Friday, October 04, 2019

Yole: Q2 2019 Exceeded Expectations, But Only in Mobile

Yole Developpement, i-Micronews: “Q2 2019 has exceeded our expectations, with +7% but there is little good news beyond mobile,” announces Pierre Cambou, Principal Analyst, Imaging at Yole Développement.

In the immediate future, Yole expects CIS quarterly sales to reach US$4.6 billion in the fourth quarter, mirroring the expected 10% YoY growth rate for 2019. This is an incredible double-digit growth prospect, especially in the context of mobile saturation and overall industry cyclical recession.

Yes, Yole’s analysts can confirm: CIS definitely has its own growth engine – an engine powered by the proliferation of cameras in mobile, which have hit new heights in 2019 since most high-end flagships deliver 5 – 6 cameras per phone. Yole expects this trend to continue over the next 3 – 4 years, before coming to a somewhat abrupt end. Analysts have arbitrarily set their YoY growth expectation at 1% in 2024 to bring this insight to light, and chase away the trolls if for no other reason.

If we peer below the CIS market’s surface, things begin to look way more interesting – lending more value to our quarterly analysis”, explains Chenmeijing Liang, Technology & Market Analyst, Imaging Activities at Yole. And she details Yole’s analysis:
  • Since Q4 2017, “all markets except mobile” have been on a downward slope. At that time, they had reached US$1.5 billion, but are now down to US$1.1 billion, a -26% drop. These markets went through rough times in 2016 for several reasons, but were actually exhibiting high-growth momentum on a multi-annual basis. In fact, the sum of these markets had doubled from Q1 2015, which translates to a +26% CAGR during 2015 – 2017. But then the industry basically lost a full year’s growth – so what is actually happening before Yole’s quarterly-monitoring eyes?
  • Looking closer at the “other” market breakdown, the two largest segments, consumer photography (DSC, DSLR, action cameras, drones) and computing (PC, laptop, tablets), have been on a slippery slope for a long time and are now on par with the other two segments: automotive and security.
  • Q1 2019 and Q2 2019 are notable as the first time that automotive, and then security, became the second-largest CIS segments. This is definitely breaking news, and it will affect the rankings and strategy of the main CIS players. However, this is not all “honor and glory” for the automotive and security markets:
    The downturn in the Chinese and U.S. automotive markets is affecting automotive CIS sales, despite the growing number of cameras per car. While Yole’s initial five-year growth expectation was +19% CAGR for automotive CIS, YoY growth for 2019 is heading towards a -5% to -10% decrease.
  • The same is more or less true for security, which Yole’s analysts originally announced a five-year +19% CAGR expectation for. Unfortunately, YoY growth will likely end up flat in 2019.
  • The largest disappointment is the industrial segment, which had enjoyed a +26% CAGR from 2014 – 2017. But after reaching US$135 million in Q4 2017, it is now back in the US$100 million-per-quarter range. A global halt to capital expenditures in the semiconductor and automotive industries is probably the main reason. On the bright side, positive news from China leads us to the conclusion that this was simply a needed adjustment due to cyclical markets, and that growth could resume in 2020 since the bottom seems to have been reached. Time will tell.

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