World ICT output up 10% in 2010

The Ten ICT Industrial Forecasts for 2010 published by the Topology Research Institute (TRI) indicates world ICT output will grow some 10% across the board in 2010. The semiconductor capital expenditure will see a 43.6% increase. DRAM and display panel prices will stabilize. Notebook PC, LCD TV, mobile handset and digital still camera (DSC) makers will enjoy 5-10% increase in annual shipments. Network and communication equipment and LED sectors’ outputs will be up 8.9% and 14% respectively.

Emerging markets helps with rebound

The TRI study indicates there will be good news for semiconductor capital expenditure, which is considered a leading indicator for the ICT market. Global semiconductor capital expenditure is expected to increase 43.6% in 2010 as TSMC, Global Foundries, Toshiba, Samsung, Intel and other industrial leaders boost their capital expenditure. The growing capital expenditure will bolster global semiconductor output to US$ 228 billion, up 10% from 2009 and underscoring the recovering momentum.

With strong demand from China and recovery of the US and European markets, DRAM supply will keep up with demand. It’s estimated that though sales will go down in the slower quarters of the first half of 2010, Microsoft Windows 7 will start to drive DRAM ASP by mid-2010. As a result, DRAM price will go up slightly in the year.

Due to fast-growing notebook and TV markets and effective capacity control, large-area panel is expected to see 18.7% increase in output value in 2010. In addition, supply and demand will stabilize.

Moreover, the demand for white LED will increase drastically thanks to the growing penetration in notebook, TV and other consumer electronics. The Shanghai 2010 World Expo and China’s domestic demand-augmenting policy will also drive the demand for outdoor displays and street lamps. It’s estimated that the world LED output value will reach US$ 7.997 billion with annual growth rate of 14%.

The output value of network and communication industry will approach US$ 467 billion in 2010. The annual growth rate of 8.9% will be propelled by increasing demand for network infrastructure deployment in China, India and other emerging markets, which will fuel the sales of Ethernet LAN switches.

Explosive growth for terminals

The rebound in mid- and up-stream markets for key parts and components as well as network and communication equipment will benefit the terminal market. Terminal sales are expected to increase thanks to the introduction of Windows 7, growing popularity of mobile broadband, recovery of the business market, personalization of the consumer segment and arrival of many new offerings. It’s estimated that notebook shipments will increase 21.71% to 185 million units in 2010. Overall PC shipments will grow 10.37% to 318 million units. Businesses are expected to start replacing their PCs in the second half of 2010.

LCD TV shipments will be up 20% to 156 million units, driven mostly by the popularity of LED TVs, continuing growth of the China market and tax incentives for energy-efficient models.

Mobile handset shipments will grow 12% year on year to 1.589 billion units, fueled by the recovering world economy, continuing demand from emerging markets and availability of relatively economical entry-level smartphones from major cellphone makers. The smartphone segment will see tremendous annual growth of 29% to 235 million units.

In 2010, digital still cameras will try to differentiate themselves from camera phones by incorporating 3D imaging, micro projector and dual displays. Shipment growth is expected to increase from -5.8% in 2009 to 5.5% or a total of 129 million units in 2010.

It’s estimated that the total output value of the 10 key ICT products – including semiconductor, mobile handset and notebook – will increase 9.7%, up from US$ 741.4 billion in 2009 to US$ 813.6 billion in 2010. Large-area panel and solar power will lead the way with 18.7% and 17.6% year-on-year growth respectively. Semiconductor, notebook, LED and WLAN chips are expected to enjoy excellent growth of 10% or more.

Software, services essential to ICT success in 2010

Apple exerts major influence on US ICT industry

The global ICT industry has always kept an eye on Apple, which not only leads the industry in innovative industrial designs but also highlights the fact that software and services will be essential to the success of consumer electronics in the digital era. Apple’s triple-play strategy will drive the US ICT direction in 2010.

TRI expects mobile devices, portable PCs and digital home hardware to account for 15% of the US$ 1 trillion revenue generated by the US ICT industry in 2010. Revenue from wireless and wired technology, software and services, which are considered an extension of the product categories, will account for over 50% of US ICT revenue. The trend is in line with Apple’s strategy.

Apple plans to introduce the Apple Tablet, which will feature a combination of multimedia contents, books, games and applications. It will also join the ranks of smartphone, Blu-ray player, eBook reader and LED TV as the 5 fastest-growing ICT products in 2010. In addition to the Apple Tablet, Windows 7, cloud computing that has become a consumer application, marketing via community websites, mobile commerce and multimedia streaming are the top 6 trends for the US ICT market in 2010.

Table 1. 10 ICT Industrial Forecasts for 2010＜Source: TRI, November 2009＞

Revenue hinges on software, hardware, services

The financial tsunami sent US ICT industry revenue down 5.1% in 2009 (estimated). Nevertheless, the Broadband Stimulus Package from the US government will pay off in the second half of 2010, bolstering the revenue by 1.5%. It will rebound to 6.5% or back to the 2008 level.

US ICT industry’s revenue numbers include hardware, software and services, which mean that hardware is no longer the sole indictor of industry performance. For example, the digital content and application download service championed by Apple can influence where the industry goes.

There are four other fast-growing ICT products in the US. Thanks to aggressive marketing by the 4 leading US operators and continuing popularity of iPhone, smartphone shipments will increase 35.4% to 67 million units. Blu-ray players may be available for less than US$ 100 or even US$ 49. As connected Blu-ray players help sales, Blu-ray player shipments are expected to increase 114% to 15 million units.

Amazon and Sony’s efforts will boost US eBook shipments 103% to 5.6 million units in 2010. Some will be available for less than US$ 150. Offerings with free wireless Internet and touchscreen will arrive. It’s estimated that LED TV shipments will grow 471% to 4 million units. The price gap between LCD TV and LED TV will be reduced to less than 20%. LED TV will account for 11% of overall LCD TV sales.

6 drivers of the future

There are 6 major trends in the US ICT market in 2010. Led by Apple, the App Store economy is growing. Mobile handset makers and operators will join in to vie for the US$ 2 billion revenue. As Windows 7 provides high operating efficiency and smooth user experience, 60% of the US businesses are expected to convert or upgrade to Windows 7 in 12-18 months, driving PC sales.

Closely tied to consumer lifestyle, cloud computing will start to turn profit in 2010 as Google, Amazon and IBM among other leading IT players commit to the technology in large scale and the technology expands from businesses to consumer market. It will be a US$ 30 billion market in US alone with annual growth rate of 30%.

Surveys show 71% of US community website members share shopping experience on a monthly basis. 56.8% of the top-500 US retail websites have marketing programs using Facebook. TRI sees the ever-popular community websites as a new and powerful tool for business marketing in 2010. With the increase of 3G services and mobile applications, mobile users will drive the development of mobile commerce, mobile advertising, mobile Internet and mobile communities. It’s predicted that it will be a US$ 15.2 billion business in 2010.

In conclusion, it’s estimated that over 50% of the US population have experienced multimedia streaming services by the end of 2009. As a result, FPD TV, BD player and game deck makers will start to provide the services.

Domestic demand, policy guarantee a prosperous Chinese ICT market in 2010

The global economic downturn had tremendous impact on China’s ICT industry in the first half of 2009. However, the launch of rural subsidy schemes – including appliances and automobiles – not only made up for the less of export market but also fueled domestic demand. TRI indicates China’s ICT industry will enjoy 7.8% and 12.4% increase in output value and demand respectively in 2010 as demand outstrips supply. The semiconductor industry, which is the basis for the general ICT industry, will see significant rebound as sales grow 11.8% annually. In 2010, China’s semiconductor industry will be driven by the terminal demand. The top-3 consumer electronics, notebook, mobile handset and LCD TV will see output value and sales on the rise. The LCD TV segment will lead the pack with 15.9% increase in output value and continuing double-digit growth.

3 major consumer products bolster domestic demand

The cream of the ICT crop in terms of output value, China’s notebook industry is expected to enjoy 6.1% increase in output value, from US$ 62 billion in 2009 to US$ 65.8 billion in 2010. With notebook placing desktop PC and domestic demand-augmenting policy, notebook shipments will increase drastically. It’s predicted that notebook sales will grow 9.1%. Domestic demand for notebook will jump 24.8% to 16.6 million units in 2010.

As the biggest ICT segment, mobile handset unit sales will increase to 250 million units in 2010 thanks to continuing growth of cloned handset sales, completion of 3G network deployment and cheaper 3G devices. Dollar sales will increase 4.4% to RMB 192.5 billion. Popularity of smartphone will skyrocket with iPhone, Ophone, MTK and HiSilicon Technologies’ commitment. Smartphone demand will reach 65 million units, accounting for 26% of the overall handset market.

Replacement purchase will drive LCD TV sales up 34.4% to 28.1 million units, accounting for 18% of world LCD TV shipments.

Policy drives LED, solar power, electric vehicle growth

In 2010, China’s LED industry will grow significantly, driven by domestic demand-augmenting initiatives such as rural subsidy schemes for home appliances and automobiles, “green” policies and new applications. It’s estimated that the demand for LED die and packaging will grow drastically as the demand for applications increase 64% to US$ 17.6 billion due to the tremendous popularity of notebook and LCD TV among other applications.

China is actively fueling the emerging solar power market. The most noteworthy move is a new law that requires grid operators to purchase solar-generated power at subsidized price for 20 years, which guarantees generator profit and drives market growth. It’s estimated that Chinese demand for solar-generated energy will reach US$ 620 million. The 138.5% annual growth rate highlights the potential.

On the other hand, it’s a fact that China’s automobile market is growing at a tremendous rate. The global automobile industry sees China as the next big market after the North America. In 2009, China halves car purchase tax as well as introduced rural subsidy and old-for-new schemes for automobiles, which also benefited the automotive electronics market. China’s automobile sales are expected to increase 35% to US$ 29.3 billion in 2010.

Conclusion

Though there are certain concerns, the global ICT market is expected to gradually recover with an optimistic outlook in 2010.

Key ICT product output, 2010，Unit: US$ 100 million＜Source: TRI, November 2009＞