Electronics OEMs to see marked revenue growth in 2013

Makers of industrial electronics lead the way as OEMs chart a path to solid growth as 2013 comes to a close

Original equipment manufacturers of electronics saw robust 7% growth in the third quarter, and the outlook is for even greater growth in the final quarter of the year according to a new market research report from industry analyst IHS Inc.

OEMs in six categories saw revenue reach approximately $493 billion in the third quarter, up 7% from $462 billion in the second quarter, IHS reported. Looking ahead, IHS predicts 10% sequential growth in the final quarter of 2013, with revenues reaching $540 billion.

The growth stands in contrast to a slow first half of the year for electronics OEMs, as growth in the second quarter reached just 2%, according to IHS. Close management of inventory is also a factor.

Of the six categories studied, industrial electronics saw the strongest growth in the third quarter. Wireless communications is expected to lead fourth-quarter growth. Data processing, wired communications, consumer electronics and automotive electronics were also included in the mix.

“Inventories have been lean throughout the channel in 2013, following a correction from oversupply in 2012 as demand unexpectedly fell in the second half of the year,” said Sharon Stiefel, senior analyst, semiconductor market intelligence, for IHS. “This leads IHS to believe that revenues are tracking with actual end demand, rather than to build or drain inventory.”

That said, seasonality is also an issue. Companies with expected seasonal holiday shipments, such as handset OEMs, most likely ramped up inventory in the third quarter to meet holiday demand in the fourth and will be followed by a welcome decline in stockpiles in Q4 as products are shipped out, IHS said.

Semiconductor suppliers are also faring well at the end of 2013. A sample of semiconductor companies providing third-quarter guidance estimate sequential growth of about 5%, IHS said.

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