A Tough 2001

Electronic News, July 9, 2001 by Ken Fleck

THIS IS GOING TO BE A TOUGH YEAR FOR THE worldwide connector industry. Fleck Research just returned from Europe where analysis of the European industry was carried out. Telecom is projected to decline by 39 percent. Wireless is also down by 35 percent. More recently, weakness is beginning to occur in the automotive sector with the full year projection at minus 8 percent.

As a result, Europe is projected to be down 10.7 percent for 2001. First quarter 2001 was down 4 percent below fourth quarter 2000. The second quarter is projected to be down 2.7 percent below the first quarter. The third quarter is projected to be down 4.5 percent below the second quarter. The fourth quarter is projected to be down 5.7 percent below the third quarter.

Fleck Research has also just met with leading manufacturers in Japan, providing an updated analysis of the Japanese industry. Telecom is projected to decline by 29 percent. Other sectors of weakness include computer, networks, and wireless. As a result, Japan is projected to be down 9.7 percent. First quarter 2001 was down 1.2 percent below fourth quarter 2000. The second quarter is projected to be down 3.2 percent below the first quarter. The third quarter is projected to be down 4.9 percent below the second quarter. The fourth quarter is projected to be down 6.l percent below the third quarter.

Additional weakness continues to exhibit itself in North America. The result is a Fleck Research projection for North America of minus 24.5 percent for the full year 2001. The prior forecast was minus 17.2 percent. Telecom continues to weaken and is now projected at minus 39 percent. Some sectors of telecom are down as much as 60 percent, according to various connector manufacturers. On the other hand, fiber optic, dense wave division multiplexing, SONET/SDH is holding stronger. PCI gear is reportedly dramatically down. In the wireless sector, handsets are projected to be negative by 30 percent, base stations by 11 percent and central office infrastructure equipment by 13 percent. In the CATV sector, manufacturers of gear are reporting sharp declines, and the connector projection is a minus 41 percent for the year. In the datacom sector, network equipment (hubs, bridges, routers, switches, etc) are projected to be down by 38 percent. First quarter 2001 was down 10.7 percent below fourth quarter 2000. The sec ond quarter is projected to be down 16.3 percent below the first quarter. The good news is that the third and fourth quarters, while still below comparable quarters in 2000, will display a slight increase when examining consecutive quarters. The third quarter is projected to be up 6 percent over the second quarter. The fourth quarter is projected to be up 16.2 percent over the third quarter.

Examining the total world, the Fleck Research projection is shipments of $39.39 billion, a decline of 10.2 percent. The strength in the Pacific Rim partially offsets the weakness in North America, Europe and Japan. The Pacific Rim is projected to be up 15.2 percent in 2001 compared to 2000. The area of major strength is China.