The mood was upbeat, the year is ending on a good note, and one thing was clear at electronica 2014: The future is connected!
By Arthur Visser
During this year’s electronica show in Munich, the mood was good and connector manufacturers showed good growth across the board – there was very little to complain about as far as 2014 is concerned. At the same time, industry leaders looked for signals to better understand what 2015 has in store for us. The Bishop & Associates’ staff members who visited the show tried to get a feel for what we can expect in 2015.
Christoph Stoppok, managing director of the Electronic Components and Systems Association and the PCB and Electronic Systems Association in the ZVEI (German Electrical and Electronic Manufacturers’ Association) expects the world market for electronic components to grow by more than 4% and reach a value of approximately $527 billion over the coming year, according to a press release issued by electronica organizers.
The press release went on to say that “global connectivity, and therefore the issue of security, are the themes that will be relevant in the future. By giving customers the opportunity to develop applications that we might not even have thought about at the moment, the electronics industry is driving this success. Sectors such as automotive and healthcare as well as the manufacturing industry are offering opportunities for growth.”
These statements confirm that the electronics industry is upbeat about the (near) future and that we may see another wave of new applications and new markets develop that were virtually non-existent before.
Hot topics in the connector space were:
- The development and growth of the automotive electronics market – Many companies profited from strong growth in this sector with enough niches for smaller connector manufacturers to demonstrate their capabilities and realize excellent growth in 2014. While production volumes in the Western world did not necessarily increase as much, right now growth in this market is driven by the performance of the luxury segment combined with an overall increase in electronics in each vehicle, even the mid-level and economy-class vehicles. Electromobility, energy efﬁciency, car connectivity, lighting, and autonomous driving were among the other key topics on the exhibition floor. The first hydrogen fuel cell vehicles to be sold commercially have hit the market, too, so the race is on among the various alternative energy sources for our mobility needs.
- Where there are sensors, there are connectors – The combination of sensor technology and connectivity was another hot topic at the show. Connector industry leaders TE Connectivity, Amphenol, and Molex were showing their capabilities for integrating sensors in automotive components as well as many more potential applications in other market sectors. Acquisitions in the past two to three years by connector industry leaders of specialist sensor companies underscore the importance of this market for connector manufacturers. TE Connectivity stated in its press release regarding its acquisition of Measurement Specialties that “the sensor market is a fragmented, large, and high-growth market, and the acquisition increases TE’s addressable market by nearly $40 billion. TE’s scale will be unique in this market.” This illustrates that connector makers believe the potential in this market is huge and can almost double the addressable market, as the connector market is expected to reach $53 billion in 2014.
- The Internet of Things (IoT), M2M (Machine-to-Machine) communication, and (related) security issues – These topics were also a general theme at the exhibition using technologies including NFC, Wi-Fi, RFID, classic Bluetooth, ZigBee, 6LoWPAN, Wireless M-Bus, and more. During the show, Mouser Electronics announced it will have worldwide rights to sell Digi’s complete portfolio of wireless products. Digi International is a leading provider of M2M networking and connectivity solutions, including a cloud computing platform and development services that enable any device to communicate with any application.
The best performing market sectors in 2014 were automotive, datacom (telecom), industrial, and transportation (including commercial aviation). The military/aerospace sector was the only market sector that significantly underperformed in 2014.
Year-to-date sales in the global connector market were up 9.2% after three quarters in 2014 (source: The Bishop Report). At Bishop & Associates, we believe the fourth quarter may come in slightly weaker, which will bring total growth for the full year 2014 to between 8 to 9% compared to 2013.
. Growth by company very much depends on its relative market share, its product range, and the market sectors it serves, so the spread ranges between 5% to 25% growth. Most companies recorded best growth rates in Asia, followed by North America and Europe. The ROW is lagging behind as large emerging countries like Brazil and Russia are struggling with their economies and manufacturing output is slacking.
Most connector manufacturers on the exhibition floor were optimistic about the coming year. For some, double-digit growth in 2014 will be replaced by expectations of single-digit growth in 2015, but there is no reason to assume that 2015 will be a bad year. Of course, unexpected (geopolitical) events and disasters can always spoil the party.
In short, most industry leaders predict growth for 2015 but more moderate than in 2014. Exceptionally, some smaller connector companies expect they can do more than high single-digit growth.
Bishop & Associates’ most recent forecast for 2015 predicts an overall global growth of the connector market in 2015 of 7.5%. We are currently processing all the latest data and input and will release a new update in January 2015 in our “World Connector Industry Forecast” report. This forecast will cover 2015 and the next five-year period.
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