It took 5 years to the electronics industry to finally reach the same level it had prior the telecom crisis in 2001.

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With 1 069 billion euros in 2005, the electronics industry finally surpassed its previous record year in 2000 when it reached 1 000 billion euros for the first time in its history, the 2001 crisis now belongs to the past, according to the new edition of "World Electronic Industries: 2005-2010", published in July by DECISION.

More interesting are the growth perspectives over the medium term. With 6% average growth from 2005 to 2010, the electronic equipment production still grows 2 times faster than the World Growth Domestic Product, fuelled by the development of electronics in every application segments, from mass markets to professional electronics. Pervasion is still in progress.

With very good positions in Automotive, Industrial and Aerospace & Defence industries, Europe does offer good perspectives in terms of electronic production. With an average growth of 3.7% from 2005 to 2010, It will still represent about 20% of the World electronic equipment production in 2010, equivalent to North America but behind China which will produce 28% of the world electronic equipment by the end of the forecast period.

DECISION believes that the global electronic production landscape is reaching a new equilibrium between the more developed and the emerging countries. Production vs. market ratios per zones should stabilize over the forecast period with Asian countries still producing about 60% more than their local demand.

First signs of this new trend are already there as illustrated by the investments of Asian leaders of the flat TV industry in new flat screen TV assembly and module plants in Eastern Europe.

How simplistic it may seem, there is one undisputed explanation to this new development of the world electronic industry: Production follows the Market!


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Fuelled by the demand in less developed countries that is gaining momentum over more mature markets, the mobile subscriber base is expected to reach 3 billions people in 2008, i.e. a net increase of 1 billion mobile phone users over the next 3 years.
By the end of the decade, more than half of humanity will use a mobile phone to communicate representing 3.6 billion users worldwide.
This turns into a mobile phone market of >1 billion units as soon as 2007, and 1.4 billion units in 2010 (+11% growth between 2005 and 2010).

Growth in value terms also offers good perspectives. The mobile phone demand should represent 138 billions euros in 2010 from 94 billions in 2005, i.e. an average growth of 8%. Average price decline being offset by the dynamism of high end terminals (3G, smartphones) in mature markets (Europe, North America, Japan), and the limited penetration of ultra low cost end handsets that will only represent 10% of global shipments in 2010.

European mobile phone production still represents 22% of global mobile terminal revenues in 2005 (21 billion euros). The European share of mobile terminal production is expected to fall to 17% in 2010 as Asian production continues to increase its share in the mobile industry (>60% of world mobile phone production in 2005 located in Asia) with the emergence of India as a second major production hub in the region after China during the period 2005-2010.

Importantly enough, European mobile terminal production will continue to grow in average at 2.5% between 2005 and 2010, ultimately reaching 23 billion euros! “Made in Europe” mobile phone are not bound to disappear anytime soon!

The European Parliament has adopted the first "Competitiveness and Innovation Framework Programme" (CIP). Between 2007 and 2013, some 350,000 small and medium-sized enterprises (SMEs) will receive € 3.6 billion in EU support to invest in all forms of innovation and growth. The new programme will support actions to help enterprises and industry to innovate. It will also boost energy efficiency and renewable energy sources, environmental technologies and a better use of information and communication technology (ICT).

CIP is composed of three specific programmes:
(1) Start up and growth of SMEs: the “Entrepreneurship and Innovation Programme” with a budget of € 2.17 billion including € 430 million to promote eco-innovation.

(2) Information and communication technologies: the “ICT Policy Support Programme”, with a budget of € 730 million, will contribute to competitiveness, growth and jobs through stimulating a wider adoption and more efficient take up and better use of ICT.

(3) Increased use of renewable energy and reduced energy consumption the “Intelligent Energy-Europe Programme” with a budget of € 730 million will support energy efficiency, new and renewable energy sources, and technological solution to reduce greenhouse gas emission cause by the transport sector.

Competitiveness and Innovation Framework Programme

This transaction represents the creation of a new world leader in smart cards and digital security, with 2005 pro forma revenues of approximately EUR 1.7 billion ($ 2.2 billion), operations in 120 countries, large operational centers in the Paris and Marseille areas, and 11,000 employees including 1,500 R&D engineers. After further review, Axalto and Gemplus have reconfirmed their initial estimate of the synergies arising from this transaction, expected to amount to EUR85 million (US$100 million) per year on a fully-phased basis.

Saab is acquiring Ericsson Microwave Systems (EMW) which has approximately 1250 employees in Gothenburg, Sweden. The acquisition adds radar and sensor operations to Saab's product portfolio in defence, aviation, space and civil security. The purchase sum is SEK 3,8 billion. The purchase also includes the Ericsson 40 percent share in Saab Ericsson Space, a subcontractor for equipments to commercial satellites.

Saab and EMW have been working closely together for a long time. EMW currently delivers the radar for the Gripen fighter. The acquisition enables Saab to create scope of action to secure the Gripen's long-term development.

EMW's defence operation has supplied more than 3000 radar systems in over 30 countries. EMW's operations within National Security and Personal Safety as well as Power Systems, with a total of 300 employees, will remain part of Ericsson.
The defence operation within EMW has sales of approximately 2 billion SEK and at the start of 2006 had order backlog of approximately 3.5 billion SEK. Exports make up approximately 65 percent of turnover.

In an other deal, Ericsson offered €30 million to buy the IP-telephony and communication specialist Netwise.

Matsushita announces plans to discontinue operations at its subsidiary Panasonic AVC Networks Germany at the end of March 2007, after which it will begin closing/liquidation procedures.

Panasonic AVC Networks (151 employees) mainly responsible for the manufacture and product development for the European DVD recorder market, currently faces ever-intensifying global competition and severe price declines. Under these circumstances, Matsushita decided this closing as part of the company’s global restructuring initiatives in the DVD recorder business. Accordingly, future product development of DVD recorders for the European market will be shifted to Japan. Matsushita will continue production for the European DVD recorder market at Panasonic AVC Networks Slovakia its consolidated subsidiary.

The Pilot Scientific and Technical Center of Excellence for Nanotechnology Development opens officially in Moscow on June 3, 2006. The multi-million dollar center is being funded by the Russian Federation. It is anticipated that Russia's overall investment in nanotechnology development will exceed $400 million in 2007. Globally, combined government investment in nanotechnology development is expected to reach $5 billion in 2006. Private investments by corporations are expected to exceed the government number for the first time ever, reaching nearly $6 billion this year.

The strong technology ramp-up continues in the Czech Republic with news that Hitachi, Panasonic, Toshiba and Hewlett-Packard are investing millions of euros in new production facilities in the central European nation.

IPS Alpha, a strategic alliance between Hitachi, Panasonic and Toshiba, announced it will invest over 90 million euros and employ up to 2,000 people in a new Czech liquid crystal display (LCD) production facility. IPS Alpha plans to begin production in its new facility in Bohemia summer 2007 and will supply Matsushita and Hitachi plants in Europe.

In total, 166 Japanese companies have operations in the Czech Republic. According to the Japan External Trade Organization, Japanese manufacturers operated 65 production bases in the Czech Republic as of year-end 2005 -- the fourth-highest number for a European country.

Meanwhile, Hewlett-Packard also announced the opening of its Czech-based computer technology supply chain headquarters for Europe, the Middle East and Africa. The new facility near Prague supports HP's European headquarters in Grenoble, France. Some 100 new jobs will be created by the expansion.

Foreign direct investment (FDI) in the Czech Republic doubled between 2004 to 2005, from $4.9 billion to $11 billion. CzechInvest, the Czech Republic's business and development agency, mediated a record of 154 new foreign and domestic investment projects in 2005. CzechInvest projects contributed $3.2 billion to the Czech economy.

Thales and Diehl signed an agreement on the formation of Junghans Microtec combining their expertise in ammunition electronics and precision mechanics to establish one of the world’s leading fuze suppliers.

The company will specialize in the development, production and marketing of ammunition fuzes and safety devices. Following approval by the anti-trust authorities, the corporate division Diehl VA Systeme and Thales subsidiary TDA will hold 51% and 49% of the company shares respectively.

Junghans Microtec will concentrate its resources at La Ferté Saint Aubin, France, and at its new headquarters in Duningen-Seedorf, Germany, where Diehl is currently investing in the expansion and modernization of its facilities. With initially 350 employees, the new company intends to achieve annual sales of €70 M.

The Korean government has given its final approval for the launch of the new KHP military transport helicopter, developed in cooperation with Eurocopter. For an estimated total amount of 6 to 8 billion USD, this program which concerns 245 helicopters, represents the largest defense contract ever signed between a European company and South Korea. Korea Aerospace Industry (KAI) will be the main contractor for this program. As first partner of KAI, Eurocopter will provide technical assistance for the development of the aircraft as well as certain sub-assemblies during the production phase. In addition, the agreement between the two companies makes provision for the export marketing of this helicopter via a joint company. The estimated contract is in the order of 300 helicopters.

Wavecom, French supplier in pre-packaged wireless communications solutions for automotive, industrial (machine-to-machine) and mobile professional applications, announced its acquisition of NexGen Software, France-based software company specializing in TCP/IP internet software.

NexGen Software brings to Wavecom its internally-developed TCP/IP (internet) suite of protocol stacks and internet software expertise along with a worldwide customer base of over 100.

NexGen Software was founded in 1999 and operated profitably in 2005. The acquisition is a cash transaction of EUR 400,000.

Philips announced it has signed a definitive agreement with Intermagnetics under which Philips will acquire Intermagnetics for USD 1.3 billion (EUR 1 billion) to be paid in cash upon completion. Intermagnetics develops, manufactures and markets high-field superconducting magnets used in magnetic resonance imaging (MRI) systems. Intermagnetics employs approximately 1150 people. Magnetic resonance imaging is one of the key imaging technologies in radiology departments in hospitals. In 2005, total MRI market was approximately EUR 5 billion.

Diebold, the world's largest maker of automatic teller machines (ATM), has decided to move its manufacturing facility from Cassis, France to Hungary to cut manufacturing costs. Diebold’s plant in Cassis employs 135 workers.

Telit Communications, Italian wireless communications developer and distributor, announced the acquisition of 75% of Bellwave m2m, a South Korean wireless communications developer of machine to machine modules, in a cash transaction totalling US$6.18M. Bellwave's m2m business has generated some $21M revenue in 2005 with dominant market share in South Korea close to 50%.

Bellwave m2m, which developed and marketed the world's smallest CDMA data communications module, has currently 40 employees. The combination of the two entities will create a new force in the m2m market, capable of servicing all CDMA and GSM and in a future also WCDMA markets, on a global basis. Telit ranks as the third largest supplier of wireless M2M modules on the European market behind Siemens and Wavecom.

French start-up Tedemis, a partner for mobile manufacturers to penetrate new markets and for brands to create value by developing a new territory in the booming market of mobile handsets and services, named Simon Gazikian as CEO. Previously, Simon Gazikian was sales vice-president a Esmertec.

Edgeware (Stockholm, Sweden), a start-up company that is offering servers for video-on-demand based on flash rather than magnetic memory, has raised 18 million Swedish krone (about $2.4 million).

Motorola has completed its previously announced acquisition of a development center in Denmark, from BenQ. By this acquisition Motorola is doubling its organization in Denmark which becomes one of its R&D and development hubs in the region. As part of the transaction, Motorola is acquiring approximately 250 employees, the majority of whom are engineers. The new Motorola-team in Aalborg will play an important role in Motorola Mobile Devices global R&D organisation.

Indian IT Services group Wipro Technologies has signed an agreement to acquire the Finland based Saraware in an all cash deal for Euro 25 Million. Saraware, a 21 year old company, provides Design and Engineering services to Telecom companies. This acquisition adds expert domain competencies in the areas of radio networks and secure mobile platforms. Saraware has nearly 200 specialists in these domains based out of Finland.

Piero Martinotti, former corporate vice president of STMicroelectronics new ventures group is nominated as chairman of the board of Sensitive Object.
Sensitive Object was created in 2003 by scientists from CNRS and University of Paris 7, to promote an innovative new technology that can modify our comfort and convenience through the sense of touch. Company’s patented technology is based on a process of “time reversal acoustics,” which connects inexpensive sensors to the audio input of a computer, in a way that turns common objects into tactile screens, which are capable of relaying information with a simple “tap”.

As worldwide subscriptions to 3G networks exceed 100 million, industry association The UMTS Forum has confirmed that WCDMA is the world's most popular 3G technology by a factor that is fast approaching three to one.

The 100 million subscriber milestone represents almost 75 million UMTS/WCDMA customers and more than 25 million CDMA2000 1x EV-DO customers.

In the first quarter of the year, WCMDA represented no less than 95% of total net subscriber additions (WCDMA+GSM) in Europe.

As of May 2006, there were more than 110 WCDMA networks operational in 48 countries. In addition there were 40 operators providing both EDGE and WCDMA coverage in 27 countries worldwide. Within Europe, 28 operators providing complementary EDGE/WCDMA coverage in 18 countries. The UMTS Forum predicts that global 3G/UMTS subscriptions will reach 100 million during the fourth quarter of this calendar year. Moreover, the second phase of 3G/UMTS is now progressing with more than 25 HSDPA networks deployed in May 2006 - enabling 3G customers to experience the full capabilities of mobile broadband.

Western Europe represents just over half of the world's total WCDMA subscribers. The region currently holds 50.4% of the global WCDMA subscriber base, with Asia Pacific contributing 47.8%. The remainder - less than 2% - is contributed by subscribers in the Middle East, Eastern Europe, USA/Canada and Africa.

Add a new portable, multimedia application to the ranks of growth opportunities for the semiconductor industry: Edutainment toys, says In-Stat. The opportunity includes LCDs, MCUs, Flash and various specialty devices. "The explosion in the edutainment toy segment is taking place as Moore's Law has enabled an impressive amount of processing power to be placed in the hands of vendors of consumer education devices," said Stephanie Ethier, In-Stat analyst. According to the high-tech market research firm, the worldwide market for edutainment toys reached $1.7 billion in 2005, and this figure is projected to hit $5.5 billion by 2010. In-Stat believes that a typical edutainment product will have an overall BOM of approximately $60 in 2006. The lion's share of the BOM will be made up by LCDs, MCUs, Flash, and various specialty devices.

Worldwide PC shipments grew by a healthy 12.6% in the first quarter of 2006. Although PC shipment growth slowed from 15.1% in 2004 and 16% in 2005, the market continues to exceed expectations and the outlook for 2006 has improved, according to IDC.

The outlook for shipment growth in 2006 increased to 10.8% from a March projection of 10.5%. The outlook for 2007 was boosted nearly 1% to 11.7% and 2008 growth projections also increased slightly. Although growth rates for 2009 and 2010 were reduced slightly, total volumes remain higher than earlier projections because of the higher near-term growth. Total shipment volume is expected to reach 284.5 million in 2008 and 333.7 million in 2010 with a value of US$253.9 billion, and US$271.1 billion, respectively.

According to IDC, worldwide broadband subscriptions will nearly double in five years, expanding from a little more than 205 million in 2005 to nearly 400 million in 2010. DSL remains the leading installed broadband technology globally, accounting for 67% of subscriptions in 2010.

Motorola, NEC, NTT DoCoMo, Panasonic Mobile Communications, Samsung Electronics, and Vodafone announced today their intent to establish the world's first global, open Linux-based software platform for mobile devices.

A world-class Linux-based platform aims to provide key benefits for the mobile industry including lower development costs, increased flexibility, and a richer mobile ecosystem - all of which contribute to the group's ultimate objective of creating compelling, differentiated and enhanced consumer experiences.

Samsung Electronics America announced that the industry's first Blu-ray disc player has been shipped to retailers in the U.S. market for availability on June 25th. The BD-P1000 will be available in stores on June 25, 2006 at a MAP of $999.99.