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The electronics industry provides equipment for both the industrial and consumer markets, producing everything from circuit boards and technical parts to mobile phones and televisions. There are always new start-ups appearing with fresh products and ideas, alongside famous, well-established global names.
In 2018 the worldwide consumer electronics industry is expected to be worth US$298 billion, providing ample opportunity for traders. From trading on emerging markets within the sector to playing it safe, all kinds of strategy can be effective.
Electronics Sector Growth and Opportunities
Emerging market economies have rapidly pushed for growth in the electronics industry, as the likes of the semiconductor sector have become more profitable. This has seen the production of electronics increase, alongside the investment in foreign production, resulting in more new factories, expansions and a greater workforce.
Another factor leading to growth for the electronics industry has been accelerated consumer spending on a global scale. With more countries producing electronic items, consumers in these locations can now afford them, resulting in greater competition. From RS Components in Japan to African start-ups and manufacturers in South America, the electronics industry truly is a global one.
Stock on the Rise
As mentioned, the semiconductor sector is the most profitable and growth in the electronics industry is often down to its leading businesses. With an average daily volume of 3.2 million shares NXP Semiconductors (NXPI) is one stock that has experienced a great rise in recent years. Strong revenue growth for the company that produces high performance mixed signal and radio frequency components has helped it rise.
Aside from semiconductor businesses, many computing firms have seen their stock increase in the electronics sector. NVIDIA Corporation, a visual computing company with a global presence, is another strong option with a solid financial position, reasonable debt levels and expanding profit margins.
Risks and Challenges
Despite the positive growth and opportunities the electronics industry offers, as it becomes increasingly more competitive it does present a few risks and challenges. Volatility is becoming more normal for electronics retailers, with a plethora of store closures, mergers and acquisitions all having an impact.
The sector is also becoming fragmented as more and more companies start to offer electronic products. Declining prices are forcing many to become more efficient and profitable, seeking out new business models as well. All of this presents risk for investors, as changes can be a gamble and if they don’t pay off lead to a worse financial situation and low to zero returns.
The Future for Electronics Trading
In order to get ahead of the markets, seeking out the next big electronics stock is the aim of most traders. Finding the next Apple can be difficult though. Yaskawa Electric, which creates robot technology, has experienced something of a rebound recently.
Brother Industries is another electronics company on the rise, forging machine tools for smartphone production. While existing leaders such as Samsung Electronics provide something of a safe option but one that could keep growing in the future.
The electronics industry provides a range of stock trading opportunities once you’ve got to grips with the minor and major players and trends.
