September 2, 2014

Growth in Electronics Production by Country

Growth within the global electronics industry started to gain momentum in the later part of 2013 a trend which will continue in 2014 and then accelerate in the period to 2017, with stronger growth in the emerging markets. Growth is being driven by the improved outlook for the global economy although downside risks still remain. The Volume 2 of the Yearbook of World Electronics Data tracks developments in the electronics industry for 16 countries with emphasis on the Americas, Japan and the Asia Pacific.

Despite losing its position as the world’s largest producer the US remains the largest market. 2013 however, witnessed a further decline in electronics output, production falling by 1.9%. A stronger domestic and global economy in 2014 should see a return to growth in 2014, although it is expected to be modest at 1.1%. The US, like Europe is now focused on the production of low-volume products in the control and instrumentation, medical, automotive, industrial, defence, high-end computing and communications segments. Over the medium term these sectors are projected to achieve low to medium-digit growth. The move by US companies to “reshore” production is gaining some momentum although the decision by Motorola Mobility to close its smartphone plant after only a year continues to question the viability of producing high volume products in the country.

Electronics output in Japan declined for the third consecutive year in 2013, with output falling by 3.2% during the year and compared to double-digit declines in the prior year two years. The economic policies being implemented by the government, the so called Abenomics has led to an improvement in exchange rates and led to a spurt in exports. In 2014, the recovery which started in the prior September is expected to strengthen due to the continuation of the government’s economic policies and the on-going boost to exports provided by the weak yen. As a result, growth in local currency is forecast to increase by 3.7%.

Growth in Electronics Production by Country 2009-2014

Electronics Production by Country

Source: RER,  The Yearbook of World Electronics Data

South Korea on the back of its leading position in semiconductors, mobile communications and advanced consumer electronic products is the fourth largest electronics producer globally with output of US$111.2 billion in 2013. After declining by 3.4% in 2012 electronics production rebounded in 2013 increasing by 8.9% on the back of strong growth in both the semiconductor and wireless communications segments. Growth is expected to ease in 2014 but still post healthy growth of 6.1% with the main drivers again the semiconductor and wireless communications segments.

Taiwan’s electronics industry is today dominated by a small number of large groups. In addition to the capital intensive semiconductor and display companies the country also has a significant number of ODMs which hold a major share in the global production of computer and communications products. Production for a significant proportion of high volume products manufactured by ODMs is now undertaken in China. In 2013, electronics output increased by 6.5% although growth was primarily driven by the key semiconductor segment. Taiwanese companies will continue to look offshore to reduce costs although the benefits of manufacturing in China will be impacted by rising wages in the country. The semiconductor segment, through the country’s leading position within the foundry business, will be key driver to growth over the medium term.

Electronic output in Malaysia increased by 2.5% in 2013 and followed a decline of 3.1% in the prior year. A recovery in the semiconductor segment combined with an improved performance in the consumer segment offset a further decline in the production of computer hardware. Continued growth in new investment will help boost production in the medium-term although output could still be influenced if established manufactures look to adjust capacity or move production to other countries. The trend to higher value-added production will continue with the country continuing to be an attractive location for the world’s leading electronic manufacturing service providers.

The emphasis on low cost manufacturing, which has driven the growth in the emerging countries and in particular China, is today being questioned. In Western Europe and the US/Canada reshoring is expected to be a significant issue over the next few years. At the same time it is expected that companies, including those in the industrial, automotive and medical sectors, will look to increase manufacturing, either internally or through partners in the emerging markets.

Cost will continue to be a key factor for the high volume products within the 3C segment. Escalating costs in China is pushing manufacturing in the country into the mainland but there is also evidence that overseas manufacturers are looking to alternative locations and to spread manufacturing across several countries.

The Yearbook of World Electronics DataThe Yearbook of World Electronics Data ­ tracks developments in the electronics industry for 16 countries with emphasis on the Americas, Japan and the Asia Pacific. Details of the new report, table of contents and ordering information can be found on Electronics.ca Publications’ web site.  View the report: Yearbook of World Electronics Data Volume 2 2014: America, Japan and Asia-Pacific.

 

 

This report provides 16 country coverage which can be purchased by sections:

 

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