Current Status of the Electronic Industry Free Essay Example

The electronics industry has helped usher revolutionary development in modern manufacturing, affecting almost every industry around the world. This industry primarily focuses on the creation and distribution of semiconductor devices, integrated circuits, and transistors (Maloney, 2003). The industry has experienced repeated success in terms of innovation and development of new technology to provide for the increasing demand for consumers. Due to this, electronics have become the foundation and basis for a wide variety of goods and services supplied by various firms and industries (Kremer, 1993).

Personal computers, household appliances, automobiles, factory processes, communication devices, and entertainment machines are examples of products that are dependent on the electronic industry. One would experience difficulty in imagining a good or service that is not influenced in any way by the products that the electronic industry provides. With the advent of better technology, this allows the industry produce new electronic devices which in turn enable the improvement of existing products and the creation of more innovative devices.

This also allows the industry to provide consumers with better products yet at relatively lower costs (Lovitt, 1977). As the level of technology that we have improves, the electronic industry exponentially makes significant advances with it. The electronic industry has experienced overwhelming growth in the past several years. Around the world, the industry exhibited sustained growth for nearly a decade (LaPedus, 2008). Recent revenue and employee reports regarding the state of the industry have shown very satisfactory results, with an influx of demand for electronic components.

Analysts believe that we are experiencing the dawn of the information revolution, and that the industry will undergo significant growth over the next 10 years.

The industry was blessed with a 9 percent increase in growth in 2006, amounting to $249 billion. In 2007, growth rates were augmented to 10 percent, or $274 billion (LaPedus, 2008). According to the Electronic and Semiconductor Industry Association, increased growth rates for the industry over the next several years would not come as a surprise. The growth of the electronic industry can be attributed to the current demand trends that are prevalent in the market.

Consumers tend to purchase electronic gadgets that can satisfy their demand for entertainment, thus the electronic industry benefits from the demand leading huge boosts in sales. It is interesting to note that current computer hardware and most expensive personal computers are created not to cater the needs of the business sector, rather to satisfy game enthusiasts. The strong growth that the industry has experienced can be attributed to the increased consumption of electronic devices, most notably digital cameras, HD televisions sets, MP3 players, and DVD players.

These following devices account for nearly 20 percent of total semiconductor consumption. Cellular phones make up another 20 percent of semiconductor demand. Unit sales of these components continue to increase, with cellular phone demand to increase to over a billion in 2008 (LaPedus, 2008). Consumers have become increasingly dependent to the use of technological devices. We can infer that demand trend of the current consumer market can significantly affect the electronic industry. Changes of preference of the community and the customers can have impact on industry.

However, with the current economic recession that the globe has been facing, sales are expected to decline along with the downturn of the electronic industry. Electronic industries and firms employ billons of workers around the globe. Employment also affects the status of the industry since a large potential workforce translates to larger potential gains, and competition between companies may lead to more efficient production (Yefim, 1992). The labor force has the capability to affect business decisions regarding the industry thru labor unions.

Aggressive labor unions are able to promote wage increases and huge bonuses that the industry may not afford, and the effect may halt production across firms. Another variable has affected the electronic industry in the recent years is the political stand of a country. The United States has put great importance in protecting their country and has allotted a significant percentage of the national budget to the defense industry. With the demand generated by the government and the services provides to protect its people, the electronic industry caters around 80 percent of the demand for these devices.

Modern warships, submarines, tanks, homing devices, and x-ray machines at airports are products of this industry. Changes in the political scenario can cause repercussions in the industry, demand for national defense chances and a decline or improvement in the industry can be observed, as majority of the components are being supplied by the electronic industry. The economy of the nation is a factor that plays a vital role in determining the status of the electronic industry. It can be observed that economic growth and productively can affect the rate of technological advances.

It can also be seen that as the level of technology improves, the industry enjoys higher profits which lead more potential investments which can cause economic growth. The industry is expected to grow as the economy continues to grow as there exists a strong relationship between them (Chute, 1971). If the economy experiences trouble and becomes stagnant, the rate of technological advances slows down and an industry downfall is expected to happen. The effect of the stalling of technology development is a slowdown of growth and productivity, if this persists then the economy will most likely be affected as well (Maloney, 2003).

The looming energy crisis also is likely to negatively affect the growth of the industry as technology development slows down. However, the players in the electronic industry are confident that growth can be sustained in the following years. The economic crisis that the economy has been undergoing has affected the electronic industry in multiply ways. Gartner Research, one of the world’s leading information technology research company, has reported that semiconductor sales in the fourth quarter of 2008 has declined by 24.

4 percent, one of the largest shifts that the industry has gone through. The possibility that the industry will continue to fall in 2009 is increasing as the past year has not been good for the economy and the electronics market. 2008 market shares amount to $261 billion, a 4. 4 percent decline compared to last year’s shares. According to Bryan Lewis, research vice president of Gartner, the current economic downturn is broad-based, and is definitely not limited only to the technology market.

While other executives compare the current industry decline to 2001’s technology bubble, Lewis disagrees with this sentiment stating that current inventory levels are being controlled and monitored, which will allow the market to recover faster. With a large amount of uncertainty present in the market, most companies are taking a safer strategy by keeping inventory levels at a minimum, allowing the industry a more stable entrance into 2009 (Lewis, 2008). Although the global economic recession that we are experiencing is currently bringing down the electronic industry, experts predict that the industry will be able to bounce back in 2010.

The current status and the future of the electronic industry are linked to a large number of factors. This is because that almost every industry is tied, link and is somehow connected to the electronic industry. The nation’s economic status, government and political stances, and consumer preference are all factors that affect the electronic industry. References Chute, R. (1971). Electronics in Industry. McGraw-Hill. Gartner. (2008, December 16). Gartner Says In 2009 Semiconductor Industry Will Experience Consecutive Years of Declining Revenue for the First Time in Its History.

Retrieved April 2009, from Gartner Newsroom: http://www. gartner. com/it/page. jsp? id=83951 Kremer, M. (1993). Population Growth and Technological Change: One Million B. C. to 1990. The Quarterly Journal of Economics. LaPedus, M. (2008). Growth of consumer electronics drives semiconductor industry to new heights. Manufacturing & Technology News. Lovitt, W. (1977). The Question Concerning Technology. The Question Concerning Technology and Other Essays. Maloney, T. (2003) Modern Industrial Electronics. Prentice Hall. Yefim F . (1992). Process Improvement in the Electronics Industry. Wiley-Interscience.