Electronics Production | July 08, 2009

Consumer Electronics Market looks up

Although the global consumer electronics market returned to sequential revenue growth in the second quarter, the industry this year will not achieve an annual expansion that would signal a true recovery, according to iSuppli.
Global consumer-electronics equipment revenue rose to $71.1 billion in the second quarter, up 4.2% from $68.3 billion in the first quarter, based on a preliminary estimate from iSuppli. This represents a major improvement from the first quarter, when revenue fell by 25.8% compared to the fourth quarter of 2008. While consumer-electronics revenue typically declines on a sequential basis in the first quarter following the fourth-quarter holiday selling season, this represented a particularly sharp decline.

The attached figure presents iSuppli’s forecast of global quarterly consumer electronics equipment revenue.

“Following the dismal first quarter, conditions are starting to improve in the consumer electronics business,” said Sheri Greenspan, senior analyst, consumer electronics, for iSuppli. “Revenue will continue increasing on a sequential basis in the third and fourth quarters, rising by 12.5% and 10.2%. While this growth is encouraging, 2009 will still be a down year for the industry.”

iSuppli predicts global consumer electronics equipment revenue will decline to $307.6 billion in 2009, down 8.2% from $335.2 billion in 2008, due to the impact of the worldwide economic downturn as well as sharply declining prices for key products.

These factors caused revenue to decline by 10% in the first quarter compared to the same period in 2008 and by 11.3% in the second quarter. Revenue will decline by 8 percent and 4.2% in the third and fourth quarters, respectively, on an annual basis.

Pricing’s double-edged sword
“With the recession having eaten into consumers’ disposable incomes, the consumer electronics industry has responded by cutting prices on popular products,” Greenspan said. “In diverse areas from digital still cameras, to video game consoles to LCD-TVs, manufacturers are offering price cuts to help move product.”

To a degree, this appears to be working, with aggregate consumer electronics product unit shipments set to rise sequentially by 5%, 16.1% and 14.1% in the second, third and fourth quarters.

However, following a 29.9% plunge in the first quarter, these sequential increases won’t be enough to prevent a 4.8% decline for all of 2009.

Although all 19 consumer electronics product segments tracked by iSuppli experienced a sequential decline in unit shipments in the seasonally weak first quarter, the second quarter saw a rebound, with most products returning to growth. The only products to see a decline in unit shipments in the second quarter were handheld video games, video game consoles, camcorders and the moribund segment of rear-projection televisions.

In the third quarter, the only major segments set to experience sequential unit shipment declines will be digital set-top boxes and rear-projection televisions. As the economy continues to recover, overall consumer electronics product revenue in 2010 will rise 2% to reach $313.7 billion, iSuppli predicts.
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