Industry and Market Opportunities

 

The opportunities that electronic, high-tech and startup industries in Asia offer to foreign investors are almost limitless. Looking at the current situation in Asia, it is the right moment for a new sustainable growth. For example China emphasizes the building and maturing existing manufacturing infrastructure and supply chains for the purpose of spurring innovation and locally based designs and products to meet the coming demands from the growing Chinese middle class. The recent trade shows in Asia, features many new, expanded offerings from exhibitors as well as a good increase in attendance. On the technology hardware side, there is a wide cross-section of companies that include automotive, medical, consumer products, computing, and energy original equipment manufacturers (OEM). The wide-reaching array of solutions, components and products by locally based companies demonstrates the ongoing success in Asian countries's efforts to build and ensure a deep, sustainable, local high-tech industry that does not just support the world, but provides the economic impetus for growing its own middle-class—the next generation of global consumers who will dominate high-tech demand over the European Union and North America.

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Electronic Manufacturing and Supply Chain

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Today, most electronics manufacturers outsource production to low-cost countries in Asia. As the supply chain shifts towards Asian countries, foreign importers of electronic goods will stand to benefit only from deep understanding of local markets and trading conditions. Demand for consumer electronic products is on the rise, driven by innovation, price deflation and growing household incomes, particularly in emerging markets in Asia. These consumer electronics products are increasingly reliant on semiconductors, which are still primarily being made in developed countries where access to capital and skilled workers is guaranteed. Many foreign brand owners and contract manufacturers have established production capacity in — or are shifting capacity to — Asian countries which offer lower operating costs and sometimes lower taxes. This shift is more pronounced in segments with greater demands on labour (e.g. passive electronic components and semiconductor assembly and testing operations) compared to those with relatively low labour intensity (e.g. semiconductor fabrication). Quality leaders with in-house, industry certified facilities and accredited quality professionals are in increasing demand because of this quickly opening market opportunity based on more competition along the semiconductor and electronics supply chain. Hand-in-hand with local tech manufacturing growth and innovation are the arrival of many solution providers offering component design/manufacturing and similar support. Connecting all of these new opportunities and aligning the new strengths with strategic market plans is the core of the global services demands.

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Tech Startups

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The next technological revolution may come from outside of Silicon Valley. Thirty three of the 100 richest tech billionaires in the world are from Asia. China led the way with 20 from mainland and one from Hong Kong, second only to America’s 51. The significant investments made in Asian tech are certainly paying off. There are certainly plenty of reasons for investors to focus their attention on Asian tech firms. While Silicon Valley is often considered the cradle of tech, Asia is actually home to more technology firms than the United States. Add in the fact that many of those firms trade at measures that are lower than their American counterparts and it is easy to see why so many investors are interested in Asia. The Asian tech market isn't just massive; it's also innovative and evolving rapidly. Driving much of that creativity is a large workforce focused keenly on technology. In terms of R&D workers, China has now outpaced the United States. In fact, China is home to more than one thousand research and development firms.

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Foreign tech companies should also consider: 

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Product design

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• In the past decade, most global majors have increasingly off-shored their design activities

• Today, Taiwan is ranked 2nd globally in integrated circuit (IC) design

• Other design activities like board design, printed circuit board design, field programming gate array design, “close-to-hardware” software development, drivers, protocol development, and diagnostics are being moved to Asian low-cost countries.

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Semiconductor fabrication and packaging

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• This is a high fixed-cost industry where greater losses are felt in downturns, and higher profits during periods following innovation

• Manufacturing is concentrated in countries with access to capital and skilled workers

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Components and subsystems

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• Strong competition in this segment results in price competition

• Manufacturers are typically located close to electronic manufacturing services (EMS) and original design manufacturer (ODM) facilities

• Reliant on three sourcing flows: mechanical components, key components (memories), and commodity parts

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Final assembly and packaging

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• China, Hong Kong and Singapore have a high number of EMS firms

• Critical success factors for assembly and packaging services include low labour costs, component costs, intellectual property protection, logistics, infrastructure and tax incentives

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Areas to watch

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• China — China is still the main hub for electronics manufacturing (components, assembly) for phones, computers and TV sets. The export and import value of China-made electronics continues to rise

• Taiwan — Taiwan’s integrated circuit industry is well established, with a vertically integrated chain including design, manufacturing, packaging and testing. It is the largest purchaser of semiconductor equipment globally

• Singapore — Electronics is the major industry underpinning Singapore’s economic growth, contributing to the city-state's manufacturing value-add