As more downstream manufacturing moves overseas, domestic demand will decline.
Los Angeles, CA (PRWEB) April 29, 2013
Consumers are clamoring for electronics that offer greater utility, convenience and connection, and the resulting sales are driving global demand for electronics components. This demand will aid the Circuit Board and Electronic Component Manufacturing industry, which primarily manufactures printed circuits, circuit boards, capacitors, transformers, connectors and other products. “Due to a mounting need for energy savings, the automotive and industrial sectors are increasingly using electronics, which is partially driving growth in demand for this industry's products,” says IBISWorld analyst Andrew Krabeepetcharat. As more everyday items incorporate advanced technology, more manufactured items will require its products, specifically circuit boards. The production of final electronic products, however, has been moving away from the United States to low-cost countries like China. This move has negatively affected US production of electronic components.
Import penetration is having a stark effect on the industry's revenue. Domestically generated industry revenue is expected to fall 2.2% in 2013 to total $44.0 billion as overseas producers outcompete US operators. Revenue for the industry is estimated to decrease at an annualized rate of 3.2% over the five years to 2013. The sudden decline in consumer spending in 2009 depressed domestic demand for the industry's products. However, demand for consumer electronics rebounded in 2010, encouraging downstream retailers and wholesalers to heavily restock inventories of components that contain circuit boards, boosting revenue 18.1% that year. Because not all products have been sold from this recent restocking surge, the inventory is expected to satisfy some anticipated consumer demand for industry products in 2013. As a result, retailers and wholesalers will make fewer purchases from manufacturers during the year.
As a result of strong export growth, the decline in industry revenue will slowly reverse, leading to slow growth over the five years to 2018. Other types of electronics manufacturing will continue to shift overseas, leading to lower domestic demand for electronic components. According to Krabeepetcharat, the rise in exports will be driven by this geographic demand shift and favorable changes in exchange rates. The Circuit Board and Electronic Component Manufacturing industry has a low level of concentration, with the four largest companies representing about 20.0% of industry revenue in 2013. Flextronics, TE Connectivity and Sanmina are all global electronics manufacturers with a manufacturing presence in multiple countries. The remainder of industry revenue comes from smaller, often contract-based, suppliers that represent less than 5.0% of industry revenue each. The standardized nature of the industry's products lends itself to high levels of competition between smaller industry players. For more information, visit IBISWorld’s Circuit Board and Electronic Component Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry primarily manufacture electronic components (except semiconductors and related devices), such as printed circuits, circuit boards, capacitors, transformers, connectors and switches.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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