Electronics systems sales likely to fall 2pc in 2009

USA: With the current global recession expected to extend into next summer, worldwide electronics systems markets are forecast to suffer their third annual decline ever in 2009 with the total value of product shipments falling 2 percent to $1.23 trillion from $1.26 trillion in 2008, according to the just-released 2009 edition of IC Insights' Integrated Circuit Market Drivers report. The other two declines occurred in the last recession when electronics systems sales plunged 14 percent in 2001 and then fell another 4 percent in 2002.

In the current industry downturn, communications and computer/office equipment segments will be hit the hardest with sales dropping 5 percent and 3 percent, respectively, in 2009 according the new IC Market Drivers report. Industrial systems revenues (including those for medical gear) are expected to fall 2 percent in 2009, while sales of consumer and automotive electronics are both forecast to decline by 1 percent next year. Government/military systems will be the only major systems segment to show growth in 2009, rising 5 percent to $83 billion from $79 billion in 2008, concludes the 535-page report.

IC Insights does not anticipate a protracted slump in end-user equipment markets. Electronics systems markets are expected to rebound in 2010 with total dollar volumes rising 7 percent to a record-high $1.32 trillion, followed by another 7 percent increase in 2011 to $1.42 trillion.

IC Insights' market data show worldwide systems sales will grow 4 percent in 2008, mostly due to strong demand for PCs, consumer electronics, and some communications products prior to the meltdown of financial markets in September 2008. Sharp declines in 4Q08 significantly eroded overall growth rates in 2008 across nearly all equipment market segments.

With the 2008-2009 recession factored into the forecast, electronics systems sales are expected to increase by a CAGR of 5 percent per year in the 2007-2012 timeframe. See Fig. 1 for a comparison of 2008 systems market sizes and projected five-year CAGR growth rates, based on forecasts contained in the new IC Market Drivers report.

Included among the fastest growing electronics systems markets in 2008 are digital TVs (29 percent), digital video surveillance (23 percent), RFID (12 percent), smart cards (12 percent), video games (9 percent), personal navigation devices (9 percent), wireless personal and local area networks (8 percent), and wired (including broadband Internet) communications (8 percent).

Among the slower growing systems segments, in terms of dollar revenues, in 2008 are personal computers (1 percent), automotive electronics (4 percent), cell-phone handsets (5 percent), and digital still cameras (5 percent). Included among the markets losing value in 2008 are PDA systems (-31 percent), personal digital audio (-14 percent), and cellular basestations (-1 percent).

IC Insights' new 2009 IC Market Drivers report shows CAGR growth rates for ICs in the five-year forecast period being the greatest for RFID applications (30 percent), digital TVs (21 percent), wireless networks (17 percent), mobile Internet devices (MIDs)/handheld computing (14 percent), smart cards (13 percent), cell phones (12 percent), and GPS-based personal navigation devices (12 percent).

Fig. 2 compares the five-year growth rates of IC sales for a dozen key end-user equipment segments as well as the 2008 market size.