Following almost 20 years of decline, the sector experienced a major rebound in growth in 2017 and 2018 – image courtesy of Depositphotos
The UK electronics sector experienced the fastest growth of any manufacturing sector in 2018, according to a new report by Santander and Make UK.Following almost 20 years of decline, the sector experienced a major rebound in growth in 2017 and 2018 – image courtesy of Depositphotos
Despite representing less than 5% of total manufacturing output, the UK electronics sector generated £19.4bn in turnover and £8.4bn in gross value added (GVA) in 2017.
Following almost 20 years of decline, the sector experienced a major rebound in growth in 2017 and 2018: up 4.4% and 12.4% respectively.
In what continues to be a very competitive sector, there are four key areas which the report identifies as presenting opportunities for continued growth for UK firms:
Paul Brooks, Head of UK Manufacturing at Santander UK, said: “The UK electronics sector continues to punch above its weight and, with the fast growth in technology, is well placed to cement itself as a core manufacturing sector.
“Increased automation and new technologies are linked to the success, but the sector needs to remain focused on growth, being agile and developing cutting-edge products to drive increasingly powerful and smart digital technologies.
The report warns that despite its strengthening fundamentals, there is sustained competition from overseas firms, particularly from China.
The sector also continues to import much more than it exports: the sector imports 50% of supply and exports more than a quarter (26%) of output, making it the most import intensive in UK manufacturing. In 2017, the electronics trade deficit stood at £22.6bn.
To counter market risks, UK electronics firms should target opportunities such as 5G and digital medicines as well as latent export demand from Asia and the Middle East.
The UK will roll out 5G in major cities in 2019, for instance, with a target of full implementation by the end of 2020. It’s estimated this could see download speeds move from 300 Mbit/s to 10Gbit/s – a 33-times improvement.
In terms of exports, while market penetration in “technology rich” Europe and North America is high for consumer electronics, developing countries represent a relatively untapped market for UK manufacturers.
Asia now accounts for 20% of UK electronics exports, up from 14% of 2007, and the top 10 high-growth export markets are all located in the region.