Electronic Equipment Market Slows Even as PC Market Perks Up

August 6, 2007

This article is included in these additional categories:

Automotive | Government & Politics | Telecom

Following three years of strong growth, the global electronic equipment market’s expansion will decelerate slightly in 2007, iSuppli Corp. predicts.

In the past three years the electronic equipment market has been exceptionally strong, with worldwide revenue growing 11%, 8.0% and 7.7% in 2004, 2005 and 2006, respectively; the strongest growth has come from PCs, mobile handsets and hot consumer-electronics products such as MP3 players and digital televisions, according to an iSuppli report.

“All major markets generated positive growth in 2005 and 2006 and all these areas will continue to expand in 2007, although the total electronics equipment growth in 2007 will drop to 6% as the wireless, consumer and industrial markets cool – even as the PC market revives,” said Gary Grandbois, principal analyst with iSuppli.

Among the report’s findings and forecasts:

  • A minor slowdown in the PC market occurred in 2006 as the market for desktops flattened, even while mobile PC unit growth remained high; that strong growth has continued in 2007 with robust first-half demand that may put mobile PCs on track to repeat their 28% unit growth of 2006.
  • The second quarter of 2007 was something of a surprise for the PC market, with much stronger growth than typically seen at that time of the year.
  • Mobile handset growth remains vibrant in 2007 and is expected to end the year with a 10% unit increase. However, revenue growth will be only 5% as average selling prices (ASPs) continue to decline.
  • Semiconductor revenue for wireless communications grew 14.2% in 2006, driven by the 20.7% unit growth of handsets.
  • The 2007 semiconductor revenue growth for wireless communications will be 7.7% as the handset unit increase slows to 10%, one of the many factors behind the present slowing in the semiconductor market.


  • The frenzied demand for new consumer-electronics products over the past four years has also slowed:
    • Revenue growth for the consumer-electronics market dropped by about one-third in 2006, to 9%.
    • Growth will decline by more than one third in 2007, to a smaller, but respectable 5.2% revenue growth as the market slows and ASPs continue to plummet.
  • The wired communications segment is expected to post 3.1% growth in 2007.
  • Automotive electronics are expected to post a 3.9% increase in 2007, a weaker trend than seen in recent years.
  • The industrial market rebounded to 8% revenue growth in 2006 as the military/aerospace, medical and semiconductor manufacturing equipment markets grew strongly.
  • However, industrial market growth has flattened in 2007, especially in the semiconductor manufacturing equipment sector, and the total industrial market is expected to post 5.8% revenue in 2007.

Although first-half electronics equipment growth was down by nearly 6% compared with the second half of 2006, that is a fairly typical seasonal pattern – PCs, mobile handsets, and consumer electronics typically show much stronger growth in the second half – according to iSuppli.

The normal exception is the industrial market, which typically grows more strongly in the first half of the year, and 2007 will show the same pattern as the industrial market slows from 4% growth in the first half to 2% in the second half, iSuppli forecast.

Despite this industrial counter-trend, the total electronics market will post a double-digit, 12%, growth in the second half of 2007 to bring the annual electronics equipment growth to 6%, iSuppli said.

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