Electronics Production | June 07, 2006
Extracts from "World-Wide Electronic Component Distribution Report 2006"
The strong growth of the first half of 2004 was not sustained into the second half of 2004 or into 2005, with most of the European Distribution Markets showing a decline, some more dramatically than others. Then at the end of the year came the first signs that an upturn could be expected in the first quarter of 2006.
Meanwhile there had been some major changes in the top players on both the European and Worldwide scale. Avnet acquired the business of Memec, and Eurodis was forced into receivership and parts were sold to other European operations. For the first time a Distributor from Asia Pacific region has appeared in the world top 5 and all the rankings in Europe have changed. This year's report shows the 2005 revenues of all the major electronic component distributors in Europe North America, China and Japan, and shows who has gained or lost market share. The report is an in-depth study prepared by people who have a deep involvement with the electronic component industry. Each country report is written by locals who have detailed knowledge of the electronic component distribution industry. These reports analyse the market split into semiconductors, passives and electromechanical components and component assemblies. Spain and Portugal Electronics market in Finland Measured by the value of production, one of the most important industrial sectors in Finland is the electronics industry, representing 25% of total industrial production. This industrial structure differs from the industrial structure in most countries of the European Union. The Finnish electronics industry is naturally strongly export-oriented (85% of the production), and specialised in the fields of communications, control and instrumentation. The electronics sector is the leading export industry in Finland, 30% of total exports. As a result of long-term R&D investments (65% of the R&D of the whole Finnish industry), and innovative top-quality products, Finland has a worldwide reputation as a technological pioneer. This industry employs about 65000 people in Finland. Finland's electronics industry is dominated by the world leader on mobile phones, Nokia. Nokia's world-wide sales was at a level of € 34.2 B in 2005 (€ 29.3 B in 2004), which means that the worldwide growth of mobile phone sales is growing again (+16% for Nokia). Nokia Mobile Phones (61% of sales) has still one manufacturing plant in Finland, and Nokia Networks (19% of sales) have also local factories. The rest production sites are located all over the world. Nokia alone employs about 23,000 in Finland (58,900 all over the world 2005). The Distribution Environment in Finland In Finland a large and increasing proportion of the components is sold directly from manufacturer to the OEM. This trend is for the time being diminishing because of the fact that more production facilities are moving abroad to countries near the market places. The presence of Nokia cannot always be considered as an opportunity for world wide distributors, but without this presence it would be hard to imagine a market as vivid as the Finnish one. The Finnish distribution market is relatively narrow. Russia Former Russian presidential economy adviser Andrey Illarionov (resigned on 27 December 2005) said that the onslaught against Yukos and the conviction of its former CEO Mikhail Khodorkovsky, had caused the country immeasurable harm and was changing the country's economic and political landscape. "The Yukos affair has not ended. This is just the beginning, even though this has been going on for nearly two years," he said at a news conference. "Over this time, the case has dealt huge damage to our country ... and the scale of the damage is not yet known." The official statistics from the State Statistics Committee shows that 2005 practically repeated the results of 2004. High oil price is the key for such "stability" and it also motivate state to penetrate business. The last example was the buyout of AvtoVAZ (biggest automotive plant at Russia) by state-controlled company "RosOboronExport", which is acting as a main arms exporter. According to Central Bank statistics, Russia's foreign trade reached $369 billion (+33%) in 2005, including $244 billion in exports and $125 billion in imports. Russia's foreign trade surplus reached $118 billion in 2005, compared to $95 billion in 2004. The "stabilization fund" where money from gas and oil export are accumulated reached $43 billion in the end of 2005 and the main problem for the government is what to do with this mass of money and how to avoid inflation boom. Russia's total accumulated investment exceeded $100 billion, including more than $50 billion in direct investment. Electronics Market in Russia As in previous years no official statistics on electronics are available. Experts estimate the Russian electronics market 2005 to be in a range of $25 … $35 billion. The market is comprised of four roughly equal shares defined as follows: telecommunications, computers/peripherals, industrial electronics (incl. automotive, aerospace, medical, military), and home appliances. Most consumer products, PCs and mobile telecom are imported as complete products rather than designed and manufactured in Russia; that is why the real capacity of the Russian components market, which is a little other $1 Billion, does not correspond to the entire electronics market consumption potential. No state programs for electronics support exist. The telecom growth was high as usual - 27,8% in 2005. The number of mobile phones reached 120 million, the number of regular Internet users reached 18 million. For the sixth year the growth of the computer market exceeded 20% with the highest growth rate of 28,5% in 2002. According to 'ITResearch', the LCD TV & monitor market tripled in Russia in 2005 and reached $0.6 billion. 2005 was the first year, when cars import exceeded the inner production - 51,2% compared to 48,8%. 410 thousand cars were imported (or assembled by foreign brands at plants located at Russia) and car market reached $22 billion. It should be mentioned that all electronic units for cars assembled in Russia are also imported. On the other hand native cars have not much electronics on board. So the niche for automotive electronic components exists, but is not too big. Arms exports continue to grow and reached a record $6.2 Billion in 2005. The inner military spending are also growing fast up to $6,8 Billion in 2005. Approximately 300 state companies produced electronics (including components) totaling $3,5 Billion, more then half of which is military oriented. But the productivity of these companies does not exceed $10 Thousand per employee annually. Contract manufacturing of electronics is growing quickly and is spreading all round the country. A few dozen EMS (Electronic Manufacturing Services, previously known as Contract Manufacturing Service) companies - Fastwel, Elcoteq, LVS Electronics, Rezonit, TabeRu, Vector Technology, etc. are equipped with modern assembly lines and are ISO9001 certificated as a rule. Two, all Russia conferences for EMS and ODM were held in 2005. The industrial electronics market, is the main segment where Russian electronic engineers may demonstrate their skills and really compete with imported electronic units. Not less than a half of all electronic components is purchased for usage here. The consumer electronics market is growing fast - experts estimate its volume in 2005 near to $15 billion. TV-sets market is estimated as $8 Billion and not less than half are assembled at Russia, but mainly from preassembled units imported from China. Components Market in Russia Not more than 180 electronic component manufacturers operated in Russia in 2005. Some are oriented on the military market; manufacturing hi-end UHF electronic components like ISTOK (Moscow), other are exporters of rather simple chips and semis like ANGSTREM or MICRON (Zelenograd). Approximately 70 private companies appeared in the last few years, mainly in a field of passives, optoelectronics and piezoelectronics. In total, native manufacturers produce components and assemblies up to $400 Million, split in roughly equal proportions between exports and domestic sales. They, of course, dominate in supplying military grade components to the national market. The Russia military budget grew by 28,6% in 2005 and components for military needs were manufactured in increased volume, but no figures are available. As a rule, native manufacturers do not use distribution channels, but prefer direct sales.