Year-end surveys tend to be pretty optimistic, or at least they find one silver lining amongst the clouds. Nobody wants to set a tone of pessimism for the upcoming year.
Then there's reality. In spite of reports that the unemployment rate is decreasing (temporarily); the EU is close to an agreement on debt management (we've heard that before); and the tablet computer market is skyrocketing (mostly Apple), companies in the electronics supply chain believe the next few quarters will be tough.
On a scale of 1 to 10 (with 10 being the most optimistic), VentureOutsource respondents rate their current outlook at an average of 5.34. That's down 10 percent from a survey the company conducted six months ago. "The survey results show that the outlook for the electronics supply chain has become very pessimistic and does not see much improvement over the next two quarters," the report says.
The demographics of the report show that the great majority of respondents -- 87 percent -- are responsible for participating in purchasing, sales, and operational decision making. Nearly one in five works in the PC industry.
One of the report's more interesting analyses comes from the semiconductor manufacturing industry. VentureOutsource notes recent results from companies such as Intel are very positive, but smaller firms are reporting mixed results. Overall:
The semiconductor segment is seeing revenue growth slowing and layoffs are starting to take place. In certain areas growth prospects are better, but overall the next several quarters will be challenging for semiconductor firms.
Semiconductor end-user demand is not expected to see any sharp uptakes and prices for most areas are expected to decline. There are few reasons for semiconductor decision-makers to be optimistic, except that inventories have already tightened, which means any uptick in demand may prove beneficial to their organizations being upstream in the supply chain.
EMS/ODMs, on the other hand, are likely scared of the order volatility they have seen and the worsening end-user demand climate. With the exception of a few areas, most product segments are expected to see weak demand through 2012 and this likely concerns most EMS/ODM executives.
The report adds that developing markets, which so far have been a bright spot for electronics, are now starting to feel the economic pain. China’s growth is slowing as both domestic and export markets show weaker demand. As to how the industry can meet these challenges, VentureOutsource notes that EMS/ODM companies have already taken steps through the last recession to right-size their operations and take costs out. Any slowdown will only cause further damage.
No doubt this is clearly bad news for Intel in the short run, but this news is blessing in disguise for Intel because it has been trying to build a business in the emerging category of ultrabook computers or ultrathins, which do not use hard drives.
a couple of new stats to add: TI and Altera both lowered their Q4 expectations--TI in a big way. Here's the link: http://www.prnewswire.com/news-releases/ti-updates-fourth-quarter-2011-business-outlook-135273503.html
mfb: the report does talk a bit about the supply chain's ability to invest in technology to drive better efficiencies. That spending is limited, although there are low-cost alternatives out there such as the cloud. There will be spending in Japan and Thailand as companies rebuild after the disasters.
I am wondering if people are undestimating the possibility of Internet and telecom technology for improving supply chain, cutting costs and make profit better, even in a critical financial condition we are experiencing right now. I could agree with the up/down trend, but I am not 100% convinced corporations are implementing innovation for their internal processes, for example. And it is a matter not stricly related to crisis, it is the way to manage and lead the industry. Maybe positive or negative perspective could be overtaken just by adopting the innovation attitude.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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