European electronics industry in transition

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6 April 2005 News

With a significant proportion of volume manufacturing already, or in the process of, moving to low cost locations in Central and Eastern Europe and to China, the dynamics of the Western European electronics industry is changing, according to a recent Reed Electronics report being distributed by In-Stat.

Since the height of the telecoms/Internet boom in 2000, production output has fallen by 24% in the local currency, with the UK and France with their strong telecom and IT bias, being badly affected. In the same period, electronics output in France and the UK fell by an estimated 35% and 39%, respectively. Germany, with its strength in automotive and industrial has seen production output fall by 14% over the same four-year period, increasing its overall share of both West European electronics output and market.

Although a significant amount of manufacturing has already been lost, there is clear evidence that shift to low cost locations is beginning to plateau. Lower volume, high-mix products will continue to be manufactured in West Europe, creating opportunities throughout the supply chain in particular for small to medium-sized CEMs and distribution. In 2004, electronics output in Western Europe was valued at 200 bn Euro despite the migration of volume production to low cost locations. To meet customer demands, larger tier-one CEMs are also maintaining a regional manufacturing presence, which is increasingly viewed on a broader European scale.

In this context, the enlargement of the EU in May 2004 has created an electronics market which covers 25 countries. Of the new members, Hungary, Poland and the Czech Republic are already well-established production centres and significant markets in both a regional and global context. The other countries are looking to significantly expand their electronics industries, albeit from a low base.

www.in-stat.com

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