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SMT & Inspection | June 30, 2005

China is cooling off

Electronic equipment production growth in China will decelerate in the coming years, according to the latest data from iSuppli Corp.
China's production of electronic equipment will grow to $326.2 billion by 2009, rising at a Compound Annual Growth Rate (CAGR) of 9.4 percent from $208.2 billion in 2004.

While such growth is impressive, the expansion of China's production is cooling off compared to the customary high double-digit advances the market has achieved in recent years. After increasing by 14.6 percent in 2004, production will rise by 11.9 percent in 2005, by 10.6 percent in 2006, by 9.5 percent in 2007, by 7.4 percent in 2008 and by 7.7 percent in 2009.

While production will continue to expand and the outsourcing trend will persist, the vast size of China's electronics industry is making it harder for it to achieve the kind of high growth margins it was able to attain previously.

Despite this, China's electronic equipment production will still increase by an average of nearly $24 billion per year from 2005 to 2009, iSuppli predicts. China's semiconductor consumption will rise to $87.9 billion in 2009, expanding at a CAGR of 12.6 percent from $48.5 billion in 2004.

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