Telecommunications Equipment Manufacturing Industry Profile

The US telecommunications equipment manufacturing industry includes about 1,500 companies with combined annual revenue of about $45 billion. Major companies include Apple, Cisco Systems, Motorola Solutions, and QUALCOMM. The industry is highly concentrated: the 50 largest companies generate about 80 percent of revenue.

Globally, exports of telecommunications equipment total nearly $280 billion, according to the International Trade Centre. Leading countries in telecommunications equipment manufacturing are China, including Hong Kong, and South Korea. Top global telecom equipment makers by revenue are Nokia (Finland), Siemens (Germany), and Alcatel-Lucent (France).

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 $365,000.

Large US manufacturers have production facilities in lower-cost countries such as China, Malaysia, South Korea, and Mexico. Accordingly, imports make up 85 percent of the US market for telecommunications equipment. Exports account for about 65 percent of US production.

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 ...