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Telecom/Datacom Cable Assembly Market Racked Up Growth in 2014

Bishop & Associates examined the revenues of 11 companies and found the telecom/datacom cable assembly market 2014 sales racked up growth.

 

Datacom marketBishop tracks 11 companies in the telecom/datacom market sector. This market has shown four quarters of year-over-year growth, as measured by these 11 companies’ revenues. In 2013, these companies grew 0.1% year over year. In 1Q14, the combined revenues of these companies grew 1.6% year over year; in 2Q14 that number grew 2.1% over the prior year; it grew 8.2% in 3Q14 and 23.1% in 4Q14 (heavily influenced by Apple’s results). Growth for the full year was 9.5%. In comparison with these companies, the cable assembly market for the worldwide telecom/datacom market sector grew 5.7% in 2013 and 9.5% in 2014. The cable assembly market is projected to grow 6.8% in 2015.

Bishop follows electronic interconnects sales trends in 13 markets. The combined annual revenue of all the market sectors was $4.35 trillion in 2014 and grew 1.9% over 2013. Of the 13 market sectors, telecom/datacom was the third fastest-growing market sector in 2014 at 9.5%, with combined revenues of $297.8 billion. Profitability was $24.4 billion at 7.6% of sales.

Apple had the most growth in 2014, at 29.6% to $120,675 million for its iPhones. Fourth quarter sales were up 57.5% over the prior year to $51,182 million, greatly impacted by the sale of the new iPhone 6. The 2014 net income on the iPhone was $26,985 million or 22.4% of sales. With this performance, and given the size of Apple in this group of companies, this significantly buoyed the group performance. The next highest growth was Qualcomm at 5.9% year over year.

As mentioned, Qualcomm had the second-largest increase in 2014 at 5.9% year over year to $26,964 million. Revenues for 4Q14 were up 7.2% year over year. Net income was $8,063 million for the year (or 30% of sales). “We are pleased to report another year of record financial performance as our 3G/4G LTE multimode and other advanced technologies continue to enable the growth of wireless data around the world, driven by our broad chipset roadmap,” said Steve Mollenkopf, CEO of Qualcomm Incorporated.

Seven of the 11 companies had contracting sales in 2014. Several of these companies are manufacturers of traditional cell phones and their forays into smartphones, which are essentially taking over the mobile phone market, have not been successful. These companies include Motorola, Nokia, Ericsson, and HTC. ZTE grew 2.7% in 2014 after shrinking 9.8% in 2013.

The following table shows the results for the 11 companies Bishop tracks in the telecom/datacom market sector.

Telecom-Datacom Market Sales 2013-2014

As shown in the following chart, year-over-year sales results have been improving since 1Q14. Sequentially, fourth quarter 2014 sales were up 42.7% from the third quarter of 2014 (again, primarily due to Apple).

Telecom-datacom market 2014 percent change by quarter

Trends in the Telecom/Datacom Market

  • Smartphone popularity and bandwidth/speed requirements continue to drive this market. Smartphone usage is continuing to drive this market sector in the Western economies. As data usage goes up on these phones, the need for bandwidth and speed has necessitated the rollout of 4G systems that are more efficient at handling the requirements. Infrastructure expansion and upgrades (switching, transmission, and backhaul) will drive the market for cable assemblies and high-speed cable assemblies like SFP, SFP+, QSFP+, and fiber optics.
  • Cell phones are the new landlines in emerging economies. Cell phone usage in emerging economies is far outpacing landline installations due to its lower cost of implementation/installation and lower cost to operate. Landline deployment has not grown significantly in more than five years.
  • The growth of cloud storage and online computing with smartphones and tablets has driven the growth of storage devices and equipment for server farms.

Bishop & Associates estimates the worldwide market for telecom/datacom cable assemblies grew 9.5% in 2014 to $19.6 billion. At 13.7% year-over-year growth, Japan was the fastest-growing region in 2014 for this market sector. The cable assembly market is projected to grow 6.8% in 2015.

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Dave Pheteplace

SVP and Managing Director Cable Assembly at Bishop & Associates Inc.
David Pheteplace joined Bishop & Associates Inc. in 2008, and was appointed vice president in September 2011. He is also the managing director of Bishop’s cable assembly division, which he established in 2008. Pheteplace has more than 30 years of experience in the interconnect industry, including managing divisions of Amphenol, Cinch, and Robinson Nugent.
Dave Pheteplace

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