Outlook for APAC General Purpose Test and Measurement Equipment Market
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Outlook for APAC General Purpose Test and Measurement Equipment Market |
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General Overview The burgeoning communications sector drives the general purpose test and measurement market in Asia Pacific (APAC), moderately pushing up demand. Rising electronics exports from Japan, South Korea, Taiwan and Southeast Asia is also slated to have a positive impact on the market. However, China is becoming increasingly reputed as a “low-cost manufacturer” and is growing at a breakneck speed, which is likely to significantly lessen the demand for general purpose test and measurement equipment in the APAC region under study. Manufacturers are resorting to mass exodus towards China, resulting in a drain in the manufacturing base which is expected to restrain the market. Companies in Southeast Asian countries are struggling to compete “head on” with the low-cost Chinese electronic and semiconductor manufacturers. Total demand from Australia and New Zealand and the smaller Southeast Asian countries such as Myanmar, Sri Lanka, Vietnam and Thailand is likely to remain the same without any significant increase. All these factors combined are expected to account for moderate growth of the general purpose test and measurements market in APAC. Market Landscape With more than 60 participants ranging from global stalwarts such as Agilent, Tektronix, Fluke and National Instruments to local niche vendors, including Cleverscopes and LG Innotek competing in the market, the competition is intense. Price-based competition is common for basic test and measurement equipment such as scopes, multimeters, function generators and LCR meters, especially in the low-end and mid-end segments. The situation is anticipated to get worse with the influx of low-priced products from China. The Asia Pacific region has long been stereotyped to be very price sensitive. Hence, price-based competition is expected to exert huge pressure on the participants in the low and mid-end segments. The scenario in the high-end segment is quite different. Price considerations only rank second as brand equity plays a key role, with end users preferring popular brands such as Agilent, Tektronix and Fluke due to their advanced features. The PXI and PC-based instrument markets are very fragmented with multiple vendors offering a limited set of solutions. The communications sector is evolving rapidly as seen by the deployment of 3G, Wi-Max, Wi-Fi and Wi-Bro applications. This is expected to push growth in the general purpose test and measurement equipment market moderately. Slowly increasing military expenditure is set to sustain the growth rate for test equipment. VXI-based equipment is still the preferred instrumentation for military operations, but is being increasingly replaced by the rapidly growing PXI solutions. Southeast Asian countries are being increasingly recognized as low-cost, hassle-free destinations and this is expected to result in the mushrooming of the electronics manufacturing base. APAC in this study refers to the following countries in the Asia pacific region: Australia, Bangladesh, Cambodia, Indonesia, Japan, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea, Vietnam, Taiwan and Thailand The following factors are identified as market drivers:
• Communications industry spurs growth Chart 1.1 provides the sales break-up by country in the Asia Pacific general purpose test and measurement equipment market for 2005.
Chart 1.1 provides the sales break-up by country in the Asia Pacific general purpose test and measurement equipment market for 2005. Being the world’s second largest economy, Japan contributed between 43 percent and 47 percent of the total sales, with South Korea following closely at a share between 30 percent and 33 percent. Taiwan completed the top three in the APAC region with a contribution of 10-12 percent of the total sales. Key Observations
The total APAC general purpose test and measurement equipment market was valued at $656.2 million in 2005 and is expected to grow at a moderate CAGR of 5 percent over the period from 2005-2012. The communications, electronics manufacturing and military sectors are set to sustain growth, while the demand from the education sector is expected to persist at the same level with minor fluctuations. The current slowdown in the U.S. economy is expected to adversely affect exports from the APAC region. Rising interest rates across the world and increasing fuel prices are expected to hamper electronic exports, thereby having a negative impact on the demand for general purpose test & measurement equipment. Though the durability of such disturbances cannot be estimated with certainty, the overall growth is expected to remain stable, with the exception of small fluctuations occurring from vagaries in the electronics exports market and the exodus of manufacturers towards China.
This article was authored by Arun Kumar C, Research Associate, Industrial Automation & Electronics, Frost & Sullivan Asia Pacific, based out of the Chennai, India office.
Courtesy of Frost & Sullivan
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