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November 17, 2020

Going the Right Way . . . if We Can Control Pandemic

Global business conditions continued to improve through October although the rate of improvement slowed a bit as pandemic concerns increased (Chart 1).

Electronic Equipment Shipments Recovering

Third-quarter world electronic equipment shipment growth showed a big improvement over the second quarter but was still down an estimated 1.4% compared to the same quarter in 2019 (Chart 2).

Based on regional electronic equipment shipment data, October 2020 sales were up 3.5% versus October 2019 and up 6.1% sequentially versus September 2020 (Chart 3). As the traditional autumn busy season winds down, the key impediment to a strong recovery is the rising COVID-19 infection rates, especially in the United States and Europe. The world awaits the deployment of a much-needed vaccine.

Custer 1

Custer 2

Custer 3

Semiconductor Growth May be Ebbing

Semiconductor chip shipments continue to increase but their global rate of growth has leveled off to mid-single digits (Chart 4). Wafer foundry sales growth also appears to be peaking (Chart 5), pointing to slower chip growth in coming months.

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Custer 5

SEMI Equipment Shines

Semiconductor capital equipment shipments continue to outshine both electronic equipment and semiconductors. Third-quarter 2020 SEMI global sales were up a whopping 31% compared to the same quarter in 2019 and up 16% versus the second quarter of 2020 (Chart 6). SEMI equipment shipments are definitely outpacing semiconductors on a 3/12 growth basis (Chart 7).

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Custer 7

SEMI Outpaces Electronic Supply Chain

Global electronic supply chain growth is improving but the semiconductor sector is clearly the winner this autumn (Chart 8).

Custer 8

Looking Forward, Pandemic Spread is Biggest Worry

Business conditions definitely look brighter. Even stronger growth is likely if we can get COVID-19 under control.

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

walt@custerconsulting.com.