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Electronic components is a very small, although
vital sector within the overall electronic engineering industry, and can be
segmented into active and passive components. Active components include
integrated circuits, discrete semiconductors, electronic tubes, optoelectronic
components and flat-panel displays. Passive components include capacitors,
resistors, wound and ceramic components.
Between 1994 and 1997, the market
experienced a period of strong growth in value. This growth was driven by a
number of factors including: the growing strength of the world economy
generally over this period, and the development and increasing market
penetration of products heavily dependent on electronic components. The
personal computer (PC) is perhaps the most obvious example, with electronic
networks, fax machines and compact disc (CD) players also being high-demand
products. The latter part of 1998 and the early part of 1999 has witnessed a
general slowdown in the growth of the value of the UK components market,
largely due to oversupply -- especially in the field of semiconductors -- and
the effect of the continuing strength of sterling. Asian and US multinationals
have begun to reduce manufacturing capacity in the UK in response to these
forces.
The strength of sterling since 1996/1997 has been a serious cause
for concern for both manufacturers and distributors of electronic components.
Export markets are more difficult to penetrate with sterling at such high
levels, and competition in domestic markets is intensified by foreign
competitors taking advantage of the relative weakness of their own currencies.
The collapse of some currencies, especially in South East Asia, has exacerbated
the problems for UK manufacturers of electronic components.
During 1998,
the electronic component market in Europe was affected both by the worldwide
imbalance between supply and demand and general economic uncertainty in the
region. Since 1997, demand for digital goods such as digital video cameras and
mini-disk players has been strong. Production of major products such as
televisions and video cassette recorders (VCRs), however, remains sluggish.
Production of industrial electronic equipment continues to be strong, mainly
the production of mobile telecommunications equipment, and computers and
peripheral equipment. In general, the boom in demand for components expected to
result from the liberalisation of European telecommunications markets has
failed to materialise.
Key Note expects the value of the electronic
components market to grow by £80m in 1999 to reach £3.8bn.
Prospects for the year 2000 are probably little better, as recessionary forces
gather in the UK economy at large. However, by 2001 growth in market value will
be rising again, driven by an increasing reliance on electronic equipment in
industry, commerce and the home. By 2003, Key Note anticipates that the UK
electronic component manufacturing sector will be worth
£5.05bn.
Text © 1999 Key Note
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Last updated by Jacob van Eldik 21th January 2000