News
News
9/19/2006
10:03 AM
50%
50%

IMF Warns Of Asian Electronics Slowdown

Emerging East Asian markets may no longer be able to depend on the electronics sector to sustain their economies, the International Monetary Fund warned.

SINGAPORE — Emerging East Asian markets may no longer be able to depend on the electronics sector to sustain their economies, the International Monetary Fund (IMF) warned in a report.

The IMF said in its "Regional Economic Outlook for Asia and the Pacific" that a "booming market" for digital consumer gadgets helped sustain export growth in Malaysia and Thailand, and prompted a "sharp turnaround" in electronics exports in Indonesia and the Philippines.

But it warned the "initial signs of a slowdown" in the sector had already appeared, including "sharp corrections" in high-tech stocks, a weakening of the U.S. purchasing managers' index for manufacturing and a substantial drop in China's imports of electronic goods.

The Fund added that China's diminishing appetite for electronics coupled with tighter profit margins were likely to have particularly "negative repercussions" for South Korea and Taiwan, which supply parts and components to Chinese manufacturers.

It also noted that the rapid pace of capital equipment spending risked leading to excess supply in some segments, "especially flash memory, with expected falls in prices and profit margins."

More serious for the region, particularly export-dependent economies like Thailand and Malaysia, is a prolonged slowdown in the U.S. market. But the IMF added that the impact of a downturn could be softened somewhat by higher consumption in China.

In addition, South Korea and Taiwan "have become more resilient to the tech cycle by establishing their own niche markets and brand names," the report said.

The IMF also said long-term prospects for memory chip producers remained promising, with the impending release of Microsoft's Windows Vista operating system and rising DRAM usage in mobile phones and gaming applications could also boost sales.

The IMF estimates that Asian producers would capture nearly 50 percent of the global semiconductor market by 2009, with Japan, South Korea and Taiwan being the major beneficiaries.

Comment  | 
Print  | 
More Insights
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Elite 100 Digital Issue, April 2015
The 27th annual ranking of the leading US users of business technology
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
Join us for a roundup of the top stories on InformationWeek.com for the week of April 19, 2015.
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.