Edgewater Research: Electronics Weekly Digest - May 27

Welcome to your weekly roundup from Edgewater Research, where we bring you key highlights, and insights across various industries.

Datapoint of the Week:

• Eurozone Manufacturing PMI: S&P reported a May flash PMI of 48.9, up from 45.4 in April, indicating near stabilization with minor declines in new orders and output. Germany's May flash PMI also improved to 45.4 from 42.5, alongside better business expectations.
• US Manufacturing PMI: Expanded to 50.9 in May from 50.0 in April, reflecting renewed activity growth driven by increased output.
• Japan Manufacturing PMI: Edged higher to 50.5 in May from 49.6 in April, signaling a return to expansion after months of contraction.

Automotive Sector Insights:

• European Auto Sales: New auto sales in Europe surged by 12% year-over-year in April, the fastest pace since October 2023. Spain and Germany led with 20% increases. BEV sales rose 14% year-over-year to 144,000 in April, despite being the third-lowest in the past 11 months. BEV penetration was at 13.4%, similar to last year’s 13.1%. PHEV and HEV sales increased by 5.9% and 29%, respectively. ICE sales grew by 4%, with a 2-point month-over-month increase in penetration to 49%, the third-highest in the past six months.

Headlines:

Auto Industry:

• China may increase tariffs on large cars to 25%, according to a government-affiliated research body.
• China's auto retail sales showed an improving trend in early May.
• Slowing EV uptake could delay Panasonic's EV battery expansion.
• Li Auto's Q1 sales were disappointing due to weak demand for electric cars.
• Lucid plans to reduce its US workforce by 6% amid softening EV demand.
• Nissan pauses some EV plans in the US.
• Mercedes workers in Alabama voted against joining the UAW.
• Stellantis CEO warns of significant consequences from Chinese EV tariffs.
• Volkswagen delays ID.7 EV launch in the US and Canada.
• VW and Renault cancel EV SUV projects.
• Xiaomi increases its EV goal to 120,000 units as Q1 results exceed forecasts.
• Tesla reduces Model Y production by 20% in China and drops the goal of delivering 20 million vehicles by 2030.
• European automakers need time and cost reductions to compete with China, according to VW.
• Americans are keeping their vehicles for a record 12.6 years on average, despite improving supplies.
• US auto sales are expected to improve modestly in May due to higher inventory and incentives.

IP&E:

• Amphenol closes the acquisition of Carlisle’s Interconnect and announces a 2:1 stock split.
• TE is considering selling its Medical business for $2 billion.

Industrial:

• US manufacturers forecast lower growth in 2024 compared to December expectations, according to ISM.

Datacenter:

• Google invests 1 billion euros in a Finnish data center to drive AI growth.

Semiconductors:

• ADI reports improving order trends and guides above expectations after quarters of under-shipping demand.
• The European Commission expects $100 billion in private chip investments by 2030.
• US tariff barriers boost utilization rates at Taiwanese foundries.
• Infineon announces new power supply units to support AI energy demands.
• Nvidia reports record results and cuts AI GPU prices in China amid competition with Huawei.
• Toshiba completes a new 12-inch power semiconductor factory, boosting MOSFET and IGBT production capacity by 2.5 times.
• Micron faces a $445 million verdict in a patent trial with Netlist.
• South Korea unveils a $19 billion package for the chip industry.
• The US plans a $75 million grant for Absolics to advance chip packaging.
• Samsung ousts a top semiconductor executive due to AI missteps.

Other:

• Apple reduces iPhone prices in China amid strong competition from Huawei.
• Microsoft releases PCs designed for AI.
• Dell introduces a comprehensive portfolio of Copilot+ AI PCs.
• A sudden container crunch causes ocean freight rates to soar, alarming global trade sectors.