Will 2010 Be A Happy New Year For The Electronics Industry?

Yes, it will. Recent market statistics indicate that the closing months of 2009 were far less depressed for the international electronics market than the pessimistic predictions made earlier in the year. Okay, so hindsight is 20/20, and I’m certainly not going to blame market analysts if their crystal balls are occasionally cloudy.

“As a result of September’s sales exceeding the high end of even our best-case expectations, Q3-09 romped in with a massive 19.7% quarterly growth forcing us to once again revise upwards of our 2009 forecast,” said Malcolm Penn, the chairman and CEO of Future Horizons, in the company’s recent Global Semiconductor Monthly Update Report.

“We now have 2009 pegged at only a 10% decline, a long way off from the –28% number we were staring in the face this time last year. Plugging this new base line into our 2010 forecast increases the growth outlook to at least 22%. If Q4 continues the Q2/Q3 momentum, this could even go much higher still. This is not wishful thinking,” Penn said. “\\[T\\]he market recovery has now broken through its escape velocity. Only a global economic disaster of cataclysmic proportions can now derail the chip recovery dynamics.”

I believe the world banking community learned just how disastrous high-risk strategies could be in 2009. Maybe the famous quote from the movie Wall Street, “Greed is good,” should now include the corollary “when it works.”

The report not only provides statistics on how the international electronics market is trading, it also gives a perspective on global economies. For example, it says the U.K. is the last G20 nation still in recession but predicts its economy will grow by 2.1% in 2010 and 4% in 2011. The other European Union countries have already moved out of economic recession, as evidenced by financial figures showing a small but positive growth in the final months of 2009.

What about the U.S.? The news there is positive with growth in the final quarter of 2009 hitting 3%, though analysts remain cautious regarding 2010 because of concerns about the country’s unemployment figures and low salary increases, which in turn will inhibit consumer spending. However, the Future Horizons report does cite a positive element in the U.S. economy—the increase in new home sales in the final quarter of the old year.

Asian economies all seem to be generally healthy and recession free. Yet analysts maintain concerns that although it appears strong, the Chinese economy could still be prone to rapid overheating

2010 is going to be better for electronics than 2009. But it probably won’t be a bumper year. The industry may have to wait until 2011 for that. What’s your view on how the international electronics market will do in 2010? Write me at [email protected].

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