All Hope is Not Lost in Consumer Electronics

Much like the entire electronics supply chain, the consumer electronics business has not been immune to the effects of the global economic downturn in the first half of 2009. But despite these terrible times, some consumer segments are not just holding their own, but prospering, according to iSuppli Corp.

Global consumer electronics equipment revenue is still expected to decline by 8.2 percent, coming in at approximately $308 billion, down from $335 billion in 2008. But iSuppli expects recovery to begin in 2010 with 2 percent growth to $314 billion. Growth will continue through the five-year forecast period, reaching $370 billion by 2013.

LCD-TV Going Strong
Liquid Crystal Display-Televisions (LCD-TVs) performed better than expected in the first half of the year due in part to incentives in China. LCD-TVs will continue to be the strongest consumer-generating revenue source in the market through 2013.

While the downturn hit prices of LCD-TVs from a panel and semiconductor point of view in the first half, this is expected to stabilize as the global economy recovers in 2010. However, this will not stop the long-term decline of LCD-TVs Average Selling Prices (ASPs). This is due to:

* A shift to smaller-screen and lower-priced models.
* Aggressive retail pricing and rising pressure on panel manufacturers.
* Increases in manufacturing efficiency.
* A larger portion of the Bill of Materials (BOM) moving to the cost of Light Emitting Diodes (LEDs) as they take an increased share of backlight functionality.

Growth in the Box
Other segments that are performing well in the face of the downturn include Set-Top Boxes (STBs) and game consoles.

All signs point to a positive first half for STBs and game consoles. This is because sales of premium boxes— i.e., those supporting High Definition (HD) content and a hard drive—continued to surge, particularly in the Digital Video Recorder (DVR) arena. The switch to digital broadcast signals has also helped in this area as many consumers using terrestrial broadcasting had to purchase STBs in order to access local programming, or they had to move to satellite or cable.

Solid growth due to the increased demand for DVRs and HD content is expected for the foreseeable future globally, including the Asia-Pacific region that is experiencing a surge in demand.

Meanwhile, game platforms seem somewhat immune to the economic recession as iSuppli expects to see slight growth in volumes in 2009, although the continued decline in revenues due to already falling ASPs will impact margins. With the strong likelihood that Sony Corp. will cut its PlayStation 3 price by $100 this holiday season, sales of game consoles should remain solid through 2009 and into 2010 when more price cuts may occur. Microsoft Corp. already slashed its Xbox 360 price to $199.

While the market remains grim in most areas of the consumer space—including Digital Still Cameras (DSCs), Portable Media Players (PMPs), camcorders and home appliances—all is not lost in the year 2009 as some segments continue to flow upstream in the economic recessionary flood.