LONDON -- Global electronics production is forecast to reach $1.86 trillion in 2015, with China leading the way, a new report says.
China is forecast to account for 38% of electronics equipment production, while low-cost geographies overall accounted for 69% of the total.
Compared to 30 years ago, the changes are startling. Production value overall has risen 78% from $1.05 trillion, the report says. China's share of world production in 1995 was a meager 2.6%. Meanwhile, the share controlled by mature geographies has fallen to 31% from 75% in 1995.
Despite the migration of production to lower-cost facilities, a significant proportion of equipment production, where the focus is on lower-volume, higher-mix products, has remained in Western Europe and the US. These sectors, primarily industrial, medical and communications (including defense), will continue to offer significant opportunities for a wide range of companies, the report says. Both regions will also benefit from their leading position in research, design and development.
The requirement for lower-cost manufacturing within closer proximity of the end-market has benefited both Mexico and Central and Eastern Europe. Pressure to reduce costs has seen an increase in the production of more complex products, a trend which will accelerate over the next five years. In Asia, China itself is coming under increasing pressure as the major global OEMs and EMS providers look to relocate production to offset higher costs. India and Indonesia, with large domestic markets and the recent move by their respective governments to introduce requirements for "local" manufacture, and the benefits of lower costs in Vietnam, will be attractive alternatives to manufacturing in China.
Mirroring the transition in production the focus for the global electronics market is also towards the emerging countries not only for products in the volume segments of the computing, consumer and communication markets but also in areas such as medical, control and instrumentation, defense and industrial. In these segments, where the focus is on complex, lower-volume products, the benefits from producing within or close to the end-market, whether in the emerging or mature regions, is an increasingly important trend across all sectors of the global electronics industry.