HIGH-TECH & ELECTRONICS
Industry Executives See
Choppy Recovery Ahead, But
They Remain Confident
The global recession of 2008
and 2009 hit the high-tech
and electronics industry
hard, with many companies
experiencing double-digit
sales declines and profit
erosion. Yet, in discussions
with these companies, they
remain highly optimistic for
the future and believe they
have used the global recession to retrench, drive out
cost inefficiencies and better position themselves for
the future.
—Simon Ellis, Supply Chain Strategies
practice director, IDC Manufacturing
Insights
igh-tech and electronics companies, those we refer to as Technology-Oriented Value Chain (TOVC) manufacturers at IDC Manufacturing Insights, have had a tough couple of years. They operate
in a complex supply chain environment where fragile inventory,
However, the segments that make up the technology-oriented value chain—
high-tech equipment, consumer electronics, semiconductor, electronic manufacturing services—may have had the most uneven recovery. Sustained demand for
new consumer devices continues to be hampered by critical part shortages and
supply chain snags. For this value chain, it may be as much about control as
cadence when it comes to further growth, and IDC Manufacturing Insights expects
companies will look to create capabilities that better link demand signals to supply
position. This links to the development of new capabilities, where high tech and
electronics companies see improved visibility and supply chain responsiveness as
ways to drive enhanced business value and manage demand volatility. Overall, IT
investments for TOVC companies look to bounce back somewhat in 2011, with
spending growth of 4. 3 percent versus 2010.
Interestingly, high-tech and electronics companies are also the segment of
manufacturers most interested in variable cost structures as a way to hedge, at the
design level, against business fluctuations. We see this, certainly, in the outsourcing of operations, but also in the approach to IT systems with SaaS and cloud
applications, and with people through contracting and skills outsourcing. High-tech companies, for example, have long been the most collaborative manufacturing segment in terms of new product design with suppliers and contractors.
H
The Outlook
Expect to see a continued choppy recovery for high-tech and electronics manufacturers in 2011 but with a sense of clarity for the future in things like visibility
and supply chain responsiveness. IT investment levels are growing, with a
healthy focus on both capability building and servicing the customer.
