Prismark Partners consultants, based in Cold Spring Harbor NY, is having its 30-year anniversary this year. As part of that celebration, Jeff Doubrava of Prismark has taken a look at what has happened in the electronics industry over the past 30 years.
First, let’s see what was going on in 1994 from an electronics industry perspective…
Electronics Systems, 1994-2024
Below we see a breakout of growth in electronic applications over the 30-year time period.
At the systems level, the electronics industry has grown at a compounded average annual rate (CAGR) of 3.7% over the past 30 years. PCs were the major growth driver in the 1980s and early 1990s but had begun to mature by 1994. Cell phones took their place with sales of only 26M units in 1994. The mobile market grew at almost a 25% CAGR over the next 20 years. It peaked at 1.75Bn units in 2014, before beginning to mature a few years later.
Prismark shows that the smartphone market growth was without question the major technological event of the past 30 years, driving the growth of many OEMs such as Motorola, Nokia, Alcatel, Apple, Samsung, and LG and creating new supply chains such as camera modules, Bluetooth, HDI PCBs, OLEDs, etc. Smartphones, PCs, and TVs are now considered mature replacement markets, with growth gated by the global economy and awaiting feature-driven replacement cycles.
Recently, Prismark has seen the electronics industry growth drivers shift to automotive and infrastructure applications (industrial, medical, military, and aerospace). These new drivers are defined by more modest unit volumes – 10s or 100s of millions, not billions, generally higher ASPs and long expected lives.
The growth of infrastructure applications is backed by three major tailwinds: data growth (servers, routers, base stations), automation (automotive ADAS, AI servers, and chipsets), and concern for the environment (PV, rechargeable batteries, xEV, SiC). These macro drivers, Prismark contends, are still in their early days and are poised to drive the electronics industry over at least the next ten years.
Growth of the Global Electronics Industry Supply Chain
Over the past 30 years we have seen transitioning from local production by vertically integrated US and European OEMs such as IBM, Siemens, Philips, and HP, to the rise of similarly vertically integrated OEMs in Japan and South Korea (e.g., Sony, Samsung, Hitachi, Fujitsu, Matsushita, LG) and most recently to companies headquartered in Taiwan or China. In parallel with these geographic shifts we have seen a movement from largely captive production at all levels of the supply chain to an increasingly merchant model led by specialists with OEMs now focused on design and services. A new geographic shift is underway that is still in its early days – a new focus on manufacturing in countries outside of China: Vietnam, Malaysia, Thailand, India, Indonesia, and Mexico.
Lastly, let’s take a look at some of the major changes that have occurred over this 30-year period as shown below in Figure 3.
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