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1 March 2015 — Technology Monitor
Trend Tracker
NOLVs: NOLVs increased for semiconductor
companies as sales and margins improved. NOLVs
were mixed for most other technology segments
due to variations in sales and/or gross margins, and
remained relatively consistent for servers, given
steady demand.
Sales Trends: Sales increased for semiconductors
and the related capital equipment due to higher
memory chip sales amid strong smartphone
demand, and for storage hardware due to the
increased use of hard drives in cloud and other
applications, as well as higher solid state drive
(“SSD”) demand.
Sales were mixed for printed circuit boards
(“PCB”)/electronic manufacturing services (“EMS”),
as some companies benefited from higher demand,
while others faced strong international competition.
Sales were also mixed for personal computer
(“PC”) hardware, as some companies enjoyed
rebounding consumer demand, while others
endured slowing commercial demand as well as
competition from smartphones and tablets.
Sales were relatively consistent for servers, with
growth in the x86 server market slowed by server
consolidation via virtualization.
Gross Margin: Gross margins increased for
semiconductors due to higher selling prices and/or
improved operating efficiencies.
Gross margins were mixed for semiconductor
capital equipment, PCBs/EMS, storage hardware,
and servers due to variations in the sales mix and in
operating efficiencies. Gross margins were also
mixed for PC hardware, with increasing margins
for many U.S. companies but decreasing margins
for companies abroad due to foreign exchange
losses and rising labor costs in China.
Inventory: Inventory levels for most technology
segments increased in Q4 2014 versus Q4 2013 to
fulfill generally higher demand. However, server
inventories decreased due to server consolidation
via virtualization.
2 March 2015 — Technology Monitor
Overview
Healthy growth in consumer electronics spending
benefited from surging demand for smartphones,
tablets, and TVs. Smartphones were the top-selling
product, with a 26% year-over-year increase to total
an estimated 1.3 billion shipments in 2014, according
to IDC Global Technology and Industry Research
Organization (“IDC”). Tablet sales climbed 25% to
281 million shipments. LCD TV shipments grew
5.4% as consumers shifted to larger screens, newer
models with Internet connectivity, and LCD versus
plasma displays, and given the HDTV price cuts.
While IT demand remains solid, IT spending slowed
in 2014 due to a more competitive market
environment, which pressured vendors to lower
their prices. Data system spending was the slowest
category, according to Gartner, with a mere 0.4%
increase to $140 billion due to lower-cost storage
options in the cloud and a shift away from high-end
server systems. In addition, device spending growth
was limited by price cuts.
The CEA projects U.S. consumer electronics
shipments will climb 3.0% to $223.2 billion in 2015
versus the prior year, while Gartner forecasts global
IT spending will rise 2.4% to $3.8 trillion.
In 2015, consumer electronics shipments will
continue to be fueled by demand for smartphones
and tablets, which are jointly slated to account for
46% of global technology sales. However,
smartphones are expected to face a slower growth
rate and a lower average price as the market
approaches saturation. TV sales will continue to rise
in 2015 as 1080p units are replaced with 4K screens.
While North America will remain a major revenue
source for the consumer electronics market, the
maturation of the market will result in an increased
share of revenue from China, India, and Africa.
IT spending this year will enjoy gains from stronger
IT budgets, which are expected to rise an average of
4.3%, driven by spending on security tools, cloud
computing, business analytics, development/
upgrades/replacements of applications, and
wireless/mobile products. However, hardware
spending is anticipated to fall as companies
outsource IT operations or move systems to the
cloud for greater efficiency. Other IT products that
may experience slower growth this year include
legacy systems, data centers, on-premises software,
unified communications systems, and storage.
Technology industry growth is largely driven by the use of consumer
electronics products as well as information technology (“IT”) products
and services. In 2014, U.S. consumer electronics shipments increased
3.0% from the prior year to an estimated $216.8 billion, according to the
Consumer Electronics Association (“CEA”), while global consumer
electronics spending climbed 1% to a little over $1.0 trillion. In addition,
Gartner, Inc. (“Gartner”) estimated global IT spending grew 2.1% to $3.7
trillion in 2014.
3 March 2015 — Technology Monitor
Overview
Inventory levels for technology products throughout
the supply chain typically depend on the seasonality
of the related end-products, with stocks built up in
advance of the seasonal selling period and
destocking performed once the build-up has
concluded. Inventory levels are also influenced by
more specific factors, such as the variations in
stocking associated with different fulfillment
models. Some large semiconductor companies, such
as Samsung Electronics Co., Ltd., as well as certain
other parts of the supply chain, such as distributors,
tend to deplete inventory in Q4 (the fourth quarter).
Overall, most major points of the supply chain
currently are at or near seasonal lows for the period
after the 2008 financial crisis. The leaner inventory
levels are due to increased efficiency resulting from
improved ERP (enterprise resource planning) and
EDI (electronic data interchange) systems, OEM
purchasing consolidation, and an emphasis on
increased working capital efficiency to maximize
free cash flow and cash return to shareholders.
U.S.: Holiday season (Black Friday through Christmas) for consumer electronics, Mother’s and
Father’s Day season (May and June) for consumer electronics, Back-to-School season (August and early
September) for computers including desktops, laptops, netbooks, tablets, and smartphones
China: Lunar New Year (late January to mid February), May Day/Labor Day (early May) for
household appliances, Golden Week (first week of October) for electronics products, Singles’ Day
(November 11) for online shopping
4 March 2015 — Technology Monitor
Industry Trends — Semiconductors
A semiconductor, also known as a chip, is a small
conductive wafer typically comprised of silicon and
found in nearly all modern electronics, primarily as a
part of memory chips, microprocessors, commodity
integrated circuits (“ICs”), and complex SOCs
(system on a chip). Semiconductor companies are
continuously working to build smaller, faster, and
cheaper chips to meet demand for increasingly
complex products, and are now outsourcing more
and more of their production to foundry companies
and others in the industry to improve efficiency.
Semiconductor demand is highly cyclical, relying on
demand for end-products such as PCs, cell phones,
and other electronic equipment. In the current era of
modern technology, where a slew of new tech
products constantly and rapidly emerge to render
slightly older and seemingly high-tech products
obsolete, the semiconductor industry is clearly in the
boom stage of the cycle.
In 2014, the global semiconductor industry achieved
record sales of $335.8 billion, which reflects an
increase of nearly 10% from 2013, according to The
Semiconductor Industry Association (“SIA”). Sales
reached record levels for the second consecutive year
and surpassed projections from the World
Semiconductor Trade Statistics organization. The
positive results reflected “broad and sustained
growth across all regions and product categories,”
said John Neuffer, president and CEO of the SIA.
Logic (a digital data processor) was the largest
semiconductor category, with global sales increasing
6.6% to $91.6 billion in 2014 versus 2013.
Memory was the second-largest and the fastest-
growing chip category, with global sales rising 18.2%
to $79.2 billion primarily due to a 34.7% sales jump in
the DRAM memory segment driven by booming
smartphone demand and strong DRAM pricing.
In the Americas, semiconductor sales increased 12.7%
in 2014 versus 2013, with the U.S. market exhibiting
particular strength and leading all global regions
given its double-digit growth.
The momentum is expected to persist through 2015
and beyond with continued semiconductor sales
growth in the U.S. and abroad. Gartner projects
global semiconductor revenue will increase at a
slightly slower rate of 5.4% to $335.8 billion in 2015.
5 March 2015 — Technology Monitor
Industry Trends — Semiconductors
Sales will be fueled by strong growth in application-
specific standard products in smartphones as well as
DRAM and NAND flash in ultramobiles and SSDs,
but partially offset by a reduction in DRAM pricing to
more traditional levels as supply and demand
become more in line with each other this year.
“While mobile phone semiconductor sales will
remain robust, driven by the accelerating shift to
smartphones and 4G Long Term Evolution, there is
concern that weak sell-through for other electronic
equipment categories will result in higher inventory
levels and drag down semiconductor sales in the first
quarter of 2015,” said Jon Erensen, research director
at Gartner.
Semiconductor inventory levels in dollars behaved
seasonally, rising 3.9% in Q3 2014 versus the prior
quarter before falling 0.9% in Q4, as some large
semiconductor companies tend to deplete
inventory in Q4. On a year-over-year basis,
inventory levels climbed 10.4% in Q4.
However, days of inventory trends were much
steadier, with 81 days of inventory in Q4 representing
the second-leanest seasonal level since Q4 2010.
NAND pricing generally declined in 2014 due to an
oversupply, as companies cut DRAM production and
instead boosted NAND flash production amid rising
demand for storage in mobile devices. NAND micro
SD pricing dropped from approximately $0.52 per
gigabyte (“GB”) in February 2014 to $0.32 per GB in
February 2015. Composite NAND spot prices on the
DRAM exchange have also been falling.
6 March 2015 — Technology Monitor
Industry Trends — Semiconductors
Meanwhile, DRAM pricing increased in 2014 due to
short supplies amid reduced capacity, expansion of
DRAM applications, and a diversification of
customers. Over the prior three years, average selling
prices (“ASPs”) of DRAM chips nearly doubled,
according to Semiconductor Equipment and
Materials International (“SEMI”).
Mergers and Acquisitions
In October 2014, Qualcomm, the world’s leading
mobile chipmaker, acquired UK-based
Cambridge Silicon Radio, a multinational fabless
semiconductor company specializing in
connectivity, audio, imaging, and location chips.
In February 2015, Intel agreed to acquire
Germany-based Lantiq, a fabless semiconductor
company specializing in broadband access and
home networking technologies.
The automotive semiconductor sector is also
consolidating due to higher demand for chips
used in infotainment and collision avoidance
applications.
While semiconductor companies are constantly
improving and updating their chip products, these
products have largely remained silicon-based for the
past 60 years. However, a new technology is
emerging that could one day render silicon chips
obsolete: gallium nitride (“GaN”).
Transistors produced from GaN chips can switch on
and off more quickly (making them easier to control)
and can withstand higher voltages than transistors
produced from silicon chips, which should allow
companies to manufacture products that are smaller,
faster, smarter, and more power-efficient.
Currently, GaN transistors are not being used in PC
chips, but are instead utilized in new applications,
such as upgrades to military radar and
communication systems, self-driving car prototypes,
and virtual-reality helmets, as well as innovative
consumer-electronics and medical devices.
Industry inertia may delay the replacement of silicon-
chip transistors with GaN-chip transistors in common
computing applications such as PCs and
smartphones, at least until GaN’s purported
performance and cost advantages become more
evident. According to Bloomberg, analysts project
that GaN-chip transistors will capture over $1 billion
of the silicon-chip transistor market in the next few
years.
Another emerging trend that may spread more
quickly is the incorporation of security features into
chips. Intel and other chipmakers are beginning to
embed security features into wireless chips in an
effort to protect against cyber-attacks.
Intel Corporation (“Intel”)
Qualcomm Incorporated
(“Qualcomm”)
Texas Instruments Incorporated
Taiwan Semiconductor
Manufacturing Company Limited
Samsung Electronics Co., Ltd.
7 March 2015 — Technology Monitor
Industry Trends — Semiconductor Capital Equipment
Semiconductor capital equipment consists of
machines that are used in the production of
semiconductor devices and are located in
manufacturing facilities known as fabs. Front-end
capital equipment accounts for nearly 70% of
industry sales, according to Value Line, Inc. (“Value
Line”), and includes the following types of
equipment: silicon wafer fabrication and processing,
photolithography, resist processing, expose and
write, chemical mechanical planarization (polishing),
chemical vapor deposition, etching, surface
conditioning/cleaning and drying, ion implantation,
sputter, and thermal processing equipment, among
other types.
Back-end equipment comprises the remaining 30% of
industry sales and includes equipment involved in
the assembly, packaging, and testing of ICs.
Like the demand for semiconductors, demand for
semiconductor capital equipment is highly cyclical.
Chip companies order capital equipment based on
their projections for future demand. In the five years
before 2014, manufacturers of memory chips halted
or significantly reduced their capital spending for
new capacity. As a result, memory chip supplies
tightened, boosting memory chip prices in the past
two years and coinciding with increased demand due
to strong sales of mobile devices. Now, memory chip
makers are finally investing in new semiconductor
capital equipment to cash in on the burgeoning chip
demand.
Logic and foundry chip manufacturers are also
joining memory chip makers in heavily investing in
capacity build-up, node shrinking, new material
integration, and advanced packaging in order to
handle new technology challenges.
In 2014, global semiconductor equipment and capital
spending grew 16.4% and 12.9%, respectively, to
$38.9 billion and $65.3 billion, according to Gartner.
Global sales of wafer fab equipment, wafer-level
manufacturing equipment, wafer-level packaging
and assembly equipment, die-level packaging and
assembly equipment, and automated test equipment
increased 16.0%, 16.1%, 19.4%, 13.8%, and 24.0%,
respectively, following sales declines for all categories
in 2013. SEMI estimates U.S. semiconductor
equipment sales jumped 20% to $38 billion in 2014.
Capital equipment sales are expected to continue
rising in 2015, albeit at a slower pace, with projected
increases of 5.6% globally and 15.8% in the U.S.,
according to Gartner and SEMI, respectively.
Semiconductor capital equipment inventory levels
have been on the rise as manufacturers of memory,
logic, and foundry chips are finally investing in new
capacity to fulfill increased chip demand.
8 March 2015 — Technology Monitor
Industry Trends — Semiconductor Capital Equipment
Quarter-over-quarter, inventory levels in dollars
climbed 1.9% and 2.7% in Q3 and Q4 2014,
respectively. On a year-over-year basis, inventory
levels jumped 9.0% in Q4.
After declines in the first half of 2014, days of
inventory began rising in the second half, increasing
from a two-year low 94.2 days in Q2 2014 to 99.9 days
in Q4.
Changes in semiconductor equipment are directed by
advancements in circuit-board technology.
According to Value Line, the ongoing shift to larger
wafers, the development of smaller-geometry chip
designs, and the shift from aluminum to copper
interconnections are the current trends in circuit
board technology that have the most significant
impact on semiconductor equipment.
The transition to larger-sized silicon wafers drives
demand for the newest and most advanced (and,
incidentally, more expensive) wafer production lines,
which boast the highest productivity rate.
The continued reduction in the size of chip geometry
requires manufacturers of semiconductor equipment
to keep pace by producing advanced equipment to
fabricate and test the smaller-geometry chips.
Finally, chip makers’ increased use of copper, versus
aluminum, for interconnections will boost demand
for upgraded equipment, as copper is more difficult
to work with.
Applied Materials, Inc.
ASM Lithography, Inc.
KLA-Tencor Corporation
Lam Research Corporation
Teradyne, Inc.
9 March 2015 — Technology Monitor
Industry Trends — PCBs/EMS
PCBs, the platform upon which semiconductors and
other electronic components are mounted and
electrically interconnected, are the foundation of
virtually all electronics products. Patterns of circuitry
are etched from copper onto PCBs and laminated
together via intense heat and pressure in a vacuum.
PCB categories include rigid PCBs (“RPCBs”), flexible
PCBs (“FPCBs”), and substrate. RPCBs were the only
type in the early stages of the industry, and continue
to account for over 50% of the industry; however,
FPCBs and substrate represent emerging products
and have experienced rapid growth in recent years,
as reported by Research and Markets. Going
forward, large PCB vendors are expected to offer the
traditional RPCBs while also increasing their focus on
FPCBs and substrate.
Due to an increasing trend of offshoring, the majority
of PCB production takes place abroad, with China
being the top producer at nearly 44.2% of global PCB
output. The U.S. accounted for almost 4.7%.
EMS includes companies that are contracted by
OEMs to design, assemble, produce, repair, and/or
test PCB assemblies and the related electronic
components on behalf of the OEMs. EMS companies
may be contracted at different points of the
manufacturing process.
In recent years, greater demand for new features in
smartphones augmented demand for PCBs. Market
research firm IBISWorld, Inc. (“IBISWorld”) reported
communication equipment industries have grown
over the past five years to account for nearly 50% of
the market for the circuit board and electronic
component manufacturing industry.
North American PCB shipments increased 3.4% in
December 2014 versus 2013, according to electronics
industry association IPC, with PCB bookings up 7.9%.
However, shipments for 2014 as a whole declined
0.8% compared to the prior year.
“PCB business in North America was virtually flat in
2014 compared to the previous year,” said Sharon
Starr, IPC’s director of market research. “Strong
orders in the fourth quarter have kept the book-to-bill
ratio solidly in positive territory, which bodes well
for sales growth in 2015.”
North American PCB shipments have been tepid
partially due to strong international competition,
which, compounded with a strong U.S. dollar,
boosted imported PCB volumes. According to
IBISWorld, imports of circuit boards and electronic
components fulfilled an estimated 57.8% of domestic
demand in 2014. Given the increased offshoring of
PCB production, domestic production has decreased.
Research and Markets indicated the global PCB
manufacturing market totaled $62.3 billion in 2013,
which is projected to rise at a compound annual
growth rate of 3.6% to reach $74.3 billion in 2018.
Market volume is also slated to increase, with a
compound annual growth rate of 3.8% to reach 32
billion units in 2018.
North American demand for EMS dipped slightly in
Q1 2014 before climbing in Q2 and remaining
relatively flat throughout the rest of the year,
according to IPC. In December 2014, EMS shipments
totaled approximately $28.5 billion.
10 March 2015 — Technology Monitor
Industry Trends — PCBs/EMS
EMS inventory levels in dollars behaved seasonally,
rising 3.6% in Q3 2014 versus the prior quarter before
slipping 0.5% in Q4. On a year-over-year basis,
inventory levels remained relatively stable, climbing
0.4% in Q4.
Days of inventory exhibited a seasonal spike in Q1,
with 56.1 days of inventory, before dropping to 50.2
days in Q4.
Major manufacturers of PCBs include EMS
companies that are contracted to produce PCB
assemblies for OEMs.
Glass fiber/epoxy laminates, which have served as the
foundational structural substrate in PCBs for decades,
are under pressure from emerging trends that are
leading PCB manufacturers to reconsider their
material options. Among these trends are
miniaturization, improved thermal management,
higher speed and performance, and 3D printing.
E-glass (electric glass) and epoxy resin are expected
to remain the dominant substrates in the near-term,
and manufacturers of glass fiber are reducing yarn
diameters to meet market demand for small devices.
However, research and development programs are
seeking higher-performance materials that could
potentially act as alternatives.
Flextronics International LTD.
Jabil Circuit, Inc.
Sanmina Corporation
Hon Hai Precision Industry Co.,
Ltd.
11 March 2015 — Technology Monitor
Industry Trends — Storage Hardware
Storage hardware includes physical devices used to
store and/or process digital data. Primary devices
consist of system hard drives (including the CPU and
RAM of a system), which store data while the system
is running and are used in PCs, notebooks, printers
and copiers, MP3 players, digital video recorders,
smartphones, home servers, and a variety of other
applications. Secondary devices consist of optical
disk drives (“ODDs”) such as CDs and DVDs,
magnetic devices such as hard disks and magnetic
tapes, SSD memory devices such as USB drives and
memory cards, and magneto-optic disks such as
floppy disks.
Other types of storage hardware include holographic
storage, which provides a 3D projection of the data,
and cloud storage, which uses the internet to store
data at remote devices. Storage capacity is
continuously increasing, particularly for devices such
as hard drives and SSDs.
Hard disk drives (“HDDs”), also known simply as
hard drives, experienced a rebound in shipments last
year after three consecutive years of declines.
According to Coughlin Associates, HDD shipments
declined year-over-year from 2011 through 2013
initially due to the massive flooding in Thailand in
2011, which significantly reduced manufacturing
capacity for HDD components, and later due to a
shift from laptop to tablet computers. However,
HDD shipments increased 2.2% to 564 million units
in 2014 versus 2013 due to the increased use of HDDs
in cloud and other applications, as well as the
stabilization of the laptop market. Coughlin
Associates predicts HDD shipments will climb
slightly in 2015 due to the recovery in the laptop
market as well demand from cloud and emerging
enterprise applications.
However, Trendfocus, Inc. expects slightly lower
HDD shipments due to the gradual decline in
desktop PC sales and the continued encroachment of
SSDs (which are composed of flash memory rather
than moveable parts).
After jumping 82% in 2013, SSD shipments increased
an estimated 60% in 2014, according to Digitimes
Research. Demand remains strong from both
businesses and consumers due to falling NAND flash
prices, thinner notebooks, and an increase in
convertible tablets.
ODD demand has suffered from a shift in demand to
online streaming versus CD, DVD, and Blu-ray disks,
although the “1000-year” M-Disc introduced by
Millenniata may have some staying power, given its
features that are ideal for long-term, write-once
archiving purposes. Magneto optic disk demand has
been dwindling as such products, including floppy
disks, are nearly obsolete amid other cheap options
(namely SSD formats) with faster writing speeds and
higher capacity.
The global storage hardware market is forecast to
grow at a compound annual growth rate of 12.2%
from 2013 to 2018, according to TechNavio.
12 March 2015 — Technology Monitor
Industry Trends — Storage Hardware
IBISWorld indicated high-end hard drives and other
storage devices have experienced relatively flat
pricing over the past five years, in spite of continual
increases in storage capacities, due to the frequent
implementation of more efficient production
methods.
HDD prices were generally stable in 2014, with rising
ASPs in the last two calendar quarters offsetting
lower ASPs the previous two quarters, according to
Coughlin Associates.
IHS reported SSD prices have declined from $1.00 per
GB of capacity in early 2014 to $0.50 per GB by the
summer due to die shrinkage (resulting in more cells
in the same amount of space), increased sales
volumes, improved manufacturing efficiencies, and
greater competition. Prices are slated to drop further
once 3D stacking becomes more popular, significantly
boosting the amount of capacity in the same space, as
NAND flash memory cells are stacked on top of each
other for greater density instead of being two-
dimensional.
Storage hardware inventory levels in dollars
increased 3.1% in Q3 2014 versus the prior quarter
before slipping 0.6% in Q4. On a year-over-year
basis, inventory levels increased 3.1% in Q4 2014.
After rising to 44.3 days in Q2, days of inventory for
storage hardware fell to 41.9 days in Q3 and
remained steady in Q4.
Despite year-over-year declines for most bellwether
companies in the most recent quarter, overall annual
revenues fared better for certain companies. Western
Digital reported an increase in global storage-device
sales from $36 billion in 2013 to $38 billion in 2014,
with another increase to $42 billion projected for
2015, according to Digital Trends. Seagate projected
an 8% increase in revenues, as well as a 7% rise in
shipments.
EMC Corporation (“EMC”)
Hewlett-Packard Company (“HP”)
International Business Machines
Corporation (“IBM”)
NetApp, Inc. (“NetApp”)
Seagate Technology Public
Limited (“Seagate”)
Western Digital Corporation
(“Western Digital”)
13 March 2015 — Technology Monitor
Industry Trends — Storage Hardware
Mergers and Acquisitions
In 2015, HP plans to acquire Aruba Networks, a
wireless networking company specializing in the
mobile market.
In 2014, IBM acquired CrossIdeas, a provider of
identity governance and analytics software. IBM
is seeking acquisitions of cloud companies, as
IBM’s cloud revenue increased 60% in 2014 due
to demand for high-value cloud solutions.
In 2014, NetApp acquired Riverbed Technology’s
SteelStore product line, which supports backup
applications and cloud providers.
In 2014, Seagate acquired Xyratex Ltd., a leading
provider of data storage technology, and Avago
Technology’s LSI flash business, which offers
flash components used in SSDs. Seagate recently
announced a strategic partnership with Micron
Technology, a chip manufacturer, to offer
innovative flash-based storage solutions,
including next-generation SSDs.
In 2014, HGST, Inc., a wholly owned subsidiary
of Western Digital that sells storage hardware,
acquired Skyera, a developer of SSD systems for
scale-out cloud and enterprise data centers.
According to Apparatus, data storage in a typical IT
setting has increased at a rate of 30% to 40% per year,
with this rate accelerating in recent months, due to
more data being generated from numerous sources
and stored for longer periods of time. Rising data
usage is driven by the current use of advanced data
analysis by companies in nearly all industries to assist
in analyzing marketing, financial performance,
staffing, production schedules, and a whole host of
other data.
Providers of cloud services are emerging as major
consumers of storage systems, as they offer their own
servers, storage devices, and systems for other
companies to remotely store data and access
computer services or resources. These other
companies therefore tend to spend less money on
their own on-premises storage hardware and servers,
as they pay cloud storage providers to manage the
storage infrastructure as a service. Providers are
currently working with corporate IT departments
that already maintain on-premises storage systems,
not only to provide services for their active data, but
also to shift their older data into the cloud for long-
term archive and backup storage needs. Private
cloud storage, particularly Tier-2 storage, is slated to
be deployed more widely in 2015 by the government
sector and larger enterprises. Still, the industry
transition from on-premises hardware to the cloud
is not expected to be completed for nearly a
decade, and physical hardware spending will be
supported by overdue upgrades for on-premises
systems.
Storage purchases have been moving from
traditional, mechanical storage formats to flash-based
technologies in recent years, and flash-based SSD
formats are expected to completely replace magnetic
hard drives in the next five years, as SSD technology
can access memory significantly faster than
traditional magnetic drives. Major industry players,
such as EMC, HP, IBM, and NetApp, have begun to
roll out complete flash offerings, including hybrid
and all-flash array (“AFA”) SSD products. As a
result, independent vendors of AFA products are
finding it more difficult to fashion a niche for
themselves to survive in the industry.
Add-on capabilities will become more directly built
into storage solutions, including built-in data
protection, Ethernet interface, and other capabilities
typically offered by separate hardware.
14 March 2015 — Technology Monitor
Industry Trends — PC Hardware
PC hardware includes the physical components of a
computer, such as the monitor, motherboard, CPU,
RAM, power supply, mouse, keyboard, CD-ROM/
DVD-ROM drive, HDD, and other parts. Hardware
may include certain peripherals that connect to a
computer to increase its abilities. Manufacturers
market their PC hardware to distributors or directly
to businesses, governments, and retailers.
According to IBISWorld, revenue for the computer
peripheral manufacturing industry totaled $22.6
billion for 2014, with computer storage devices (CD-
ROM/DVD-ROM drives, HDDs, and SSDs)
accounting for 47.0% of industry revenue and input/
output peripherals (keyboards, mice, monitors,
webcams, microphones) accounting for 32.2%.
In recent years, PC sales were dampened by the
growing popularity of smartphones and tablets.
However, the market may be beginning to stabilize.
According to Gartner, global PC shipments totaled
83.7 million units in Q4 2014, increasing 1% from Q4
2013, with smartphones continuing to receive priority
over PCs in emerging markets such as China and
India. U.S. PC shipments climbed 13.1% over this
period, which marks the fastest growth rate in four
years.
“Installed base PC displacement by tablets peaked in
2013 and the first half of 2014,” said Mikako
Kitagawa, principal analyst at Gartner. “Now that
tablets have mostly penetrated some key markets,
consumer spending is slowly shifting back to PCs.”
However, IDC provided less optimistic results,
indicating global PC shipments declined 2.4% to 80.8
million units in Q4 2014 versus 2013.
IDC indicated that the decline was driven by slowing
commercial demand, although consumer demand is
gradually returning.
“Moving forward, the U.S. PC market should see flat
to slightly positive growth,” said Rajani Singh, Senior
Research Analyst at Personal Computing. “The U.S.
consumer PC market will finally move to positive
growth in 2015, strengthened by the slowdown in the
tablet market, vendor and OEM efforts to rejuvenate
the PC market, the launch of Windows 10, and
replacement of older PCs.”
After declining in Q1 2014, PC hardware inventory
levels have been climbing. Quarter-over-quarter,
inventory levels in dollars increased 6.0% and 1.7% in
Q3 and Q4, respectively. On a year-over-year basis,
inventory levels jumped 7.3% in Q4.
15 March 2015 — Technology Monitor
Industry Trends — PC Hardware
Days of inventory were more volatile, rising sharply
to 16.4 days in Q2 before dropping to 12.4 days in Q4.
Prices for PCs and related equipment have steadily
declined due to the exponential growth in computing
technology each year, which resulted in the related
manufacturing cost savings being passed on to
consumers. Intense competition has also kept prices
relatively low.
In 2014, Lenovo, HP, and Dell led the global PC
market, with market shares of 18.8%, 17.5%, and
12.8%, respectively, according to Gartner. PC
shipments in 2014 for Lenovo, HP, and Dell increased
11.1%, 7.9%, and 9.9% respectively, versus 2013.
Mergers and Acquisitions
In 2015, HP plans to acquire Aruba Networks.
In 2014, Lenovo acquired Google Inc.’s
(“Google”) Motorola Mobility smartphone
business and IBM’s low-end x86 server business.
In 2014, Dell acquired data analysis provider
StatSoft.
Apple acquired 20 companies in 2014, including
low-power display company LuxVue, headphone
producer Beats Electronics, and a variety of apps
and platforms, among other companies.
Compal acquired Toshiba’s European LCD TV
factory in late 2013 and is seeking to acquire PC
and Internet-of-Things (IoT) companies in 2015.
Amid the burgeoning popularity of smartphones and
tablets, demand has risen for more-portable PCs (e.g.,
regular, thin, and light notebooks in addition to
netbooks such as Google’s new Chromebook),
laptops that convert into tablets via detachable/
bendable screens, and PCs with touch-screen
systems. The increased global sales of netbooks, in
particular, indicate that consumers are willing to
sacrifice screen size and computing capability in
favor of portability and easy access to entertainment.
While current high-end computer monitors use either
LCD or LED displays, these technologies are likely to
be replaced by even slimmer, more energy-efficient,
and higher-picture-quality options in the near future,
such as organic LED (OLED) screens. Curved PC
displays are also a developing trend, although only
professionals and enthusiasts are likely to pay a
premium for curved monitors.
Flash-based SSD storage formats are anticipated to
replace magnetic hard drives in the next five years.
Lenovo Group Limited (“Lenovo”)
HP
Apple, Inc. (“Apple”)
Dell, Inc. (“Dell”)
Compal Electronics, Inc. (“Compal”)
Asustek Computer Incorporation
16 March 2015 — Technology Monitor
Industry Trends — Servers
A server is a system of computer hardware and
software that provides network services across a
computer network via computer programs. Many
companies maintain server rooms or data centers that
house continuously operating computer servers,
while others are transitioning their data to remote
cloud-based servers operated and maintained by
third-party providers.
There are a variety of server types, such as
application servers, catalog servers, communications
servers, database servers, and proxy servers, among
others. In addition, the Internet is based upon a
client/server model, with millions of servers
connected to the Internet, including the World Wide
Web, email, online gaming, and database servers,
among others.
Global server shipments and revenue increased 4.8%
and 2.2%, respectively, in Q4 2014 versus Q4 2013,
according to Gartner. In 2014 as a whole, global
server shipments and revenue grew 2.2% and 0.8%,
respectively.
The increased server demand was driven by growth
in the x86 server market as a result of hyperscale data
center deployments (as x86 servers remain the
primary platform used in large-scale data center
build-outs worldwide) and service provider
installations, despite declines in the mainframe and
Unix platforms.
According to Uptime Institute’s 2014 Annual Data
Center Industry Survey, overall data center budgets
are expanding throughout the world, with 62% of
data center organizations receiving large year-over-
year budget increases in 2014 versus only 36% in
2013.
However, data centers are increasingly consolidating
via virtualization, which has slowed shipment
growth.
Gartner projects modest growth in the global server
market this year, supported by further expansion in
the x86 server market due to the growth of integrated
systems, although continued server consolidation
may partially offset the gains.
Server and related hardware inventory levels in
dollars behaved relatively seasonally, rising 0.6% in
Q3 2014 versus the prior quarter before falling 7.4%
in Q4. On a year-over-year basis, inventory levels
declined 4.1% in Q4.
17 March 2015 — Technology Monitor
Industry Trends — Servers
Days of inventory exhibited minor fluctuations, rising
to 27.6 days in Q3 before slipping to 27.1 days in Q4.
In Q4 2014, HP led the global server market with a
27.9% share of the market based on revenue,
although its revenue only increased 1.5% year-over-
year, according to Gartner. Dell maintained a 17.3%
market share and experienced a 16.9% boost in
revenue. IBM and Lenovo maintained market shares
of 12.8% and 7.9%, respectively. IBM’s server
revenue fell 50.6%, while Lenovo’s server revenue
jumped 743.4%, due to Lenovo’s acquisition of IBM’s
x86 server business in Q4.
Server vendors are gradually experiencing a shift in
customers from end-user companies to cloud storage
providers (which serve end-user companies).
According to a recent report by Business Cloud
News, despite slow expected growth in server
shipments, cloud data centers are anticipated to
increase over the next few years to account for nearly
half of all server shipments by 2018.
Server vendors are facing challenges from web
customers, including Facebook, Inc. and Google, that
are custom-designing their own computer servers via
contract manufacturers in Asia, spurring other
similar companies to contemplate following suit. As
a result, server suppliers are offering more attractive
prices, emphasizing software innovations, and
otherwise catering to the needs of major web
customers in order to remain competitive. More
traditional customers, such as banks and government
entities, are also posing a threat by considering
alternative suppliers that could offer lower price
points.
HP
Dell
Lenovo
18 March 2015 — Technology Monitor
Industry Trends — Distribution
Distributors in the technology industry distribute
electronics components and computer products.
According to IBISWorld, communications equipment
and supplies (e.g., telephones, routers, modems,
navigational equipment, and radar) represented the
largest product segment, accounting for 46.3% of
revenue for the current U.S. electronic part and
equipment wholesaling industry.
Electronic parts and equipment (e.g., capacitors,
resistors, connectors, and solar cells) represented
23.6%, semiconductors represented 18.0%, integrated
circuits represented 6.1%, and other goods (e.g.,
computer equipment, storage devices, and peripheral
equipment) comprised the remaining 6.0%.
Distribution revenue grew at an annualized rate of
4.4% over the past five years to reach $366.3 billion, as
reported by IBISWorld, with demand driven by the
proliferation of consumer electronics as well as the
increased use of electronics products in the industrial
sector. Demand for electronic parts, semiconductors,
and circuits grew to support rising demand for
consumer electronics and increased factory
automation, while demand for communications
equipment and telephones fell as consumers adopted
smartphones and other mobile devices.
However, the growth rate for revenue has slowed, as
more manufacturers are sourcing electronic parts at a
lower cost from distributors in China and other low-
labor-cost countries versus U.S. distributors.
Distributors also face challenges from falling prices
for electronics products, an influx of lower-cost
imports, and the increased potential for wholesale
bypass (where customers bypass the distributor and
purchase goods directly from the manufacturer).
As a result, IBISWorld projects industry revenue
growth will slow to an annualized rate of 1.7% over
the next five years to reach $399.2 billion by 2020.
Distributor inventory levels in dollars climbed 2.2%
in Q3 2014 versus the prior quarter before slipping
2.5% in Q4, when distributors deplete inventories.
Year-over-year, inventory levels were up 6.9% in Q4.
In 2014, days of inventory continued to follow
seasonal trends, rising in Q1 and Q3 (to 42.4 and
42.7), but declining in Q2 and Q4 (to 40.7 and 39.0).
19 March 2015 — Technology Monitor
Industry Trends — Distribution
Mergers and Acquisitions
Synnex completed its acquisition of IBM’s
customer relationship management business in
2014.
Arrow plans to acquire immixGroup, an IT
solutions provider, in Q2 2015 in order to expand
its presence in the public sector market.
Ingram acquired Rollouts, an IT services
company, in 2014.
Arrow Electronics, Inc. (“Arrow”)
Avnet, Inc.
Ingram Micro Inc. (“Ingram”)
Tech Data Corporation
Synnex Corporation (“Synnex”)
CDW Corporation
20 March 2015 — Technology Monitor
Machinery and Equipment
The market for late-model, name-brand CNC
(computer numerical control) equipment, less than
eight years of age, remained stable over the last
year following 24 months of steady growth.
Communication systems and equipment designed
and/or configured for specific functions in a
narrow industry, such as portable antenna cells,
have an appeal that is somewhat limited to those
also engaged in the field of communications.
The specific circuit board electronic assembly
industry is poised for a 4% year-over-year decrease
in demand for the next five years. This falls on top
of a 2% decrease this year alone, according to
IBISWorld. However, it is of note that many
lending institutions are entering the PCB sector in
lending activity of late. This has caused somewhat
of a bump in used equipment values for late-model
machinery. While older machines are still in
demand for parts, original equipment
manufacturers are still offering attractive financing
packages on new machines with low interest and
warranties, and are expected to continue to do so,
which will presumably balance out any rise in
used equipment values going forward.
End-users who own the same makes and models of
various technological machinery and equipment
would be ideal prospects for such goods.
However, the amount of similar older equipment
currently available in the used equipment industry
may have resulted in diminished returns, favoring
the buyer, and not the seller.
Specialized, or “job specific,” items do not typically
command strong interest in a liquidation setting.
Often, the cost to re-tool and re-engineer job–
specific machinery and production lines is cost
prohibitive to a speculative buyer.
There is an inherent technological obsolescence
associated with electronically controlled and/or
customized equipment in the “high-tech” sector, as
is readily apparent in the computer and electronics
test equipment manufacturing industries. In a
recovering but cautious manufacturing
environment, buyers coping with the economic
uncertainty correlated to the theoretical liquidation
of these plants are projected to limit their
purchases to equipment for which they have an
immediate need or to items which can be
purchased at significant discounts.
Although economic conditions continue to
improve, many firms continue to shed equipment
related to overcapacity in order to increase
utilization rates and decrease expense and
maintenance costs. In general, such dispositions
by others and the continued technical
advancements routine to the industry may have
affected the desirability of certain machinery and
equipment. In the current manufacturing climate,
sales of production equipment items tend to be
correlated to work moving between suppliers,
rather than to increases in overall volume.
Industry growth leads to shortages of available
new and used equipment, in turn creating greater
demand and higher value for used items. At
present, quondam business failures, consolidation,
and recessional concerns serve to reverse this
condition.
21 March 2015 — Technology Monitor
Technology Reference Sheet
($ in Millions) 2014 2013 Year-Over-
Year Change
Q4 2014
(Estimated) Q3 2014
Quarter-Over-
Quarter
Change
Semiconductors $265,588.7 $238,763.9 11.2% $70,165.9 $68,911.3 1.8%
Semiconductor
Capital Equipment $26,096.5 $22,769.9 14.6% $6,509.6 $6,504.0 0.1%
PCBs/EMS $63,399.1 $62,571.1 1.3% $16,904.8 $15,956.8 5.9%
Storage Hardware $65,524.5 $64,284.0 1.9% $17,601.8 $16,691.7 5.5%
PC Hardware $206,207.3 $204,009.0 1.1% $57,448.9 $48,141.0 19.3%
Servers/Hardware $230,077.9 $238,787.6 (3.6%) $57,592.7 $57,773.7 (0.3%)
Imaging $63,074.1 $64,574.9 (2.3%) $15,410.7 $15,895.5 (3.1%)
Wireless $407,143.0 $345,074.8 18.0% $123,036.0 $92,202.5 33.4%
Telecommunications $141,056.1 $134,026.7 5.2% $35,348.0 $35,362.8 0.0%
Distribution $77,542.8 $69,962.2 10.8% $21,033.9 $19,247.4 9.3%
($ in Millions) 2014 2013 Year-Over-
Year Change Q4 2014 Q3 2014
Quarter-Over-
Quarter
Change
Semiconductors $27,013.9 $25,079.0 7.7% $27,013.9 $27,271.8 (0.9%)
Semiconductor
Capital Equipment $4,412.5 $4,048.2 9.0% $4,412.5 $4,293.9 2.8%
PCBs/EMS $8,563.6 $8,920.8 (4.0%) $8,563.6 $8,607.2 (0.5%)
Storage Hardware $4,174.8 $4,047.8 3.1% $4,174.8 $4,202.8 (0.7%)
PC Hardware $10,136.9 $9,447.2 7.3% $10,136.9 $9,964.9 1.7%
Servers/Hardware $10,591.1 $11,047.6 (4.1%) $10,591.1 $11,438.5 (7.4%)
Imaging $5,259.0 $56,55.9 (7.0%) $5,259.0 $5,691.5 (7.6%)
Wireless $16,262.3 $16,846.8 (3.5%) $16,262.3 $17,104.9 (4.9%)
Telecommunications $6,164.0 $5,696.1 8.2% $6,164.0 $5,949.8 3.6%
Distribution $8,136.0 $7,609.2 6.9% $8,136.009 $8,342. (2.5%)
22 March 2015 — Technology Monitor
Experience
Great American Group, LLC (“GA”) has worked with and appraised numerous companies within the
technology industry, including businesses with revenues ranging from $4 million to over $4 billion. While
our clients remain confidential, they include companies throughout the technology supply chain, including
manufacturers, importers, distributors, and retailers of technology and electronics products, as well as
related parts and accessories. GA’s Machinery and Equipment division has also appraised technology-
related machinery and equipment for resale in the secondary market. GA’s extensive list of inventory
appraisal experience includes:
A provider of IT services and products, including
wireless modules, modems, servers, monitors,
keyboards, and other products.
A provider of IT solutions to businesses,
assembling and installing products such as
servers in addition to offering memory cards and
other data-storage products, as well as software
and networking products.
A provider of servers, data storage devices, and
related hardware and accessories for data centers
at various businesses, offering configurations per
customer specifications.
A large global provider of broadcast equipment
and related products, including cameras, routers,
servers, storage devices, and switchers.
A manufacturer and distributor of single- and
three-phase power transformers built to
customer specifications for companies in the
electrical utility, public power, and industrial
markets.
Distributors of electronics and computer
products, including mobile storage devices, MP3
players, smartphones, laptops, desktop
computers, and other products.
A provider of a variety of consumer electronics
and industrial products, including computers
and consumer electronics under the company’s
private label, which are sold online and to retail
electronics stores, TV retailers, catalogs, and
wholesalers.
An independent distributor of data center
products, primarily including servers and
memory-related products, as well as networking
equipment, storage products, power supplies,
printers, laptops, and other computer hardware,
as well as mobile computing products.
One of the largest wire and cable producers in
North America, offering a wide range of wire
and cable products for use in the residential,
commercial, industrial, retail, electrical
wholesale, and utility construction markets.
GA has also liquidated a number of companies offering technology and electronic products, including
Circuit City, MPC Computers, Pioneer Electronics, and Computer City. In addition to our vast liquidation
and appraisal experience, GA maintains contacts within the technology industry that we utilize for insight
and perspective on recovery values.
GA is a subsidiary of B. Riley Financial, Inc., whose affiliate B. Riley & Co. (“B. Riley”) is nationally
recognized for its highly ranked proprietary equity research. B. Riley’s technology research team has
developed expertise in various technology sectors by performing extensive due diligence on key companies.
Its analysts continuously monitor industry developments and communicate with company management
teams, competitors, suppliers, and customers. B. Riley regularly publishes its research findings through
Research Updates and daily Morning Notes, to which it has provided GA access. B. Riley & Co., LLC is a
member of FINRA and SIPC. For more information, please visit www.brileyco.com.
23 March 2015 — Technology Monitor
Monitor Information
The Technology Monitor relates information covering a variety of technology products from a
manufacturing and wholesaling standpoint, including industry trends and their relation to the
valuation process. As rapid advancements in technology can result in product obsolescence,
our bi-annual Technology Monitor highlights recent market developments as well as emerging
trends and technologies that could potentially shift product demand. GA strives to
contextualize important indicators in order to provide a more in-depth perspective of the
market as a whole.
GA internally tracks recovery ranges for technology products, but we are mindful to adhere to
your request for a simple reference document. Should you need any further information or
wish to discuss recovery ranges for a particular segment, please feel free to contact your GA
Business Development Officer.
GA’s Technology Monitor provides industry trend information for a variety of technology
products. The information contained herein is based on a composite of GA’s industry
expertise, contact with industry personnel, liquidation and appraisal experience, and data
compiled from a variety of well-respected sources believed to be reliable. We do not
guarantee the completeness of such information or make any representation as to its
accuracy.
24 March 2015 — Technology Monitor
Glossary of Terms
AIDC (Automatic Identification and Data Capture): AIDC is the automatic process of identifying objects,
collecting the related data, and entering that data directly into computer systems. AIDC technologies include
barcodes, biometrics (e.g., iris and facial recognition systems), RFID (Radio-Frequency Identification),
magnetic stripes, smart cards, OCR (Optical Character Recognition), and voice recognition.
Capacitor: Originally known as a condenser, a capacitor is a passive two-terminal electrical component that
is used to store energy electrostatically in an electric field. Within a capacitor, the terminals connect to two
metal plates (the electrical conductors) separated by a non-conducting substance (the insulator) such as air,
Mylar, glass, or ceramic, among other materials.
Circuit: A circuit is an electrical device that provides a path for electrical current to flow, thereby allowing
computations, signal amplifications, counting, timing, data movement, and other operations to be performed.
Circuits include discrete and integrated circuits, and are composed of electronic components such as
resistors, transistors, capacitors, inductors, and diodes, which are connected by conductive wires or traces.
CPU (Central Processing Unit): A CPU, also known as the processor or central processor, is the electronic
circuitry within a computer (the “brains” of the computer) that conducts the arithmetic calculations and other
logical, control, and I/O (input/output) operations necessary to carry out the instructions of a computer
program. Most modern CPUs are microprocessors contained on a single integrated circuit chip.
Discrete Circuit: A discrete circuit is constructed from individual electronic components connected by wire,
instead of a single integrated circuit, and is well suited for application-specific designs. Discrete circuits are
typically less time-consuming to build, larger in volume, and faster at loading data than integrated circuits,
but maintain a higher cost because they use more material and are built piecemeal.
DRAM (Dynamic Random-Access Memory): DRAM is a type of RAM (a form of data storage comprised of
small memory chips and installed on a computer’s motherboard) that stores each piece of data on a separate
capacitor. A DRAM chip can therefore hold more data than a SRAM (static RAM) chip, but requires more
power than SRAM. Unlike hard disks and CD/DVD-RWs, RAM devices allow data to be read and written in
nearly the same amount of time, regardless of the order in which data items are accessed.
EMS (Electronics Manufacturing Services): EMS refers to companies that are contracted to design,
assemble, produce, repair, and/or test electronic components and PCB assemblies for OEMs.
Fiber Optic Cable: Fiber optic cable is a high-speed data transmission medium, whereby digital data is
transmitted through the cable via rapid light waves. The cable contains tiny glass or plastic filaments that
carry light beams, and the receiving end of the transmission translates the light pulses into binary values that
a computer can read. Fiber optic cables offer the fastest data transfer rates of any data transmission medium.
25 March 2015 — Technology Monitor
Glossary of Terms
Hard Drive (Hard Disk Drive): A hard drive is a high-capacity, self-contained device that houses the hard
disk and handles the reading, writing, and storage of data on the hard disk. A hard drive is used to
physically store files, folders, and other data in computers and computer-based devices.
Integrated Circuit (IC): An integrated circuit (also known as an IC, chip, or microchip) is formed on one
small plate (currently tens of nanometers in size) of semiconductor material, and is used in traditional
computing. Due to its small size and close proximity of components, an IC performs at a higher level than a
discrete circuit, as the components of an IC can switch quickly and consume minimal power.
LED (Light-Emitting Diode): An LED is an electronic device that emits light when an electrical current
passes through it, and produces brighter light than other types of bulbs while using less energy. LEDs are
now being used as backlight for flat-screen TVs and computer monitors, and are also commonly used for
indicator lights on electronic devices, and in electronic signs, clock displays, and other applications.
LCD (Liquid Crystal Display): LCDs are super-thin displays used in laptop computer screens, flat-panel
monitors, and certain other electronic devices. LCDs display images using the light-modulating properties of
liquid crystals, which do not emit light directly.
Monitor: A monitor is a screen that displays visual output from a computer, cable box, video camera, VCR,
or other video-generating device. A computer monitor uses CRT and LCD technologies to display the
computer’s user interface and open programs, and allows the user to interact with the computer via the use
of a keyboard and/or mouse. A TV monitor uses CRT, LCD, and plasma technologies.
NAND: NAND is a type of flash memory (an electronic non-volatile computer storage device that can be
electrically erased and reprogrammed) primarily used in main memory, memory cards, USB flash drives, and
SSDs (solid-state drives). NAND is ideal for devices to which large files are frequently uploaded and
replaced, such as MP3 players, digital cameras, and USB drives.
POS (Point of Sale) system: A POS system is a system that facilitates and processes a retail transaction (a
sale, return, or order), and typically includes a cash register (comprised of a computer, monitor, cash drawer,
receipt printer, customer display, and barcode scanner) as well as a debit/credit card reader. POS software
can also record sales history, track orders, connect to other systems in a network, and manage inventory.
Power Supply: A power supply is a hardware component that supplies power to an electrical device by
converting the alternating current received from an electrical outlet into direct current supplied to the
computer/electrical device. The power supply also regulates the voltage to prevent overheating.
PCB (Printed Circuit Board): A PCB is a thin fiberglass, composite epoxy, or other laminate-material board
that is etched or printed with conductive pathways that connect different electronic components (e.g.,
transistors, resistors, and ICs) on the PCB. PCBs act as the foundation of many internal computer
components in both desktop and laptop computers, and are also used in other electronic devices.
26 March 2015 — Technology Monitor
Glossary of Terms
Resistor: A resistor is a device designed to resist or control the passage of an electric current, thereby
limiting or regulating the flow of electrical current in an electronic circuit.
RFID (Radio-Frequency Identification): RFID is a system that uses tags (ICs that include a small antenna)
that respond to radio waves in order to track objects, people, or animals. RFID tags can be read by a laser
scanner or recorded by being placed within the range of an RFID radio transmitter, and maintain uses in
merchandise tags, inventory management, airplane luggage, tollbooth passes, credit cards, and animal tags.
Router: A router is a hardware device that routes data from a LAN (local area network) to another network
connection, allowing only authorized machines to connect to other computer systems.
Semiconductor: Semiconductors are the foundation of modern electronics, as devices made of
semiconductors are components essential to most electronic circuits. A semiconductor is a solid substance
that can conduct electricity under certain conditions. The properties of a semiconductor can be modified
based on the impurities added to it and the electrical fields or light applied to it.
Server: A server is a computer that provides data to other computers on a LAN or a WAN (wide area
network) over the Internet. Servers include web servers, mail servers, file servers, and other types of servers,
with each type operating software specific to its purpose. A server also refers to the computer program
running to serve the requests of other programs, known as the clients, by sharing data.
Solder: Solder is a fusible metal alloy used to join together metal workpieces as one solid piece. Soldering is
the process by which metal workpieces are joined via a solder. Electronic soldering is used to connect
electronic components and electrical wiring to PCBs.
Storage Device: A storage device is any type of hardware that stores data. Computer hard drives are the
most common type, with other types including flash memory drives, compact flash cards, and SD cards.
Transistor: A transistor is a basic electrical component that alters the flow of electrical current. The transistor
acts as a switch that can turn a signal on or off by modifying the current between two of its three terminals
(which can connect to other transistors or electrical components). Transistors are the building blocks of ICs.
A series of transistors can also change the amount of current being sent.
Virtualization: Virtualization software enables several operating systems and applications to run on one
physical server (host), creating self-contained virtual machines that act like a real computer. The virtual
machines are isolated from one another and use the host’s computing resources.
Wireless Access Points (Wireless APs): Wireless APs are devices that allow wireless devices to connect to a
wired network using Wi-Fi or related standards. The AP typically connects to a router via a wired network,
but can also be an integral component of a router or wireless modem.
Sources: Techterms.com, www.pc.net, www.wikipedia.org
27 March 2015 — Technology Monitor
Appraisal & Valuation Team
Adam Alexander
President
(818) 884-3737
Ken Bloore
Chief Operating Officer
(818) 884-3737
Paul Arceri
Director
(818) 746-9334
Conrad Van Ryswood
Senior Associate, Technology Specialist
(781) 429-4085
About Great American Group
Great American Group is a leading provider of asset disposition solutions and valuation and appraisal services to a wide range
of retail, wholesale, and industrial clients, as well as lenders, capital providers, private equity investors, and professional
services firms. In addition to the Technology Monitor , GA also provides clients with industry expertise in the form of monitors
for the chemicals and plastics, metals, food, and building products sectors, among many others. For more information, please
visit www.greatamerican.com.
Great American Group, LLC is a wholly owned subsidiary of B. Riley Financial, Inc. (OTCBB: RILY), which provides
collaborative financial services and solutions through several subsidiaries, including: B. Riley & Co. LLC, a leading investment
bank which provides corporate finance, research, and sales & trading to corporate, institutional and high net worth individual
clients; B. Riley Asset Management, LLC, a provider of investment products to institutional and high net worth investors; and
MK Capital Advisors, LLC, a multi-family office practice and wealth management firm focused on the needs of ultra-high net
worth individuals and families.
B. Riley Financial, Inc. is headquartered in Los Angeles with offices in major financial markets throughout the United States
and Europe. For more information on B. Riley Financial, Inc., please visit www.brileyfin.com.
Headquarters
21860 Burbank Blvd. Suite 300 South
Woodland Hills, CA 91367 800-45-GREAT www.greatamerican.com
Mike Marchlik
National Sales & Marketing Director
(818) 746-9306
David Seiden
Executive Vice President, Southeast Region
(770) 551-8114
Ryan Mulcunry
Executive Vice President - Northeast Region, Canada & Europe
(617) 692-8310
Bill Soncini
Senior Vice President, Midwest Region
(312) 777-7945
Drew Jakubek
Managing Director, Southwest Region
(972) 265-7981
Jennie Kim
Vice President, Western Region
(818) 746-9370
Dan Williams
Managing Director, New York Region
(646) 381-9221
Craig A. Ellis
Senior Semiconductor and Capital Equipment Analyst
Co-Director of Research (B. Riley)
(415) 229-4835