The supply chain’s value chain
GARTNER Inc, a provider of research to the technology industry, expects spending on consumer electronic devices to grow by 7% this year. This was up from its forecast of 2% spending growth last year.
It cautions that there will still be fluctuations in the shipments of these devices on a year-on-year basis, but forecasts worldwide shipments of devices such as PCs, tablets and mobile phones to grow 1.3% or 2.3 billion units this year after declining 3% last year.
This should be good news for Malaysia’s electrical and electronics (E&E) industry, which accounted for 36.7% of the RM935.39bil in total exports last year.
Interestingly, Gartner says the spending growth will be underpinned by better specifications on top of the increasing average selling prices, which it expects to rise by 5.6% this year from 9.1% last year.
The better specifications mean that local E&E players must move up the value chain. As they produce high-specification goods, the overall economy will also benefit as high-end services such as research and development (R&D) centres, services that are sorely lacking in Malaysia, are set up.
High-end manufacturing will be a catalyst for not only R&D jobs but other high-end service industries, in banking and finance, for example, or even urban services.
The global economy is closely tied to the supply chain where a product is conceptualised in one place, then designed in another while different parts are manufactured in half-a-dozen other locations before being put together in yet another place and shipped out to the end-markets. These parts criss-cross oceans and continents and are part of the global trading system.
Malaysia occupies an intermediate position where the E&E value chain is concerned, as its factories are more parts manufacturers than the producers of the finished goods.
That’s where a focus on devices that house high-tech software for the Internet of Things and cybersecurity features will help in moving up the value chain and help create the high-end jobs needed to raise wages.