Trends in global production and trade

This report examines key trends in global production and trade in Electronic Components. Our focus is on the competitiveness of emerging economies ('low-cost' countries, LCCs) as global source countries.

As to the composition of the Electronic Components industry, we distinguish between (a) electrical elements ('passive' components), and (b) electronic devices ('active' components).

The study is based on an analysis of cross-border trade flows. Flows of cross-border trade reflect the views of investors and traders on the ability of source countries to supply international markets.

Between 2002 and 2006, world exports of Electronic Components grew at an average annual rate of 17.1 percent.

With exports from emerging economies growing at a higher rate (23.2 percent), their share of world exports increased from 21.5 percent in 2002 to 26.4 percent in 2006.

Chart 1B suggests that LCCs are slightly more important as source countries for electronic devices than for electrical elements.

According to Chart 1C, Asia is the dominant low-cost source region for Electronic Components. Moreover, Asia's share of world low-cost exports has increased over time, approaching 95 percent in 2006.

The geographical reach of a product's supply chain reflects the tradeoff of users between (a) accessing the most competitive source of supply worldwide, and (b) the benefits of proximity to end-product markets.

In this study, we measure the reach of supply chains by examining the extent  to which imports from LCCs cross regional borders (as reflected in the relative size of intra and extra-regional import flows).

In this regard, Charts 2A and 2B reflect to the significance of Asia's advantage as a low-cost source region. Moreover, they bring out the large (growing) role intra-Asian supply chains in Electronic Components, especially in active ones.

Chart 3A lists the leading low-cost source countries for Electronic Components. With world export shares of 18.6 and 16.0 percent resp. Taiwan and China are the leading source countries, followed by South Korea (11.3), Malaysia (8.9), and Philippines (6.7).

Since 2002, the share of the Top-5 source countries in world low-cost exports increased by 3.2 percentage points to 89.8 percent in 2006. This points to a tendency of concentration in favour of today's leading source countries in the export of Electronic Components from emerging economies.

Between 2002 and 2006, Taiwan's share of world low-cost exports increased by 2.5 percentage points to 27.1 percent in 2006.

Relative to other LCCs, Taiwan has a slight advantage in electronic devices. Since 2002, Taiwan has lost some ground in electrical elements.

Between 2002 and 2006, China's share of world low-cost exports increased by 7.9 percentage points to 23.4 percent in 2006.

Relative to other LCCs, China's advantage lies in electrical elements. Since 2002, China has strengthened its relative position in electronic devices.

Between 2002 and 2006, South Korea's share of world low-cost exports rose by 2.2 percentage points to 16.5 percent in 2006.

Relative to other LCCs, South Korea's advantage lies in electronic devices. Over time, South Korea has lost ground to other LCCs in electrical elements.

Between 2002 and 2006, Malaysia's share of world low-cost exports declined by no less than 6.7 percent to 13.0 percent in 2006.

Relative to other LCCs, Malaysia has a competitive edge in electronic devices.

Between 2002 and 2006, the share of the Philippines of world low-cost exports declined by 2.7 percentage points to 9.8 percent in 2006.

Relative to other LCCs, the Philippines has an advantage in electronic devices.

Emerging economies are the origin of more than two thirds of world exports of Electronic Components.

Supply chains in LCC exports are, in large part, organised on a regional basis (with a focus on Asia as the dominant low-cost source region).

Based on our assessment of low-cost export flows between 2002 and 2006, we expect the following trends to shape global production and trade in Electronic Components in the short to medium term:

► Emerging economies continue to gain in importance as source countries for electrical elements as well as electronic devices.

► Leading ones ― such as Taiwan, China and South Korea ― strengthen their position as global 'hot spots' for Electronic Components.

Emerging economies (LCCs) are defined to include the 35 leading exporters of manufactures with a GNI-per-capita below USD 15 000.

Electrical elements: Plugs & sockets (< 1 KV), printed circuits, fuses (< 1 KV), switches (< 1 KV), transformers (< 1 KVA), converters, inductors, capacitors, resistors. Electronic devices: Diodes, transistors, digital circuits, analog circuits, hybrid circuits.

Export growth is calculated as the compound annual rate of growth between 2002 and 2006.

Specialisation is calculated as an index (–1.00 to +1.00), measuring the weight of a given product segment in a country's exports. A positiv index value implies a competitive advantage over other LCCs in this product segment.

Updated: January 2008