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Malaysian E & E Sector


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Frost & Sullivan analysis of the Malaysian E & E Sector

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Malaysian E & E Sector

  1. 1. Malaysian E & E Sector A Quick Overview of Trends & Challenges Looking Ahead Sanjay Singh Frost & Sullivan
  2. 2. Agenda • Global Electronic Trends • Malaysian E&E Overview • Issues and Challenges for Malaysian E&E Sector 2
  3. 3. Global Electronics Industry Trends Measurement Est. Global E&E Revenues, 2009 $3.2 trillion Est. Global Semiconductor Revenues, 2009 $230 billion  Mobile phones and PCs will continue to do well through 2010  Smartphones & converged mobile devices witness growth in most markets  An increase in broadband penetration will drive growth of devices  HDTVs & Web-enabled TVs will be an interesting segment to watch  3D TV & Electronic book readers are likely to make headway in 2011 3
  4. 4. Semiconductor Market in 2009 COMMUNICATIONS C O M C P O U N T S E U R M S E R Total semiconductor revenue for 2009 stood at ~ USD230 billion 4
  5. 5. Consumer Electronics/Computers : Faster, Smaller, Cheaper and Innovative with Even Shorter Development Life-Cycles – Growth Drivers for Semiconductors From Laptops To Tabletops Mobile Phones: Projection, From 2D to 3D HDTV Visual Search and Morphing Holographic “Projection Keyboard” Mobile Projection Technology Technologies in 2020 3D HDTV– use of auto stereoscopic displays with micro lenses) to Touchscreen Window With Built-in transmit images differently to right Camera, Scanner, Wi-fi, Google Maps Intuitive Search Tools. and left eyes Laptops with integrated monitor and keyboard. E-Media E-Book E-Newspaper Reader Morphing– Allowing Users to Transform Mobiles Into Different Shapes 5
  6. 6. Malaysian E&E Sector Malaysia E&E Exports, 2008-2009 E&E Industry in Malaysia – Market Overview Year Total Exports Malaysia E&E exports  More than 1,700 E&E companies, 28.8% of labor force  Major segments – Industrial electronics (RM111 billion), 2009 RM411.4 billion RM227.8 billion Electronic components (RM97 billion) 2008 RM464.5 billion RM255.4 billion Electronic Consumer Electronics Electrical Equipment Components • Leading companies are • Mainly Semiconductors • Major Malaysian undertaking R&D manufacturing products - air-cons, activities in Malaysia to undertaking ATP refrigerators, washing support their APAC • Industry is volatile. machines and vacuum markets. • Constitutes 38% of the cleaners • USD6.9 billion in total electronics exports exports 6
  7. 7. Malaysian E&E Sector Global OEMs like Samsung, Hitachi, Matshushita, Mitsubishi, Toshiba & Contract Manufacturers like Flextronics, Celestica, Solectron and Jabil Circuits Cash Cow, Mature Production High Tier Local Suppliers Mass Can the lower like BCM, Globetronics Production, tier companies Unico, LKT, Eng Process at the bottom Teknologi Innovation support the upper tier? Low tier Commerciali Mfrs zation, Testing, Limited Production Innovation, R&D, Testing Focus time 7
  8. 8. Are we stuck in the middle ? High Value added per employee Malaysia in transition..?? Knowledge Based Labor / Cost based Resource based Low R&D Technology & Product Assembly & System Marketing / Packaging Distribution Process Creation Design testing solutions Branding TECHNOLOGY CAPABILITIES: Application / operation Process innovation Product innovation Marketing Country Competitiveness 8
  9. 9. Emerging Trends 1. Greater “electronic”ization of products and technology convergence with globalized production networks 2. OEMs to outsource more activities and products to focus on activities adding higher value and those serving as core differentiators 3. Expectations of higher growth trends and EMS adoption in niche areas like healthcare (medical equipment); A&D; Industrial and Automotive • ODM model is better suited to product categories (i.e. PC, notebooks) where IP is subsumed in the components • EMS model is best suited to product categories (i.e. medical equipment, network infrastructure) where IP is held by OEMs 9
  10. 10. Emerging Trends • Moving forward, the following key forces / issues are expected to impact EMS / ODM companies • “Green” factor • “Bottom of pyramid” market / segments • Emphasis on Support and Services • Companies need to take these into account as a part of their business strategies • Can Malaysia leverage its strengths to capitalize on the same? 10
  11. 11. So what are the key issues before Malaysian E&E? Foreign Investments • FDI inflow into E&E sector lacking • In 2009, Global FDI dipped by 37%, Malaysia’s FDI fell by 81% from 2008 • Measures by the government to reverse this trend • Liberalization in key sectors of the economy • New Economic Model (NEM) • Economic Transformation Program (ETP) • Record of RM14 billion investments for the 1st six months of 2010 Human Capital the weak spot in Malaysian E&E • One of the key factors under the New Economic Model (NEM) • Quality & Quantity • Foreign Talent • Policies to attract foreign knowledge workers • No top universities 11
  12. 12. Thank You! 12