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Electronics Production | January 25, 2007

Consumer-Electronics Products Drive<br>OEM Spending in Emerging Regions

New applications in the consumer electronics and computer markets are driving OEMs to change their semiconductor spending habits, according to iSuppli Corp.
However, this is only one of the trends in semiconductor spending and design influence, as the electronics market experiences a spate of design activity cropping up in emerging regions where labor is cheap, a pool of engineers can be found easily and governments are handing out
benefits in order to encourage OEMs locate R&D centers in their countries.

Factors impacting semiconductor buying include the rising consumption of notebook PCs, the increasing integration of multimedia features in mobile phones, the entrance of new companies into the MP3 player market and the arrival of a bevy of new video game consoles.

Semiconductor spending by OEMs is expected to grow by 8.6 percent in 2007, with the rise driven by a number of consumer electronics products that represent the fastest-growing segments for semiconductor spending.

While semiconductor spending habits are changing, the leading nation in electronic equipment design activity that influences chip spending remains the United States, with a projected $68.7 billion in
design-inspired chip purchasing in 2007, up 9 percent from $63.1 billion in 2006. The only country that even comes close to this is Japan, with a projected $44.1 billion in 2007, up 4.7 percent from $42.1 billion in 2006.

However, other countries, specifically those in Eastern Europe, have experienced phenomenal growth, as these nations are more than willing to give assistance to companies looking to invest in the region. For example, the Polish government has made a concerted effort to attract
foreign investment by offering benefits on land, taxes and labor. Delphi and Bosch Group recently have invested in R&D centers in Poland in order to help expand their automotive electronics businesses.

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