Has spring arrived for Taiwan electronics industry? Only signs of spring seem to be appearing in Korea and China while Japan’s and the United States electronics industries remain in the midst of winter.
The global economy continues to weaken with no signs of a quick turnaround. Electronics markets in the United States; Europe, Japan and China remain stagnant.
Bucking this trend is the Taiwanese electronics industry which has greatly improved since mid January.
Last fall, as leaves from trees began to dry up and fall to the ground, the U.S. economy also dried up.
Worldwide, the automobile industry and the Taiwanese electronics industry were the first technology sectors to label the financial crisis the worst recession in 100 years.
Most large, global electronics companies announced wholesale employee lay-offs and instituted inventory consolidations throughout the pipeline.
Warehouse inventories, final products, and goods in process decreased dramatically, and fourth quarter production was reduced by nearly two-thirds. Mandatory worker vacations extended into the first quarter of 2009, extending the Christmas and New Year holidays for many.
One fall out from forecasts predicting a long recession was cancellation of plant and equipment capital expenditure improvement plans.
Prognosticators were spot on with their message for most countries; however, it did not hold true for Taiwanese printed circuit manufactures.
SEE ALSO
Asia hourly manufacturing wages vs developed economies
South East Asian manufacturing strategy
Asia labor costs and China manufacturing relocation impact considerations
During the third week in January, Taiwanese printed circuit manufacturers received a lot of unexpected orders. Planning departments attributed new orders to an adjustment in inventories due to low material levels, and thought the spike in activity was just a ‘dead cat bounce’.
However, the number of orders for February remained consistent and actually increased week after week.
This flurry of activity has spilled over to circuit board manufacturers; component suppliers, display panel manufacturers and material suppliers.
Additionally, a few electronics manufacturing services (EMS) companies had a busy February and March.
Taiwanese printed circuit board (PCB) manufacturers have now hired back a few production operators laid off earlier in the year, and larger Taiwanese PCB laminate manufacturers have operated at higher capacity in March compared to some previous months.
Why Taiwan and what product has sparked the orders for circuit boards?
Two predominant product front runners have emerged from the ashes.
The first product is the Net Book PC, a small-sized low-cost notebook computer with limited functions. The product launch in industry was very successful and this product category grew despite economic challenges. Taiwanese PC and mother board manufacturers played an integral part in the basic concept of netbooks and now enjoy a market share of more than 95%.
The second product is the smart phone. The smart phone category has also grown month over month despite a decline in traditional cellular phones. The majority of smart phones originate in North America or Europe, but most are assembled by Taiwanese manufacturers.
Economic stimulus
Another reason for the turnaround in Taiwan is the stimulus program launched by the Chinese government to prod along their own economy.
Money was injected into the consumer market, and helped generate demand for large-sized, flat panel TVs.
Fortunately for Taiwanese TV manufacturers and suppliers, their Chinese counterparts could not keep up with demand enabling this business segment to shift to Taiwan.
There are more reasons for the upswing in business within the Taiwanese electronics industry.
Taiwanese companies continuously look for new business avenues to pursue even in good times.
Taiwanese have a vast, worldwide information network that can act with a sense of urgency. Management teams for Japanese and American companies take a more reactionary approach; choosing employee lay offs and plant consolidations…lying in wait for an economic rebound, while Taiwanese companies are masters of their own destiny, and do not rely on government stimuli.
The strength of the Taiwanese lies in their beliefs that you reap what you sow.
Source: EPT Newsletter, VentureOutsource.com, April 2009
Get list of EMS manufacturers for your requirements (Its free)
Save time and money. Find quality EMS manufacturers. Fast. Venture Outsource has a massive, global database of contract electronic design and manufacturing capabilities. Speak with a Provider Advisor.
“Was able to very quickly find details on the important elements of setting up EMS and ODM partnerships, talked with an advisor for personalized info on quality providers matching our requirements while getting up to speed quickly about the industry and connect with key staff from like-minded companies and potential partners. Great resource.”
— Jeff Treuhaft, Sr. Vice President, Fusion-IO
Advisors tell you matches we find for your needs, answer your questions and, can share EMS industry knowledge specific to your industries and markets.
