TAIPEI – The worldwide bare board market will fall 5 to 6% year-over-year this year, the leading industry analyst said yesterday in a prerecorded webinar.
China, the US and some Taiwanese fabricators will beat the market, Dr. Hayao Nakahara added in his taped remarks, which were broadcast by the TPCA.
In making the forecast, Nakahara noted the wide range of end-markets suffering year-over-year setbacks, in large part due to shutdowns tied to the coronavirus. Slower demand by such industries as automotive and mobile phones curtailed growth in the first half and will act as a drag on second-half growth as well.
The political issues between the US and China, the stress of coronavirus, and US-China trade relations make forecasting “very difficult,” Nakahara added.
Auto sales were down 45% in April, bringing the year-to-date drop to 29%. China was hit hard in the first quarter – falling 33% – but rebounded to flat growth in April. The world’s largest car market had been slowing prior to the Covid, however; dropping 21 months in a row through March. In response, China has postponed the elimination of subsidies for electric cars, hoping to spur more traction for that key market.
Other auto markets have fared even worse. The US is down 46%, Canada is off 64%, and Western Europe plunged 80% in April. The full-year 2020 forecast now calls for Western Europe to drop 27%.
IC sales were down last year, bottoming in May 2019, then came back. Semiconductor fabrication equipment has also plunged thus far this year, with spending down 25%. “PCBs have a lot to do with the semi market and are affected by the trend,” Nakahara noted.
All consumer electronics segments dropped in the first quarter. Notebooks fell 12% but got a boost from demand for new home users.
PMIs in Southeast Asia in April are bottoming out. China is recovering quickly but Nakahara was reserved over whether its recovery is sustainable.
The silver lining, Nakahara noted, are the steep rebounds now expected for 2021.
Electronics sales are forecast to fall 4.8% in 2020, followed by a 16.9% recovery next year. IC sales will drop 4.2% this year, then grow 23.9% in 2021. Semiconductor capex spending will bounce back in the second half, bringing the full-year growth to 1.2%, then uptick 7.5% in 2021. Semiconductor equipment and services combined will drop 5.1% this year before climbing 17.2% in 2021.
He was less bullish on smartphones, calling forecasts predicting growth of 1.8% and 8% in the third and fourth quarters, respectively, “a bit optimistic.” Mobile devices are slowed by the lagging 5G rollout. Total 5G phone sales for the year will amount to 280 million to 300 million units, an adoption rate of about 19%. That will jump to 450 million units next year (29%), then 630 million units (40%) in 2022.
Nakahara drew upon a variety of sources for the end-market data, including IDC, TrendForce, Bloomberg, IHS Markit, Mizuho Security, and Gartner.
The impact of all this on the PCB market is mixed, Nakahara said. “Some fabricators are doing well, especially those serving 5G infrastructure despite the problems others are facing. IC substrate makers also doing well and investing. Smartphone and automotive makers had a hiccup and will continue to be very challenging.”
Some Taiwanese shops suppling the consumer electronics market are doing well but will probably peak over next two to three months, he added.
“China, and Taiwan fabricators operating in China, are doing pretty well and investments continue, especially for IC substrates,” Nakahara said.
A survey of large Japanese and Taiwanese PCB fabricators reinforced the story. Of the 13 public Japanese PCB fabrications, all but Shinko Denki and Ibiden saw lower sales in 2019. Those two firms are mainly IC substrate makers, Nakahara noted. Ibiden is investing $1.2 billion to expand in Japan, while Shinko is allocating $550 million.
Of the 15 largest Taiwanese PCB companies, Unimicron, another IC substrate supplier, is investing $800 million. ZDT, Hannstar, and T.P.T. are among those benefitting from tablet and PC sales. Flexium’s revenue nearly doubled in April but was only half of what it was in January.
According to Nakahara’s preliminary data, PCB fabricator sales in 2019 rose 1.4% to $76 billion worldwide. Excluding sales of assembled boards by fabricators, the bare board market was around $70 billion, he said. That could drop to around $66 billion in 2020.
Because of the trade wars and its military emphasis, the US is doing well, Nakahara said, although the base is only about $2.7 billion. Laminate companies are reporting solid results, he said.
The rest of the West will take a beating because of its exposure to the automotive industry. In 2019. Germany had sales of $819 million, down 14%, while the rest of Europe plus Russia totaled $1.66 billion.
“Germany makes up 40% of Western Europe, and automotive is 50%, so Germany is very bad. Europe will drop 10 to 15% in 2020.”