
Electronics production change in key Asian countries has been mixed. India and Vietnam have led with way, with India’s electronics growth accelerating from 15% in 2017 to 27% year-to-date through July 2018. Vietnam has decelerated from 33% growth in 2017 to a still robust 18% year-to-date. India and Vietnam should continue to outperform other Asian countries because of their low labor rates and improving infrastructures. China and Thailand have maintained growth in the 12% to 14% range over the last year and a half. Malaysia and South Korea have picked up from 4% in 2017 to 10% and 8% respectively year to date. Japan electronics growth is stuck in the low single-digits while Taiwan has seen declines.

Total electronics exports in 2017 were $1.8 trillion while imports were $2.1 trillion, according to the World Trade Organization (WTO). China continued as the largest electronics exporting country in 2017 at $592 billion. However, the total other Asian countries became larger than China at $627 billion. China was also the largest importing country with $408 billion in 2017. The U.S. was second at $336 billion.

The U.S. and China are currently in a trade war, with each country imposing tariffs on imports. The impact of the trade war on U.S. electronics and semiconductor companies is explained in a New York Times article. The effect on Asian companies is covered in a article in the Nikkei Asian Review. In addition, the U.S. is renegotiating the North American Free Trade Agreement (NAFTA). A preliminary agreement was reached with Mexico and discussions are ongoing with Canada.
Without getting into the politics of these trade issues, it is important to note the significance of China and Mexico to U.S. electronics imports. According to the U.S. Census Bureau, the majority of U.S. electronics imports in 2017 came from China at 59%. Mexico was the second largest source of imports at 18%. Most of the rest was from other Asian countries at 19%.

Electronics and semiconductors are truly global industries. Free trade is necessary to keep these industries running efficiently. Hopefully the current trade issues can be resolved in a reasonable time.
CES 2019 A New Era
Bill Jewell 01-11-2019