Electronics and semiconductors are at the heart of the modern economy. Each year, another 35 billion microprocessors are activated, driving most of the products used by industry, as well as a range of everyday devices that includes smart cards, satellite positioning systems, mobile phones and MP3 players. The number and functionality of intelligent devices has seen rapid growth, and this looks set to continue: by 2010, it’s estimated that electronics will account for 50% of the cost of a prestige car.
The business that are driving this rapid evolution are themselves undergoing considerable change:
- Established companies are spinning out non-core activities, leading to the emergence of niche players. Many major organizations are selling their semiconductor operations, reluctant to participate in an arena that is seen as increasingly commoditized. However, as semiconductors are put to more and more uses, markets are growing for highly-specialized products. This creates room for niche players, who then merge to build scale and efficiency.
- Technology is enabling businesses to enhance their all-round product offerings. In the world of domestic appliances, for example, manufacturers are developing closer relationships with end users, using computer chips and wireless technology to offer packages of solutions and services that include remote operation, software updates and fault diagnosis.
- Commoditised product manufacture has largely migrated to Asia. Where products genuinely are a commodity, production has shifted from Europe and the US to lower-cost centers in Asia.
Many market leaders combine outsourced manufacturing with a focus on added-value customer solutions. They satisfy unmet customer needs by combining great innovation, design and delivery. This helps them evolve into some of the world’s fastest-growing companies, and gives them many opportunities to expand, organically and by acquisition.
