Information and Analytical Center for Modern Electronics (LLC “SOVEL”) is a consulting company established in 2011. The sole owner is its CEO Ivan Pokrovsky, who is also the executive director of the Association of Russian Electronics Developers and Manufacturers (ARPE). The center is one of the few organizations that systematically evaluate the Russian electronics market.
Experts examined manufacturers’ data and customs statistics on the Russian market of semiconductor, passive, electromechanical components and electronic modules that are used in the manufacture of electronic equipment. The market for printed circuit boards, sales of large displays for monitors and TVs, computer components (modules) and microprocessors for large-site assembly of computer equipment, as well as integrated supplies of components by foreign manufacturers of consumer electronics for their assembly enterprises in Russia were not taken into account.
Reasons for the fall
Ivan Pokrovsky explained to RBC that in 2019 the market in physical terms remained at the level of 2018, but in monetary terms it fell due to lower prices for electronic components – a year before that, prices for them had risen sharply due to a shortage of production capacities abroad.
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Among the main reasons for the fall of the market in 2020, Pokrovsky calls the reduction in the purchasing power of the population and the investment of infrastructure companies in technological development. In some segments, additional factors influenced, such as market saturation (for example, in the case of consumer goods). Pokrovsky added that the pandemic did not significantly affect the market contraction – according to him, enterprises increased production to compensate for 2.5 months of downtime, and the crisis will have little effect on the annual performance of companies that were able to overcome the isolation time.
According to the forecast of Ivan Pokrovsky, retail and the automotive market will suffer the most, as they directly depend on the declining purchasing power of the population. As soon as consumers refuse to buy, the demand for components is rapidly reduced.
At the same time, sales of electronics in the largest segment – for military and aerospace equipment – will decrease by 5%, to $ 846 million. The production of this equipment depends on the volume of financing of state orders and arms exports. In 2020, public procurement will remain at last year’s level. Arms exports in the first quarter decreased by 36%, but supply recovery is expected in the second half of the year.
The authors of the study noted that if additional measures of state support for import substitution are introduced, the drop in 2020 can be mitigated to 5%, in which case the market volume will be $ 2.69 billion.
What will be the consequences of the market decline – in the material of RBC Pro.