ELECTRONICS INDUSTRYELECTRONICS INDUSTRY

PRESENTED BY

Hemant Nikalje

Kiran Kumar

Jaideep Patil

Kaustav Ghosh

Manish Khubchandani

Vikas Kumar

Current ScenarioCurrent Scenario

The electronic industry is growing at a brisk pace

According to EIA estimates, it has the potential to reach US$ 70 billion by 2010 and US $158 bn by 2015

The electronic industry in India constitutes just 0.7 per cent of the global electronic industry

Demand in the Indian market is growing rapidly

Investments are flowing in to manufacturing

SegmentsSegments

Electronic Manufacturing ServicesElectronic Manufacturing Services

India is well-known for its software prowess

Nearly 50 companies are present in India

Revenue generated is $2.3billion in 2009

Reasons for growth

Labour costs in India are between 30 to 40 per cent less than in the United States or in Western Europe

Contd……Contd……Fast-growing domestic market

An excellent education system

Nation’s technology parks

Recent improvements in the country’s transit and utility infrastructure.

Risks

Fluid exchange rates combined with volatile oil and component prices lead to unpredictable costs

Changing government policies along with shifting government regimes causes unpredictable political environment

Electronic Contract Electronic Contract Manufacturing RevenueManufacturing Revenue

Contd…….Contd…….Increasing number of engineering and design

activities are also being outsourced to EMS companies and they are becoming ODMs (Original Design manufacturers)

India can target 2.2 per cent of the world-wide electronics EMS market of US$497 Billion by 2010 which works out to a potential of US$11 billion.

Several MNCs have been looking at Several MNCs have been looking at setting up contract manufacturing setting up contract manufacturing in Indiain India In Ranjangaon, near Pune, Jabil, has

1,75,000 sq.foot facility located.

Printed circuit board, enclosure integration and distribution and repair services with in-region design services support

To serve the consumer, instrumentation, networking, peripherals and telecommunications industries

Key players – Contd..Key players – Contd..Flextronics ventured into India in 2001 when

they purchased a Motorola facility They offer printed circuit board assembly,

box builds and testing services in India

Focus is on providing higher-value, higher-margin design services for cell phone and telecom/networking software

Nokia and Alcatel are among the existing customers of the newly-formed division

Contd..Contd..Nokia, Elcoteq, Solectron and many more have

made large investments to access the Indian market.

In consumer electronics Korean companies such as LG and Samsung have made commitments

They established large manufacturing facilities and now enjoy a significant share in the growing market for products such as Televisions, CD/DVD Players, Audio equipment and other

entertainment products.

Porter’s Five Forces Model of Competition

Threat of New Entrants (Medium)

Many MNC’s are already well established

Requires investment in localization and distribution reach

High growth rate could attract new entrants

Bargaining Power of Suppliers (Low)

Most suppliers are small in scale and size as compared to manufacturers

Suppliers are forced to cut their prices or go out of business

• Direct negotiation with suppliers in order to encourage:

Reliable supply Faster delivery Lower prices

• Many OEMs start to produce their own components in-house

Bargaining Power of Buyers (Rather High) Wide choice of products available

Buyers face few switching costs

Well informed, increasingly demanding customers

Buyers are price sensitive and demand high quality

Buyers compete with the supplying industry by: bargaining down prices & forcing higher quality products

Threat of Substitute Products (Low)

No substitutes currently for products in this sector

There are few substitutes from other industries, if any

For example:

Digital Camera in the place of Film Camera

Fax machines in place of overnight mail delivery

Rivalry Among Existing Competitors (High)

Well established, strong players

Brand, cost and distribution are key differentiators

Lack of differentiation or switching costs

Imitation of technology

Counterfeit products

Low profit margins

High exit barriers

Growth DriversGrowth Drivers

Fast growing sector is telecom services particularly cell phones

Internet subscribers lead growth in demand for its products with increasing penetration of computers, & Government support to rapidly encourage usage of IT in all sectors.

Highly talented workforce, especially for design and engineering services with good communication skills.

Production Trend for different Production Trend for different Segments :Segments :Consumer ElectronicsConsumer Electronics

Consumer electronics sector is key segment to driving growth.

Consumer electronics, components and computer Hardware appear the most attractive segments for investment, in terms of size and growth

Consumer electronics (durables) industry contributing about 32 per cent of the total electronic hardware production

Computer IndustryComputer Industry

The high growth in PC sales is attributed to increased consumption by Industry such as Telecom, Banking and Financial

Services, Manufacturing, Education, Retail and BPO/IT-enabled services as well as major e-Governance initiatives of the Central and State Governments

Control, Instrumentation and Industrial Control, Instrumentation and Industrial SectorSector State-of-art and reliable PLC/Data

Acquisition systems are being applied across various sections of the process industry

Communication & Broadcasting SectorCommunication & Broadcasting Sector

DTH service is available through National Broadcaster and private DTH service provider.

Better quality digital broadcast reception is now available almost everywhere in the country

ExportsExports India is an exporter of a vast range of electronic

components products for the following segments.

• Entertainment electronics• Optical Storage devices• Passive components• Electromechanical components• Telecom equipment• Transmission & Signaling equipment• Semiconductor designing• Electronic Manufacturing Services (EMS)

Key challenges this industry Key challenges this industry facesfaces

Infrastructure

Changing governmental policies

Inadequate component supply base

Equipment manufacturers needs to import all of the components needed to assemble boards and/or systems

References References http://www.elcina.com

www.ibef.org

Electronics Industry PDF