DATAPOINT OF THE WEEK: S&P reported Jan flash Eurozone manufacturing PMI of 48.8 vs 47.8 in Dec reflecting marginal improvement in activity after six months of decline. S&P noted business confidence in the Eurozone moved higher while order books showed a reduced rate of contraction. The relative improvement in the Eurozone came in despite Jan Germany flash PMI remaining subdued at 47.0 vs 47.1 in Dec, reflecting continuation of headwinds from inflation, inventory overhang, and continued decline in new orders. S&P also reported Jan flash US mfg PMI of 46.8 vs 46.2 in Dec reflecting continued fall in output and new orders with firms highlighting a negative impact on demand from higher cost as input prices increased at a faster pace in Jan.
High Performance Analog Insights – January 2023
Key Takeaways:
1. Expecting 4Q in-line or to low-end with backlogs/NCNRs at least partially offsetting continued weakening in underlying demand.
2. Sales in 1Q still projected sub-seasonal due to slower bookings, declining backlog coverage.
3. Suppliers without NCNRs are expected to see 1H23 downside, suppliers with NCNRs expected to underperform in 2H23.
4. Pricing still targeted flat or raised for CY23; viewed as unlikely to hold into 2H23; TI viewed as increasingly flexible.
5. Delivery times continuing to contract; suppliers still hesitant to adjust official lead times on concerns of triggering cancellations
6. Suppliers still delivering well inside quoted lead times; channel increasingly pushing back on deliveries as they are already in excess. Suppliers viewed as diverting supply to the channel to offset pushouts and cancellations over the past two quarters.
7. Channel inventory est. 4+ wks. elevated for non-constrained; rebalance expected in 1H23+; HPA back to normal/target 7-8 wks.
8. Auto seeing some bookings and inventory adjustment into 1Q23, still viewed as best relative mkt with growth in CY23 from content.
Connector Insights – January 2023
Key Takeaways:
1. Connector bookings noted lower M/M in Dec/Jan. with further moderation expected through 1Q.
2. Shipments noted as finishing down MSD Q/Q in 4Q, mostly in-line but with pockets of downside on weaker Asia and order pushouts.
3. Connector suppliers, particularly TE, viewed as offsetting C4Q demand weakness with increased shipments to distribution.
4. Backlogs viewed as continuing to trend lower. Visibility beyond the current quarter appears diminished on lower backlog coverage.
5. Connector outlooks for 1Q remain cautious at down 7-10% Q/Q.
HDD Insights – January 2023
Key Takeaways:
1.Forecasting C1Q23 HDD shipment TAM to ~33-36M units, flat/down Q/Q assuming continuation of muted nearline HDD orders across all end markets, and further DOI digestion by select U.S. hyperscalers, CE/client HDD orders forecasted to decline Q/Q
2. Reducing CY23 HDD shipment TAM lower to ~145M units, or down ~15% Y/Y, or ~10M units below prior forecasts as we continue to see demand challenges across most/all end markets throughout at least C1H23 – C2Q23/C2H23 HDD production forecasts cut to ~35-37M units/quarter (vs. ~37-40M units) suggesting HDD shipment TAM unlikely to recover beyond mid-30M.
3. Client HDD orders forecasted to decline by as much as 10-20%+ Q/Q in C1Q23, PC OEMs citing reduced overall PC builds and reduced HDD-attach rates as driving reduced orders; supply sufficiently concerns remain yet seeing no outright shortages to-date.
