Electronics Weekly Electronics Design & Components Tech News
Since the height of the telecoms/Internet boom in 2000, production output has fallen by 24 per cent in local currency, with the UK and France with their strong telecoms and IT bias being badly affected.
In the same period, electronics output in France and the UK fell by an estimated 35 per cent and 39 per cent, respectively. Germany, with its strength in automotive and industrial has seen production output fall by 14 per cent over the same four-year period, increasing its overall share of both West European electronics output and market.
Although a significant amount of manufacturing has already been lost, there is clear evidence that shift to low cost locations is beginning to plateau. Lower volume, high-mix products will continue to be manufactured in West Europe, creating opportunities throughout the supply chain in particular for small to medium-sized CEMs and distribution.
In 2004, electronics output in Western Europe was valued at €200bn despite the migration of volume production to low cost locations. To meet customer demands larger tier-one CEMs are also maintaining a regional manufacturing presence, which is increasingly viewed on a broader European scale.
In this context, the enlargement of the European Union in May 2004 has created an electronics market which covers 25 countries. Of the new members, Hungary, Poland and the Czech Republic are already well-established production centres and significant markets in both a regional and global context. The other countries are looking to significantly expand their electronics industries, albeit from a low base.
The report also reveals that:
- In terms of the market, weaker demand in the run-up to Christmas has resulted in full year projections for 2004 being revised down and at the end of the year the outlook remained uncertain.
- The inventory correction which began in the third quarter of 2004 is expected to have an on-going impact on the market in the first half of 2005. However, it is expected that any slowdown will be relatively short lived and with growth gaining momentum in the second half the year, the West European electronics market is expected to show relatively modest growth of 1.7 per cent in 2005 to reach €250bn.
- With growth accelerating in 2006 and 2007 the market is forecast to reach €280bn by 2008.
The Market Alert is drawn from the Reed Electronics Research report, Yearbook of World Electronics Data 2005 – Volume I (West Europe), which has tracked the European and global electronics industry since 1973.
