Growing Consumption in Asia Rebalances the Electronics Industry

If the consumption of electronic components and devices can be taken as a benchmark, then all signs indicate that Asia's economies are holding up well on the strength of domestic demand.

On the back of waning demand from western economies and declining exports in the electronics industry, a silver lining has emerged with recent analyst reports highlighting the strength of local consumption in the Asia. Whether these growing number of ‘made and sold in Asia' products are enough to pick up the slack and sustainably meet the targets of Asian manufacturers remains to be seen. In the meantime, there is plenty of evidence in the news that the region is doing well on the whole.

IHS iSuppli predicts semiconductor spending among Asia Pacific-based OEMs will rise by an average of 6 percent in 2012 compared to the 2.5 percent average growth of global OEMs. China's ZTE is expected to lead the pack at 26 percent growth in spending this year followed by Taiwan's HTC and TCL of China. ZTE and HTC are ranked among the top smartphone makers both globally as well as in China.

In March, IDC released market figures indicating China will surpass the US in smartphone shipments this year with the gap expected to widen by 2016. By that year, IDC predicts China will hold 20.2 percent market share, followed by the US at 15.3 percent with India, Brazil and the UK following behind. Overall, 160 million smartphones are expected to ship for the Chinese market by the end of this year, up from 67 million last year, and by 2016, China smartphone shipments will rise to 333 million, reports IHS iSuppli. In the current Chinese market, Samsung leads the pack followed by local manufacturers Lenovo, Coolpad and Huawei Technologies with ZTE and HTC also in the top 10.

Other countries in the region such as Thailand, which was hit by devastating floods last year, just reported higher-than-expected growth in the second quarter. This was fuelled mostly by measures taken by its government to boost domestic demand as well as the continued recovery in manufacturing.  Indonesia - Southeast Asia's largest economy - is seen as the best insulated against external financial effects because of its large domestic market and low reliance on demand from western economies.

While these reports may provide a sense of optimism in Asia, many economists have warned that the global financial markets are too intertwined and that no country can be completely impervious in the event of a severe financial crisis such as the collapse of the eurozone. They point out that many Asian economies are still largely reliant on China and that growth there has slowed down sharply in the last few quarters.

One thing many economists do agree on, however, is that strong domestic demand does soften the impact of the current economic slowdown. The good news is that, barring any unexpected event, this factor and the demand for high technology products will continue to grow in Asia in the years to come.