China domestic demand still strong: Q&A with NXP regional executive for Greater China, Mike Yeh
While seeing demand for electronics in China not being dampen by heavy snows that fell there, NXP Semiconductors has a positive outlook for demand prior to the Olympics Games and sees several directions for potential business. Digitimes recently had the opportunity to talk with the company’s regional executive for Greater China, Mike Yeh, about his outlook for China and the global industry in 2008.
Q: What is the impact of the heavy snows that fell in China on the domestic market there? Will effects from the snowstorms have any impact on the market in terms of demand and supply in the second quarter?
A: Although China has revised down its gross domestic production (GDP) growth forecast due to effects from the snowstorms, the adjusted rate is just one percentage point. GDP in China is still going to maintain double-digit growth in 2008.
Based on feedback from downstream customers, they initially worried that product distribution and consumption would be affected by traffic delays and a reduction in the number of people being able to make it back to their hometowns for the holidays. But they now have observed that inventory has already been sold out and consumption has not been affected.
Such good news in turn has spurred sales of consumer electronics such as TVs and handsets. Sales of these types of electronics are expected to remain strong. Based on the observed situation, impact from the previous snowstorms on sales in China is under control.
Q: What do you think about the Olympic Games? How will the event impact sales of electronics in China?
A: The market is currently positive about the Olympics. As the Olympics is being hosted by China, domestic demand for electronics will pick up considerably. We see business potential in the video, audio, data transmission and battery sectors.
As people wish to see Olympic events in realtime, no matter whether through their TVs, handsets or portable consumer electronics, this will help spur corresponding demand. For those who are unable to receive realtime broadcasts, good quality audio transmission is also what consumers are looking for. And as people are going to share information or communicate about the events, demand will stem from here as well. When demand for portable electronics ramps up, this will also spur corresponding demand for battery and power management (PWM) ICs.
Q: What do you think about the industry outlook for the second quarter and 2008 as a whole?
A: Marketers mostly project that demand for electronics will have noticeable growth in the second quarter prior to the Olympics. Yet, as of today, the strength of customer pull-in is not clear nor strong. This may possibly be due to an economic slowdown in Europe and the US which has prompted many branded customers to be rather conservative.
In China, domestic demand is still strong without a doubt, but as new labor laws are being enacted, the higher labor cost has prompted local vendors to be more cautious about their business outlook. To conclude, industry players should be cautious about the trend in the China market and the overall global trend in 2008.
Q: What are your comments about the recent consolidation speculations about NXP?
A: Any consolidation that creates synergy is a possibility. For NXP, we cannot comment further. But I will say NXP continues to seek efficient consolidations in order to speed up growth of our sales and market share.
Q: What do you think about possible future relaxing of restrictions on the flow of IT professionals between Taiwan and China?
A: I think Taiwan professionals will have stronger incentives to develop in China. But as the quality of China R&D professionals grows, NXP will continue strengthening our R&D works in China, while recruiting experienced engineers from Taiwan. The most important impact from a possible relaxing of regulations is enhanced production efficiency and division of labor.