Good News for a Bad Year
By Ken Fleck - July 23, 2001
My recent columns have focused on the major downturn that has caused the industry to enter a state of shock. With North America projected to be down 24.5 percent, Europe down 10.7 percent and Japan down 9.7 percent in 2001, not one company within the industry predicted this to happen back in mid-2000. Nevertheless, this article focuses on some positive signs occurring within the industry. Believe it or not, this year is not all bad news.
Everyone knows that the year 2000 was an anomaly. OEMs, fueled by optimism, were double-ordering and triple-ordering. Inventories became bloated. Telecom and network gear was shipped by some of the OEMs with financing deals (in other words, some of the gear shipped did not appear in the receivables). Lead-times within the connector industry on some product lines went as high as 32 weeks. When the downturn occurred, these lead-times shrunk to four weeks or less. If we recognize 2000 for what it was, an aberration, then the best comparison for 2001 is to 1999.
Here are some of the statistics for this comparison. The world shipments in 2001 will essentially climb back to the 1999 level. Worldwide, connectors, cable assemblies and backplanes are projected to reach $39.39 billion in 2001, only 0.8 percent below the 1999 level.
The Pacific Rim will be up 35 percent over the 1999 level as 2001 shipments are projected to reach $13.38 billion. Japan will be up 3.8 percent over the 1999 level as 2001 shipments are projected to reach $9.22 billion.
Only North America and Europe will fail to bounce back to the 1999 levels. North America is projected to reach $14.93 billion in 2001, still 15.8 percent below 1999. Europe is projected to reach $7.10 billion in 2001, still 13.8 percent below 1999. It will take until 2002 for these two regions of the world to come back to the 1999 levels.
Nevertheless, there really is a lot of good news this year. First, 39 percent of the industry's shipments during 2001 will occur in areas of strength. Fiber optics, particularly driven by multimode duplex fiber designs, such as MT-RJ, LC and VF-45, and multifiber connectors, such as the MPX, will be up 12 percent in 2001. Aiding the strength in fiber is fiber optic cable assemblies, particularly multifiber such as 8, 12, 20 and 24 channels. In these cable assemblies, such as the 24-channel, they are terminated on one end with a design such as the MPX, then midway in the cable assembly is a breakout connector which divides into the 24 channels, which each are terminated by LCs.
In the high-speed/high-bandwidth area, there are more than 20 design types of connectors. In 2001, some are up and some are down. Where the connector designs have bandwidth of 1Gbit/sec. or less, shipments are down. On the other hand, those designs that have bandwidth of 2.5Gbits/sec., 3.125Gbits/sec., 5.0Gbits/sec. and above will show an increase in 2001.
Meanwhile, military and aerospace connectors will be slightly positive. Consumer high-end products, such as digital cameras, DVDs, etc., will be up. Medical high-end products in the surgical sector will be up. Broadcast connectors will show an increase. Likewise, the aircraft aftermarket will be positive.
In addition, there are several countries in the world where the market remains strong. These include China, projected to be up 19 percent, and Mexico, projected to be up 8 percent.