Telecommunications Equipment Manufacturers Industry Profile

The US telecommunications equipment manufacturing industry includes about 1,500 companies with combined annual revenue of $65 billion. Major companies include 3Com, Cisco Systems, and Motorola, as well as the US operations of foreign companies such as Alcatel-Lucent, Nokia, NEC, and Siemens. The industry is highly concentrated: the 50 largest companies generate about 75 percent of revenue.

COMPETITIVE LANDSCAPE

The industry depends on purchases from businesses, telephone companies, cable companies, data communications providers, and TV and radio broadcasters. Profitability for individual companies is linked to technical innovation and the ability to secure high-volume contracts from large customers. Small companies can be successful if they make highly specialized products. There are large economies of scale in manufacturing standard products, but many products are specialized and produced in small manufacturing plants. Annual revenue per employee averages more than $500,000.

The US telecom industry is entering a transition phase where the current telephone system is converted to VoIP technology and the TV broadcast industry is migrating to HDTV technology. These changeovers will require replacing a substantial portion of the equipment in use today, presenting an opportunity for all vendors.

PRODUCTS, OPERATIONS & TECHNOLOGY

The industry produces transmitters and receivers (including satellites); signal boosters; signal processors; connecting devices; power supplies; switches; and phones. About two-thirds of industry revenue comes from equipment for wireless communications (including radio and TV) and a third from equipment for line-based communications.

The industry makes a large variety of products ...