It is that time of the year again, to look at the prospects ahead for the South African electronics industry. A short review of the past would help to give the correct perspective.
Globally, the year 2000 was a buoyant year for the electronics industry and especially for component manufacturers. There were indications that the market had overrated the high-tech companies, which resulted in a massive meltdown of the Nasdac and especially the 'dot.com' companies. However, components were in short supply with long lead times and allocations. This resulted in high prices.
Towards the end of 2000, a rapid change occurred, especially in the US market. There were clear signs that the market was slowing down and that the times were coming down, which would ultimately result in lower component pricing.
In South Africa the situation was somewhat different. We certainly did not see the boom in the electronics market that was evident in the US, Europe and the Far East. Our market remained much more stable with moderate increases. We did, however, suffer the consequences of the component shortages and the resulting price increases.
As our market remained much more stable, it is my hope and expectation that we will also not see the volatile downward swings that are evident in the US and Far East markets and possibly expected later in the year in Europe.
If economic predictions of moderate growth in the South African market turn out to be correct, I am once again cautiously optimistic for the prospects of the South African electronics industry. This could certainly be aided by some substantial CAPEX spending on telecom infrastructure - 'the problem always is shortage of capital'. Other sectors, such as vehicle tracking and security, remain on a steady upward course.
The distribution market will continue to see quite significant changes. We have seen the entry of another global distributor, Memec, and there has been the takeover of EBV in Europe by Avnet. A re-alignment of both Avnet and EBV-Electrolink here in South Africa should be seen during the course of the year.
Most South African manufacturers have realised that in order to survive they need to become niche players, exporting their products to selected overseas markets. This has been positive for many companies in South Africa and it is my belief and hope that this trend will continue in the year ahead.
So, as usual and as is my nature, I remain cautiously optimistic for the prospects in the year ahead.
For further information contact Avnet Kopp, (011) 444 2333, [email protected], www.avnetkopp.co.za
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