Telecommunications Equipment Manufacturing Industry Profile

Companies in this industry make equipment used in telephone, data, radio and TV broadcast, and wireless communications networks. Major companies include Apple, Cisco Systems, Motorola Solutions, and QUALCOMM (all based in the US), as well as Alcatel-Lucent (France), Ericsson (Sweden), Huawei (China), Nokia (Finland), and Samsung (South Korea).

Global spending on telecommunications equipment is about $340 billion, according to IT research firm Gartner. Emerging markets are fast becoming innovation centers for telecommunications equipment manufacturing, both in terms of low labor costs and technological advances.

The US telecommunications equipment manufacturing industry includes about 1,500 companies with combined annual revenue of about $45 billion. The output of US communication equipment manufacturing is expected to grow at a low rate over the next two years. Key growth drivers are technology innovation and spending by businesses and consumers.

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. The industry is highly concentrated: the 50 largest companies generate about 80 percent of revenue.

Large US manufacturers have production facilities in lower-cost countries such as China, ...