Prospects of growth but West European electronics industry continues to face global pressures

Oxford, UK, February 2006

Electronics output in Western Europe remains significant. According to Reed Electronics Research’s (RER) annual survey, production in the region amounted to Euro 192 billion in 2004, around 19% of the global total. The sharp decline between 2000 and 2003, when electronics output fell by just under 30%, has moderated although with pressure on prices and the increasing need to relocate to reduce costs, overall output has continued to edge downwards. Output in real terms declined by 0.7% in 2004 and was forecast to fall by 1.3% in 2005.

Other findings include:

- The sharp decline in the communications and IT sectors, in particular, has had a significant impact on the industry and most notably in France and the UK , where a combination of lower demand and the migration of production to lower cost locations has seen output fall by 37% and 45% respectively between 2000 and 2004.

- Germany , with its strength in automotive and industrial has not been as badly affected. After falling by 16% in the period to 2002 production has increased in the subsequent two years, albeit only modestly, with overall production still remaining below 2000’s level.

- In spite of its poor performance in recent years Italy continues to be Europe 's fourth largest electronics market behind Germany , France and the UK . In 2001, however, it dropped to fifth behind Ireland in terms of overall output - a position it retained in both 2004 and 2005.

- Communications, including both fixed and wireless, accounted for the largest share of electronics output in 2000 and has remained the largest product group although over the period to 2004 its share of the total has fallen from 31% to 28%. In contrast industrial has increased its share of the total from 18% in 2000 to 23% in 2004 and highlights the growing importance of the sector. Pressure on prices continues to impact all areas of the industry and in particular the component sector.

Reed Electronics Research (RER) specialises in providing international business information sources designed to assist senior management, marketing and business development personnel, industry watchers and analysts in keeping abreast of changes, developments and other factors affecting their business. RER is part of the global Reed Electronics Group a part Reed Business Information a leading provider of critical information and marketing solutions to business professionals and a member of Reed Elsevier.