Last year was characterised by extreme volatility, with the rand’s plummet and the switch-over from an electronic components shortage in 2000, to a surplus in 2001, which resulted in weaker prices. Both factors contributed to a difficult year for most electronic component suppliers.
Grey marketing became more prevalent as dumping of stock took place overseas and the rand volatility made it risky to hold stock and difficult to predict future trends.
Hopefully the volatility of the last few months is over and 2002 will be a far more stable year. Although dumping of stock should diminish, there should be no shortage of stock as experienced in 2000. Thus the dollar cost of components will remain relatively stable. The rand will most likely show a slight depreciation over the year, dropping to about R13,00 to the dollar by December.
Business conditions will be centered on two extremes. Companies who have built up an export market can expect a boom period as the weak rand makes their products look very inexpensive. Those companies who rely solely on the domestic market will find the going tough as their components costs have increased by 40% since September 2001.
The various market segments will also be influenced by this trend. Some examples:
* Military - will show a turnaround when, compared to past years it has been shrinking. It will now start to grow rapidly. This is mainly due to the 'arms deal' and as well as alliances that have been formed between local companies and international arms manufacturers.
* Telecommunications - is expected to decline except for companies that are exporting products such as G3 cellphone equipment.
* Security - the local market should remain relatively stable with companies who are exporting showing strong growth.
* Metering - expect a decline as municipalities find the increased costs even more unaffordable. Companies that export their products should increase their sales.
The electronic component industry will find business increasingly tough and more competitive. There will be pressure on companies to reduce margins in order to maintain market share. Customers will demand better service at a lower price and companies that are able to meet these requirements will capture market share from less competitive rivals.
Analog Data Products
On a personal note the launch of Analog Data Products (ADP) has exceeded all expectations. We have grown the market share of our agency Analog Devices and expect to do even better in 2002. Our advertising slogan: 'The complete signal chain supplier' has helped us create an awareness of the complete Analog Devices range which includes, DSPs, A/Ds, D/As op-amps, CPU supervisors, interface ICs, energy monitoring ICs, video ICs and power supply chips.
ADP is now entering phase 2 of its business plan where we will shortly be announcing the acquisition of some new exciting and innovative agencies, which will enable us to offer our customers even more of their component requirements. All in all we expect to have a very successful 2002 as we continue to offer our customer the right components at the right price and with superior service.
For further information contact Stephen Silberman, Analog Data Products SA, (011) 531 1400.
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