Gartner Says Electronics Industry Should Enter Into Sustainable Recovery in 2010
Outlook Is Brighter for Electronic Equipment Markets but Effects of Recession Will Be Far-Reaching
"Almost all sectors of the electronic equipment market are still declining, and we will need to see markets hit bottom before we see the waves of recovery and a rebound to positive growth," said Klaus Rinnen, managing vice president at Gartner's semiconductor manufacturing group. "The wider process of rebounding will occur over a period of approximately two years."
Although the PC market is already reaching the bottom of its growth pattern, Mr Rinnen said the majority of electronics segments will not reach bottom until the second half of 2009, and until then, uncertainty will remain high and visibility low. He also suggested that there is a possibility of a W-shaped recovery pattern that, while less likely, could push sustainable growth into 2011.
"Although there are signs that the market will improve over the next few years, we do not expect semiconductor sales to regain the 2007 peak sales levels during the current five-year forecast period, ending in 2013," said Jim Tully, vice president and distinguished analyst at Gartner.
It is anticipated that PCs and mobile phones, as the "bread and butter" of the electronics industry, will be among the lead segments to bottom out and start the charge for the recovery. However, Gartner warned that although improvement in electronics inventories, in combination with government stimulus, will likely put a halt to the current slide in the market, the question is one of timing between these two events.
If economic growth and government stimulus are slow to materialise, the industry could see a demand and production lift followed by a languishing demand period and even a risk of overproduction in mid-2009. Such events could not only delay the bottoming of segments but also force a second and lower bottom for the PC market.
Even if government stimulus plans lead to a rapid economic recovery and a return to growth, Gartner does not expect the onset of a sustainable recovery - as measured by a rolling 12-month comparison with the prior year - to set in before the second quarter of 2010. Mobile phones are projected to be the first market to achieve a sustainable recovery, edging PCs by about one quarter. For the industry as a whole, sustainable recovery will take longer as higher-priced and highly consumer-dependent segments are delayed.
"The semiconductor industry must prepare itself for significant changes in consumer buying behaviour, technology demand patterns and the supplier landscape," said Mr Tully. "The current recession is pushing many suppliers to the brink of ruin, and several will not survive. The emerging supply chain will be leaner and stronger, but while it reshapes to the new market realities, industry participants are exposed to considerable vendor vulnerabilities."
Gartner analysts said that awareness of risk, both up and down the supply chain, is a must for industry players to maximise their opportunities. In the near term, careful attention must be given to the expected recovery pattern of each sector, and a response must be planned, as those vendors with the most credible response to these patterns will be the ones that emerge from the downturn as winners.
Additional information is available in the Gartner report "Dataquest Insight: When Will Demand for End-User Electronics Recover?" The report is available on Gartner's website at http://www.gartner.com/....
This research is produced by Gartner's Semiconductors Manufacturing programme. This research programme, which is part of the overall semiconductor research group, provides a comprehensive view of the entire semiconductor industry, from manufacturing to device and application market trends. More information on Gartner's semiconductor research can be found in the Gartner Semiconductor Focus Area at http://www.gartner.com/....
Gartner UK Ltd
Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries. For more information, visit www.gartner.com.