Power Electronics

Is the Electronics Industry Starting to Recover?

We see conflicting signs that the electronics industry is starting to recover. While positive signs from the electronics industry offer hope for an early recovery, several pluses and minuses have made it hard to tell whether things are getting better.

On the positive side, Agilent Technologies Inc. announced it will restore full pay to all its employees worldwide as of Aug. 1, 2002. Temporary pay reductions have been in place since May 2001, when Agilent cut pay as one of several measures to address the severe downturn in the telecommunications industry and the corresponding decline in Agilent's business.

Meanwhile, Agilent's former parent, Hewlett-Packard (HP), said it would force most of its 4,000 contract workers in the internal computer systems department to take three weeks of unpaid leave. An HP spokesperson said this would save the company $15 million to $20 million. HP also said it plans to lay off 15,000 employees as it merges with Compaq Computer.

On the components side, the Semiconductor Industry Association (SIA) released its 2002 midyear forecast, outlining the view that an industrywide recovery is under way. It said that semiconductor sales are expected to increase by 3.1% in 2002, with the growth rate accelerating to 23.2% in 2003 and 20.9% in 2004.

“Last year was the most difficult and challenging year in the history of the semiconductor industry,” said Dwight W. Decker, chairman and CEO of Conexant Systems Inc. “So far this year, we've seen a significant decline in excess inventory and manufacturing capacity, and the industry has resumed modest sequential growth, indicating we are in the initial stages of a recovery. Our expectation is the recovery will gain momentum in the second half of the year and continue with strong growth through 2003 and 2004.”

The SIA reported that discrete semiconductors would remain flat in 2002, with 1% growth to $12 billion. Discretes are forecast to grow 22% to $15 billion in 2003, 16% to $17 billion in 2004, and 4% to $18 billion in 2005.

Analog, which makes up 17% of the global semiconductor market, will grow 3% to $24 billion in 2004, according to the SIA. This market will grow 25% to $30 billion in 2003, 20% to $36 billion in 2004, and 7% to $39 billion by 2005. The largest end-use driver of analog includes the upgraded telecommunications networks for Internet service and digital telecom technologies. Consumer and automotive application-specific analog products also play an important role in this sector.

Indicators for passive components point to conservative growth, showing industry stability, through summer followed by increased demand for new products by end of Q3, according to the Electronic Components, Assemblies & Materials Association (ECA).

Other indicators, such as the increase in manufacturing productivity and the semiconductor industry's positive book-to-bill ratio, point to a conservative recovery for electronic components. “Most market information suggests slow growth through the end of the summer,” said Willis. “As the shelf life of many products in inventory expires and new products and designs come online, demand will increase in the late third quarter through the end of the year.”

We want to know what our readers see happening in the industry. Please send your remarks and predictions to editor@powerelectronics.com.

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish