Future Prospects for Demands 1.Global Demand/Production Forecasting (1) Overall scenario Between 2000 and 2010, the global demand for electronics (electronic devices, electronic components, information software and services) will increase 7% or more annually on the average. The global demand in 2000 is expected to be 1.7 trillion dollars. It will reach 3.4 trillion in 2010, doubling in ten years. Global demand between 1990 and 2000 has been increasing 7% annually on the average, doubling in ten years. Between 2000 and 2010, the global demand for electronic devices will increase 4% or more annually on the average. In the same period, the global GDP will increase 3% annually on the average. According to trend analysis in the past, the global demand for electronic devices will exceed the global GDP by 1%. (2) Trends by item 1:AV equipment for which a firm demand is expected due to digitization In the advanced countries, a firm demands for AV equipment is expected since replacement demand will be fueled by added values due to digitization and networking. In the Asian countries such as China and Asean, purchasing power will increase due to economic development, which will expand demands for AV equipment such as TV and VCR. 2:Large expansion of demands for telecommunication equipment and computers due t* the IT revolution, The IT revolution, the impetus for the American economy, will have a ripple effect on countries all over the world, and the growth rate of computer demand will exceed the economic growth rate in those countries. As a result of downsizing and cost reduction, computers will be widespread in companies and households in society as a whole. * Since more people will use networks as computers are widespread, the number of users of the Internet and Intranets will exponentially increase. As the Internet is widely used and the demand for network devices increases, improvement of the large-capacity high-speed infrastructure will be necessary to adapt to the sudden increase of the amount of traffic. 3:Large expansion of demand for electronic devices due to expansion of the demand for electronics and increase of the input coefficient According to a trend analysis, the input coefficient of electronic devices is expected to increase. Integration of semiconductor circuits will lower the number of parts and shorten the working strokes, which will lower the cost ratio of the assembly process. 4:Shift from hardware to system solutions In the IT revolution, demand for information software and information services for construction of information systems will increase as well as demands for hardware such as information equipment and computers. The added values of businesses are being shifted from hardware to system solutions. This will increase the demand for information software and services. Particularly high growth rates are expected for telecommunication equipment and computers. (3) Trends by area This report builds a demand forecasting model by assuming correlation between the demand for electronic devices and GDP and forecasts the demands for electronic devices in each country by considering the predicted GDP value. The growth rates of demand for electronic devices by area will be relatively higher in Asian countries where high economic growth is expected. On the other hand, high economic growth is not expected in Japan and the European countries which are aging societies.  Figure 1 : Global Demand Forecasting by Item (Unit: Billion Dollars) In Japan, the demand for electronic devices decreased 1.1% annually on the average in the first half of 90's, but increased 1.9% annually on the average in the second half. Production was affected by the shifting of production sites to overseas, especially in production of AV equipment, in the second half of the 90's. The increase in the production of electronic devices was at a double-digit level in the first half of the 90's, but became negative in the second half due to bad market conditions. It recovered rapidly toward 2000. In the 2000's, a firm demand is expected since alternation of generations of products such as digital AV equipment will promote replacement demand. For telecommunication equipment and computers, a high growth rate is expected due to the continuing IT revolution. A high growth rate is expected for production of electronic components.  Figure 2: Average Growth Rate of Global Demands for Electronics by Item (2000 - 2010)  Figure 3: Magnitude of Demands for Electronic Devices and Annual Average Growth Rate in 2010 (5) Global demand/production forecasting for AV equipment Since the world economy is shifting from a recovery to a growth phase in 2000, the demand for AV equipment is expected to expand. In advanced countries, consumer products will have an added value due to digitization and networking, which will lead to a firm demand. In Asian countries such as China and Asean, purchasing power of people will increase due to economic development, which will expand demand for consumer products such as TVs and VCRs. A low growth rate of 1% is expected for AV equipment in the advanced countries such as Japan, the U.S., and European. In the 90's, the demand for AV equipment was toward an expansion on a quantity basis, but it has "topped out" in a value basis due to price reduction. From the consumer's point of view, demand is mostly due to replacement demands since they have reached saturation, and a large increase in demand is not expected. Shifting of AV equipment production sites to overseas seems to have reached saturation in the second half of the 90's. The growth rate in Asia is expected to become small. (6) Global demand/production forecasting for telecommunication equipment The IT revolution in the U.S. will have a ripple effect on Japan and the European countries. Therefore, demand in Japan and the European countries will increase 3-4% annually on the average in the 2000's. In the U.S., brisk demand for telecommunication equipment is expected in the 2000's on the back of the 90's. This is because of an increase of the use of electronic commerce and multimedia communications services. 1:Cable communications equipment In all countries in the world, demands for network equipment will expand as a result of the increase of the amount of traffic due to expanded use of the Internet. 2:Radio communication equipment (Unit: Billion Dollars, %)
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In the first half of 2000's, ground wave digital broadcast will become commercially practical in countries all over the world. Therefore, expansion of capital investment is expected for transmission and relay systems related to digital broadcasting. Around 2001, the next-generation cellular phones (IMT-2000) which allow high-speed data transmission will be introduced to the market. This will fuel replacement demand. In the ITS domain, the highway toll collection system (ETC) will become commercially practical and the traffic information communication service will become widespread, which will accelerate investment on the infrastructure. (7) Global demand/production forecasting for computers The IT revolution, the impetus for the American economy, will have a ripple effect on countries all over the world, and the growth rate of computer demand will exceed the economic growth rate in those countries. As a result of downsizing and cost reduction, the demand for computers will increase on a quantity basis. As computers will be widespread in companies and households in society as a whole and networking will become popular, the number of users of the Internet and intranets will exponentially increase. Along with networking of computers, the needs for software services as well as hardware will increase. For example, private user needs for various information services and electronic commerce via the Internet will expand. For corporate users, expansion to information sharing systems, supply chain management, and net business is expected. 1:Computers As the Internet becomes more popular, demand for network servers and network equipment will increase. Innovation will improve performance of PCs dramatically, and PCs will penetrate into the workstation and middle computer markets. 2:Peripheral devices Along with the expansion of demand for computers, the demand for peripheral devices will increase. A further increase of the production rate in Asia, which is a major production site in the world, is expected. (8) Global demand/production forecasting for business machines The global demand for business machines in the 90's (1990-2000) was steady, decreasing 0.1% annually on the average on a value basis in dollar terms. Most of business machines are copiers. By area, demand was steady in Japan, the U.S., and European countries. In the rapidly developing Asian countries, the growth rate is 1% annually on the average. For business machines, a large expansion of demand is not expected because of product trends such as 1: combination of copier and fax machines, 2: a decrease in demand for fax machines due to widespread use of e-mail, and 3: a decrease in demand for word processors due to improved availability of PCs. However, since a stable demand is expected regardless of the business trend, the global demand in the mid- or long term will increase around 1% in a value basis. (9) Global demand/production forecasting for measuring instruments In the 90's, the global demand for measuring instruments has shown a firm increase. By area, expansion of demands was observed in the U.S. and Asia. On the other hand, demands in Japan was sluggish. Some of the reasons are shifting of production sites to overseas and a slowdown of production activities due to the recession. There is a correlation between the global demand for measuring instruments and the global nominal GDP. By item, the highest correlation is observed between the demand for measuring instruments and GDP. In many countries, a high correlation was observed between the domestic GDP and the domestic demand for measuring instruments. Generally speaking, demand for measuring instruments is sensitive to the level of production activities. This may increase the correlation with GDP. On the other hand, the correlation between the domestic demand for measuring instruments and GDP is not high in Japan, the U.K., France, and Germany. One of the reasons might be the shifting of production sites to overseas. In the mid- or long term, expansion of demands is expected in the Asian countries. Due to the low cost of labor, Asian countries are becoming popular as production sites for electronic devices, and there is a tendency of the quantity of production of high-technology parts to increase. In the 2000's, the Asian countries will develop as production sites, and an expansion of demand for measuring instruments is expected. (10) Global demand/production forecasting for electronic components and devices 1:Electronic devices The global demand for electronic devices in the 90's (1990-2000) increased 10.8% annually on the average on a value basis, in dollar terms. There is an increasing trend in the demand for all electronic devices. By area, demand in Japan decreased after reaching a peak in 1995, but there has been an increasing trend in other areas. Among them, demands in Asia were rapidly expanding. According to the past trends, the input coefficient will increase in the future. Integration of semiconductor circuits will lower the number of parts and shorten the working strokes, which will relatively lower the capital investment for the assembly process. Along with the expansion of production of electronic devices in Asia, a large increase in the demand for electronic devices is expected. As the global demand for telecommunication equipment and computers expands, the production amount of electronic devices will increase. For semiconductor devices, needs for system-on-chip products incorporating a processor, memory, and control circuit and custom devices incorporating limited functions for specific applications will increase. 2:General electronic components The global demand for general electronic components in the 90's (1990-2000) increased 4.9% annually on the average on a value basis in dollar terms. There is a steady trend in the demand for the entire electronic devices. By area, demand in Japan decreased after reaching a peak in 1995, but there has been an increasing trend in other areas. Among them, demand in Asia was rapidly expanding. The input coefficient by area for general electronic components will be steady in the future according to the trend of the past. Along with the expansion of production of electronic devices in Asia, a large increase in demand for general electronic components is expected. (11) Global demand/production forecasting for information software and services 1:Information software The level of demand in the U.S. was about 1.3 times higher than in Japan in 1990. It will increase to become about 3.2 times in 2000. The factor which widened the gap was that U.S. companies had actively invested in IT since the second half of the 90's whereas Japanese companies had held back investment on IT due to the recession. In Japan, the IT revolution will swing into full gear in the 2000's. Performance of Japanese companies will improve due to an economic recovery and as a result of restructuring, and capital investment related to IT will expand to promote the IT revolution where the U.S. companies have a head start. 2:Information service The level of demands in Japan was about 2.5 times higher than in the U.S. in 1990. It will increase to become about 5.5 times in 2000. The reason for this seems to be similar to the one for information systems and software. 2.The Core Application Market in the Seamless Network Society Among the electronics markets in 2010, the following six markets are expected to develop dramatically. In the commercial markets, the "network information electrical appliance solutions", integrating electronics in the household via a network, will be a promising application in the 2000's. A typical future "network information electrical appliance" would be a product which incorporates a TV with a display function and a home server integrating the video and Internet functions. Next, one of the electronics markets which will become a focus of attention will be the "mobile solution". Mobile solution is an application across the consumer and industry fields which allows people to get information or enjoy entertainment via high-speed radio technology anytime and anywhere. Examples of future mobile solutions would be advanced mobile phones, PDAs (Personal Digital Assistant), and wearable AV terminals which are extensions of portable MD and CD. Electronics will form a large markets in the field of commerce. The EC solution market which allows companies, administrative bodies, and consumers all over the world connected to the network such as the Internet to receive various services will be formed. Electronic commerce solutions will develop via all kinds of information terminals as systems and services which support commerce on the network. The ITS (Intelligent Traffic System) solution is a promising application which will transform all applications regarding traffic. When the ITS solution is implemented, it will prevent chronic traffic jams and instruct the route that gets to the destination in the shortest time. This will change the environment for vehicles. For example, it will make driving a family car easier. In addition, for commercial vehicles, business structures will be more efficient in the distribution industry. In the public sector where computerization has been slow and inefficient, a large demands will materialize. For example, "electronic government", which allows people to receive administrative services via a terminal connected to the network and to vote via the Internet, may be realized. In education, it will allow students to receive education according to their ability, progress, and needs and provide high quality education for people at distant sites. (C)Copyright,JEITA,2000
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