Slowdown in Electronics Market

PC World reports Gartner is predicting a slowdown in the electronics sector

A weakening global economy will soon cause consumers worldwide to slow spending on electronics products, a Gartner analyst warned on Monday.

"In coming months we expect to see signs of a widespread slowdown in the electronics sector, which would directly impact semiconductor sales," said Richard Gordon, analyst at Gartner, in the market researcher's Semiconductor Monday DQ Report. The chip industry likely won't start to recover until the second half of next year.

The impact of the credit crunch on the U.S., and to some degree European, housing markets, along with high energy prices directly hurting consumers, will lead to slower spending on electronics gear, he said.

Sales of personal computers and mobile phones have held up well so far to this year due largely to demand in emerging markets such as China, India, Russia and South America, which have also boosted semiconductor sales. Chips are the main building blocks of all electronic devices, and more chips go into computers and handsets than any other products.

The Gartner analyst posits that emerging market nations will eventually feel the impact of the worsening global economy.

"As the economic cycle unfolds it seems inconceivable that we will not see a more significant reduction in spending on electronics, even in the most resilient of industry sectors and regional markets," he said.

The most fascinating part of the recent slowdown in this industry is that sales of PCs and consumer electronics devices have continued to roar ahead. The "economic slowdown" is mostly from what we can see here in the United States but with more and more countries becoming increasingly prosperous, their is less dependency on the United States economy.

As the article notes, big pushes into India and China have managed to offset much of the slowdown in the US economy. Russia and Eastern Bloc countries have also been soaking up electronics goods like sponges. South East Asia is another sector that is growing and enabling computer companies to sell to a broader consumer base. The advent of cheaper mobile Internet devices has also helped to float the sales figures and keep the computer industry in the game.

We have long argued on this blog that the economic slowdown in the states will eventually have a negative impact on the electronics sector. We have however been surprised by the buoyancy of the consumer electronics market.

PC World: Gartner Warns of "widespread Slowdown" in Electronics Sector