We have noted before on this blog that the electronics industry will not be immune to the downturn in the US Economy and that the financial impact will have some effect on the consumer electronics industry. Business Week recently wrote about the predicted downturn. According to Business Week:
Spending on electronics and appliances fell 13.8% in September, compared with 5.5% in August, according to MasterCard Advisors' SpendingPulse service, which provides data on MasterCard (MA) transactions. Electronics retailer Best Buy (BBY) may have had a 9% to 10% sales decline in the second half of September, according to Bernstein Research analyst Craig Moffett, citing company filings. The financial crisis that's crimping interbank lending and dragging down stocks accelerated in the second half of last month.
Sales of big-ticket items such as flat-screen TVs may be in for the biggest drubbing, analysts say. Rather than pony up for a new high-definition TV set, many consumers with analog TVs may simply opt for sub-$100 digital TV converter boxes as they gear up for the February 2009 deadline for the digital-TV transition. "HDTV sales may be the next shoe to drop," Moffett wrote in a recent report. That bodes ill for manufacturers like Sony (SNE), Samsung, and LG. Fewer TV purchases could in turn have an impact on satellite-TV providers DirecTV (DTV) and DISH Network (DISH), whose sales of service packages are closely linked to new TV purchases, Moffett reckons.
Makers of high-end laptops also have cause for concern, says Roger Kay, founder of consultancy Endpoint Technologies Associates. Apple said on Oct. 14 that it's shaving $100 off the price of its entry-level MacBook (BusinessWeek.com, 10/15/08). Other manufacturers may follow suit or roll out more ultramobile PCs, smaller, less powerful laptops that can cost $50 to $200 less than laptops, Kay says. So far, that category of machines "has not cannibalized our notebook sales," says Mark Hill, general manager for U.S. sales. Nor has Acer detected a slowdown in demand, he says.
Declines in the consumer electronics industry will definitely impact the entire electronics value chain. Right from the raw material suppliers, through to the PCB manufacturers, chipset manufacturers, silicon foundries, computer manufacturers etc. This value chain is predominant in Taiwan and therefore the negative effect of a worsening global economy may be magnified in Taiwan.
The technology industry in Taiwan is the predominant industry and tech companies make up a large portion of the TAIEX. Also, a lot of Taiwanese people have a lot of their wealth invested in the markets. Any decline in the market will significantly impact their desire to spend.
No doubt there will be interesting times ahead for many companies here in Formosa. Some industries will at a guess consolidate and over the short term there maybe cutbacks and layoffs but, when the economy improves, those companies left standing will have a lot of opportunities.
Business Week: Rough Times Ahead for the Electronics Industry
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