Week In Review: Manufacturing, Test

Apple woes; DRAM CapEx slows; more ADAS.


OEMs and chipmakers
Apple has reduced its revenue outlook to $84 billion for the quarter, down from $89 billion to $93 billion in its original forecast. The consensus on Wall Street was $91 billion. “The guide down was mostly attributed to weaker-than-expected iPhone demand in emerging markets, predominantly China,” said John Vinh, an analyst with KeyBanc Capital Markets, in a research note. “Management believes China’s sluggish economic conditions have been further aggravated by escalating trade tensions with the United States. Apple has observed declining retail and channel partner store traffic in China as the quarter progressed and cited market data that points to sharp contraction in the overall Chinese smartphone market.”

This also impacts Apple’s chip supply chain. “We view Apple’s pre-announcement as incrementally negative for the Apple supply chain group: AVGO (17% Apple), CRUS (80%), QRVO (36%), SWKS (36%), and SYNA (20%), and are lowering our estimates accordingly,” Vinh said.


After years of record growth, DRAM makers are seeing weak demand and falling prices, causing them to reduce their capacity expansion plans in 2019, according to DRAMeXchange, a division of TrendForce. Micron, Samsung and SK Hynix are reducing their capital spending plans. In 2019, total capital spending for DRAM production is expected to reach $18 billion, down 10% from 2018, according to the firm.

Microchip’s Silicon Storage Technology (SST) subsidiary has announced that its embedded SuperFlash technology is qualified to the Automotive Electronics Council’s AEC-Q100 Grade 1 on United Microelectronics Corp.’s 55nm platform.

Market research
Driven by emerging applications in advanced driver assistance systems (ADAS) for cars, the radar chip market is expected to grow by 22.9% between 2016 and 2022, according to Yole. “At Yole, we believe radar technology will achieve an outstanding penetration rate in car sensors, complementing camera devices,” said Cédric Malaquin, an analyst at Yole.“Despite the small global car sales growth reaching almost 3% until 2022, we expect an average growth rate of 23% for radar module sales, and an average growth rate of 22.9% as well, for radar chip sales over the next five years.”

Autonomous emergency braking (AEB) is becoming a “must have” in ADAS for cars, according to Strategy Analytics. AEB creates various challenges for processing architectures and SoCs. “Competition between auto makers is intensifying as to who makes the safest cars on the market,” said Kevin Mak, an analyst with Strategy Analytics. “This is accelerating product cycles more quickly than has been previously experienced in the automotive industry.”

Global defense expenditures grew 4.9% in 2018, the fastest growth rate since 2008, according to the annual Jane’s Defence Budget report. “Global defense spending grew for the fifth consecutive year to reach a total of $1.78 trillion in 2018, significantly exceeding the post-Cold War record of $1.69 trillion in 2010,” according to the report. “Jane’s forecasts that overall NATO defence expenditure will exceed $1 trillion in 2019.”

Jim Handy, an analyst with Objective Analysis, released his 2019 semi forecast. “The industry has already entered the first stages of its collapse, with both NAND flash and DRAM prices falling, and this will continue, thanks to overbuilt capacity, until prices reach cost. This is what always happens when there’s an oversupply. This price collapse will cause DRAM revenues to drop by 35%, and NAND flash revenues to decline by 15%, leading to a decline in overall semiconductor revenues of about 5% year-over-year,” he said in a blog.

IHS Markit’s final U.S. Manufacturing Purchasing Managers’ Index (PMI) was gloomy in December. The PMI is based on monthly surveys of selected companies representing various economies worldwide. “The headline PMI dipped to a 15-month low amid a weaker rise in new business and the softest expansion in output since September 2017,” according to the firm.

Leave a Reply

(Note: This name will be displayed publicly)