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Sales Without Borders

If the electronics industry is so global, why do regional distinctions continue to be so important?

This question occurred to me when an astute EBN reader asked why optimism among US CEOs was such good news for the global economy.(See: CEOs More Confident, But….) That's not too tough — the US is a huge export market for every other region in the world. If US CEOs are feeling good about the economy, US consumers may loosen their purse-strings a bit more. If anyone stands to benefit from that, it's Asia.

Then the following press release came across the wire, beginning with:

    Semiconductor Industry Association (SIA), representing United States leadership in semiconductor manufacturing and design, and the heartbeat of American innovation, today announced that worldwide semiconductor sales for 2010 reached a record $298.3 billion, a year-on-year increase of 31.8 percent from the $226.3 billion recorded in 2009. Worldwide semiconductor sales in December amounted to $25.2 billion, a modest decline of 3.0 percent from the month prior in line with historical seasonality, and 12.2 percent higher than December 2009. Fourth quarter sales of $75.5 billion represent a 4.0 percent decline from the immediate prior quarter, and a 12.2 percent increase over the same period in 2009.”

More good news for the industry, I'm thinking. Then I read more of what Brian Toohey, president, SIA, said in the press statement:

    “In 2010, all major semiconductor product categories showed double-digit growth year-over-year. As semiconductors have been America’s top export over the last five years, it is important to note that the Asia Pacific region represents 54 percent of the total worldwide semiconductor market. The Americas semiconductor market only accounts for 18 percent of the world market.

    “Semiconductor design and manufacturing facilities are strategic to our nation’s economic growth. However, our industry is faced with fierce global competition and our policymakers and regulators must ensure that we have balanced tax, regulatory and trade policies to allow our industry to continue to flourish in the U.S. and remain America’s largest export industry,”

This is a common theme among many of the reports, analyses and forecasts that businesses are releasing of late: we celebrate global growth, but bemoan regional sluggishness. Yes, the US economy could stand more jobs, fewer taxes and a host of other things. And the SIA is representing the interests of its members, which is what it's supposed to do.

But at the same time, we can't rejoice that the global semiconductor market is growing but complain that US dominance of that market is eroding. Electronics is global; we import to and export from every region in the world and as long as one market is thriving — whether it's the US, Asia, or Europe — we all benefit from its success.

8 comments on “Sales Without Borders

  1. Anand
    February 1, 2011

    Barbara,

       Electronics industry is so global because regional distinctions plays major role. Typical product life cycle is, US will come up with idea and investment, design is done in India or China, Manufacturing is done in Singapore/China, packaging is done in China/malaysia. Its all a cycle. I still feel optimism among US CEOs has tremendous impact on this cycle though things are slowly chaning.

  2. Mydesign
    February 2, 2011

        Barbara, as a part of globalization all most all the countries had opened their internal markets for foreign investment with red carpets & other attractive soap facilities. Some of the key factors of globalization are they can take the advantages of economic growth, availability of skilled manpower, low labour cost, availability of raw materials etc. Since everybody wants to gain the advantage of these factors for their growth, companies had expanded their foot print outside the territory.

       Fortunately or unfortunately, only the developing nations (china, India, Singapore etc) got much advantage of this globalization scenario. They got the presence of big brands, more jobs are created, better economic growth for country and citizens, better living standards etc. Unfortunately their presents in multiple locations, forced them to cut down their existing operational size, which affected the economic condition of developed countries.

      In my opinion, countries like US, Europe etc have to come up with some key policy and guidelines for attracting investments, which can in turn generate better economic growth and job opportunities

  3. prabhakar_deosthali
    February 2, 2011

    Rightly said!  US is the originator of this complete business cycle and all others are just the implementors and beneficiaries from the business generated out of the initiatives coming from US. The core R & D still happens in US and China & India only participate in the applied R & D. And I think the main driving force behind the US core  R & D is the defense and space initiatives of the US federal govt.

  4. jbond
    February 2, 2011

    This is an excellent article. It is true that we all succeed globally as long as one or two major markets are thriving. The U.S. consumers need to realize that we are a global economy. We are as much an importer as we are an exporter. It is understandable that people feel the U.S. needs to remain dominant in the manufacturing industry, yet they fail to realize that if we can replace these jobs with other jobs in different areas we can thrive.

  5. garyk
    February 3, 2011

    The United states is losing control of the world manufacturing. Counterfeiting is in all areas of manufacturing. Gray Market electronics, this Gray Market will filter into the US Areospace and Military Electronic Equipment. We are seeing the tip of the iceberg with counerfeiting. Not to mention 10% of the worlds medicine is counterfiet.

    Govenments in other counties don't care, they just what to make money and control the manufacturing.

    How do you control Sales Without Borders?

  6. itguyphil
    February 3, 2011

    Where do you get those counterfeit figures? sounds like a major issue of concern.

  7. Barbara Jorgensen
    February 3, 2011

    There are many different ways to look at this, as readers point out. I guess what I find frustrating it US companies' willingness to take credit for great global sales, yet get snarky when other regions outpace our performance. I lean toward readers' observations that if the US is lagging, it's our own fault. It is true that it is not all  businesses' fault, the US government has made it difficult for US manufacturing to be lowest cost. But let's not forget most of the folks buying our products are not on these shores. It's disappointing, but it is a reality.

  8. garyk
    February 4, 2011

    Counterfeiting of electronic part is from SMT Magazine October 5, 2010.

    Conterfeit medicine is on United States TV all the the time

    Go to YAHOO and enter Counterfeit Medicine

    Gray Market for Electronics is in EBN 12/21/2010

    Anymore question? Let me repeat, United States is losing control. The world buys US and Japaness product because these countries can be trusted. Quit trying to be politically correct and face the facts. What facts? your figure out the facts. The worlds manufacturing is out of balance, out of control just for the sake of dollars.

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