June 12,
2007
Global
Demand Keeps Growing
Across
the world, demand for electronic components keeps growing. The average growth internationally
has been adjusted downward over recent months, but the figures are still
positive in every region. Research firms that track global component demand
pegged 2007 at about 10 percent growth averaged around the world. Many of those
firms are now saying 2007 will deliver growth at a much lower percent. But
overall growth is still expected in every area.
But
not all regions are equal. Asia has been leading growth for many years,
particularly in the area of components that go into consumer electronics. The
developed regions of Europe and North America are still expanding, but that
growth tends to be in the low single digits.
A
broad-based distributor like Avnet Inc. in Phoenix has distribution channels in
all areas of the globe. They are even in Japan, which is a tough market for
North American companies to crack. Avnet is seeing growth continuing in all
regions, and its experience roughly matches the growth predicted by research
firms. “In Asia right now we’re seeing season growth,” says Harley Feldberg,
president of Avnet Electronic Marketing Global, the Avnet division responsible
for component distribution. “We’ll have a build up through the summer and into
the calendar year-end. That speaks to the digital consumer nature of that
market.”
While
Asia builds throughout the year quarter-by-quarter, Avnet is also experiencing
annual growth in Asia which suggests that the market is expanding in real
terms, not just building toward the holiday season. “We’re seeing year-on-year
growth as well as sequential growth,” says Feldberg. He notes that some of the
growth in Asia is coming from markets within Asia itself. “One of the things
that is driving Asia growth is that products are being sold into Asia itself,”
says Feldberg. “They’re becoming consumers of their own products. That’s the
growth we seek.”
The
developed markets of Europe and North America are behaving differently. For
Avnet, the European market includes the Middle East and Africa. The “America”
market includes Canada and Latin America as well as the United States. “For us,
Europe and America don’t act that different,” says Feldberg. “That business is
stable. ‘Stable’ is code for not exciting.”
There
are two areas within Europe and America where Feldberg is seeing more
substantial growth, Mexico and Eastern Europe. They are both little markets, so
that growth is a small portion of Avnet’s overall global business. “We’re
seeing growth in Mexico and Eastern Europe,” says Feldberg. “They are both
exciting markets, but the they pale in size compared to China.”
While
much of the growth in Mexico and Eastern Europe comes from contract
manufacturers, Feldberg is also seeing some indigenous consumption. “We think
Mexico and Eastern Europe will continue to grow because the demand is not all
from outsourcing.” Feldberg also pointed to India as an up and coming market.
“The demand in India is from outsourcing and indigenous consumption,” says
Feldberg. “Just think of how many cell phones they’re buying.”
Over
the coming year, Feldberg expects continued growth in all global regions,
though that growth will be slower than originally projected. “If you follow the
prognosticators, they’re pulling down their 2007 forecasts,” says Feldberg. “If
you go back in time, they were all equally wrong when they projected 10 percent
growth globally. Now you see those numbers coming down closer to 5, 6 or 7
percent.” Feldberg notes those percentages will rise when the communications
market turns to greater growth.
He
points to one market in Asia that behaves differently from the rest, Japan.
Since Japan is a developed market, it behaves more like the other developed
regions. “The market in Japan is looking pretty good, but it seems to be
tracking similar to Europe and North America,” says Feldberg. “But we’re still
excited about the growth there.”
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