EE2006

Slide1: 

Electric - Electronics Sectors 2006

CONTENTS: 

CONTENTS Electronic Market Overview World Market Trends Openness of Mexican Economy Economic Indicators The Electronics Sector

World Wide Electronic Sector: 

World Wide Electronic Sector

World Market Trends: 

Environmental friendly products that minimize pollution Protect natural resources (water, air & energy) Thinner, lighter & Smaller products that offer substantial reduction in power consumption Increasing End User Applications Lead to Significant Market Growth World Market Trends

World Market Trends: 

2005 sales rose 5% to $106 billion. Similar forecast increases for the following years are expected until 2007. Digital TV Sales Increase 61.7% to 4.12M In ’03. The demand for FPDs is expected to be strong as they replace low-priced CRT displays in many applications. World Market Trends

Technological advancements are improving production yields and reducing the manufacturing costs of flat panel displays (FPD), increasing their use in many end user applications. If the proliferation of cellular phones, personal digital assistants (PDAs), camcorders, game consoles, and digital cameras across the world is any indication, thedemand for FPDs is likely to increase.  : 

Technological advancements are improving production yields and reducing the manufacturing costs of flat panel displays (FPD), increasing their use in many end user applications. If the proliferation of cellular phones, personal digital assistants (PDAs), camcorders, game consoles, and digital cameras across the world is any indication, the demand for FPDs is likely to increase. World Market Trends

Color TV World Market: 

Color TV World Market 140 million sets world wide USA 25 million sets Japan 9 million sets China 28 million sets Europe 12 million sets

LCD TV World Demand: 

LCD TV World Demand Source: CEA Market Research

Forecast of Plasma TV sales: 

Forecast of Plasma TV sales Source: CEA Market Research

Analog Color TV sales: 

Analog Color TV sales 5% 80% 15% Labor CRT Accessories Source: CEA Market Research

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OPENNESS OF THE MEXICAN ECONOMY Preferential market access to 32 countries Free Trade Agreements with USA and Europe Negotiating FTA with Japan Market access to all countries in Central America

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El Salvador Costa Rica Nicaragua Honduras Guatemala Israel Bilateral Investment Treaties Free Trade Agreements Canada USA Chile Bolivia Venezuela Colombia Uruguay Portugal   Netherlands Switzerland Austria Spain France Italy Greece Germany Belgium Luxembourg Finland Denmark Ireland UK Sweden Norway Iceland Liechtenstein Argentina South Korea Cuba FREE TRADE AGREEMENTS AND BILATERAL INVESTMENT TREATIES

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Source: INEGI INTEREST RATES

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Source: INEGI INFLATION RATES

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Source: JP Morgan COUNTRY RISK

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Source: JP Morgan MEXICO´S OUTSTANDING POSITION IN LATIN AMERICA

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Source: INEGI INDUSTRIAL PRODUCTION

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Mexico has become the seventh largest exporter in the world Second largest exporter to the U.S. in 2002 Mexico is by far the leading exporter of the Latin American region Exports of Mexico account for almost twice the total exports of Brazil, Argentina, Paraguay and Uruguay put together. MAIN RESULTS OF OPENNESS

ELECTRIC - ELECTRONICS SECTORS: 

ELECTRIC - ELECTRONICS SECTORS

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Automobiles and Autoparts More than 10 billion dollars have been invested in this sector in Mexico, and currently exports to the U. S. more than 30 billion dollars a year. Electronics And Home Appliances Currently trades with the U.S. more than 87 billion dollars a year. MOST BENEFITED SECTORS

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TRADE BALANCE 2005

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ELECTRONICS SECTOR EXPORT DYNAMICS 1998-2005 Parts and components Electromedical Telecomm equip. IT Audio and video, 30,464 36,548 46,248 42,978 39,871 40,036 47,398 49,648

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Source: World Trade Atlas & Bancomext PRODUCTS PC´s 17% TV’s 16% Telecom. Sys. 8% Interruptores 4% PRODUCTS Semicond. 14% PCB 12% CRT 5% Passive Comp. 5% USA 94% Canada 1.4% Switzerland 1.5% Others 2.4% Exports Destination 49,648 USA 14% Korea 7% China 11% Japan 7% Malaysia 8% Imports Origin 50,500 TRADE BALANCE 2005 Main Products and Countries (millions of USD) Germany 0.7% + + Others 53%

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MAIN ELECTRIC AND ELECTRONICS CLUSTERS NORTHWEST TIJUANA MEXICALI SAN LUIS R.C. TECATE ENSENADA NOGALES NORTH CD. JUÁREZ CHIHUAHUA NORTHEAST MONTERREY SALTILLO REYNOSA TAMPICO CENTRAL EDOMÉX QUERÉTARO MORELOS PUEBLA VERACRUZ WEST GUADALAJARA AGUASCALIENTES MANZANILLO SOURCE: Preliminary data from Banco de México 34

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AUDIO & VIDEO Main Manufacturers in Mexico SOURCE: BANCOMEXT 27

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PERSONAL COMPUTERS Main Manufacturers in Mexico SOURCE: BANCOMEXT 28

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ELECTRONICS INDUSTRY MAIN DOMESTIC COMPONENTS SUPPLIERS SOURCE: BANCOMEXT 29

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SOURCE: BANCOMEXT ELECTRONICS INDUSTRY MAIN DOMESTIC COMPONENTS SUPPLIERS 30

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ITA Plus National Program for the Competitiveness of the Electronics Industry and High Tech SUPPORT PROGRAMS

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Mexico’s ITA Plus, eliminates tariffs on imports from all the world to: Computer products (Computers, monitors, printers, scanners) Telecommunication products (modems, cellular phones, office switching equipment, switching transmission equipment, audio & video) Other electronics goods (calculators, photocopy machines, cash registers). ITA PLUS OBJECTIVES

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Package 1: Elimination of tariff to 290 codes for all importers will be according to three groups: ITA PLUS PACKAGES 9 Package 2: Tariffs on raw materials and inputs of other sectors, such as steel, plastics, and chemical products, only to be used by the electronic, computer and telecommunications firms, were eliminated since September 2002 (278 tariff codes in the electronics PROSEC)

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Electronics, computer and telecommunications productive chain was liberalized: tariffs on almost 4,000 are to be eliminated 11 ITA PLUS COVERAGE

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NATIONAL PROGRAM FOR COMPETITIVENESS OF ELECTRONICS AND HIGH TECHNOLOGY INDUSTRIES 33 The National Program for the Competitiveness of the Electronics Industry and High Technology includes issues such as: Designing a competitive fiscal policy Promoting a competitive tariff structure Efficient foreign trade processes Develop the supply chain Promoting technological development Upgrading human capital Generating an adequate infrastructure