As bad as the air cargo industry has fared in recent years, the woes would be so much greater if not for steady growth in U.S. electronics exports. Though not as flashy as exports of aerospace equipment and automobiles, nor as massive as outbound agriculture shipments, strong electronics exports suggest the U.S. still has a high-tech competitive edge. Unfortunately, sluggish economic growth abroad has shorted the export momentum.
The electronics industry only recently recovered from the supply chain disruptions caused by Thai flooding in December and the Japanese earthquake and tsunami earlier in the year. Despite these disruptions and the slower global economy, the industry saw growth in 2011 and expects to see more this year.
Semiconductor Industry Association members, which make up about 90 percent of the U.S. semiconductor sector, expect to see single-digit overall growth this year, with roughly 82 percent of their sales outside of the U.S., said Brian Toohey, association president. The majority of the association members are U.S.-based, and the rolls include heavy hitters Texas Instruments and Intel, along with smaller players.
The U.S. semiconductor industry boosted its global market share last year from 48 percent to 51 percent, reinforcing its lead over Japan, South Korea, Europe and Taiwan. Global semiconductors sales topped $300 billion in 2011, more than double the sales of a decade ago.
“We have seen tremendous growth in Asia,” Toohey said. “China accounts for about 40 percent of the consumption of semiconductors.”
The growth also is driven by semiconductors having a greater role in everything from automobiles to industrial control equipment. That trend appears to have dampened the cyclical nature of the industry, which traditionally saw surges of orders as companies replaced old equipment. But after SIA member sales rebounded 32 percent year-over-year in 2010 as the economic recovery took hold, sales still inched up 0.4 percent in 2011, Toohey said.
The healthy sale of semiconductors bodes well for the overall electronics industry, because semiconductors are a foundation technology. But the economic slowdown in Europe and Asia stunted that growth, helping to pull sales down 1.3 percent in February year-over-year.
“Overall, the combination of improved U.S. macroeconomic factors along with sequential semiconductor sales growth in the Americas region warrants an optimistic view for growth in 2012,” Toohey said.
U.S. consumer electronics exports appear to be holding their own, as total industry sales increased 7.9 percent year-over-year to $195.2 billion in 2011, according to the Consumer Electronics Association. The biggest opportunity for consumer electronics export growth is in specialized products, such as smartphones and high-definition 3D products. That’s where U.S. producers can still use innovative design to compete with lower labor costs abroad.
The growth of U.S. exports of workhorse electronics, including power equipment, lighting systems and medical imaging, also is tapering off after expanding 12 percent year-over-year in 2011, according to NEMA, an association of about 450 electrical manufacturers.
Timothy Gill, NEMA director of economics, expects export growth in the mid-single-digits this year. The biggest markets continue to be Canada and Mexico, accounting for about a third of exports. Unsurprisingly, exports to Asia appear to be rising, as members see China flexing its automation investment in factories amid rising labors costs, Gill said.
Recently, domestic sales have outpaced international sales, largely because of the slowdown in European and Asian economies, and the steady growth of U.S. business. “We are definitely seeing the effects of what is happening overseas,” Gill said.
“We haven’t seen the same type of fall-off in Canada and Mexico.”