PMI^2. The SEMI 3/12 growth curve is leading the current upturn!
In Summary
We are now in the recovery phase of the current business cycle with SEMI equipment already in a growth mode. However significant economic and geopolitical concerns persist.
Walt Custer of Custer Consulting Group is an analyst focused on the global electronics industry.
