U.S. electronic firms in Malaysia see recovery in fourth quarter

U.S. electronic firms in Malaysia see recovery in fourth quarter

KUALA LUMPUR (AFP): Major U.S. electronics firms in Malaysia expect sluggish exports to rebound from October onwards but forecast a 12 percent drop in their sales this year, an industry group said Tuesday.

The Malaysian American Electronics Industry (MAEI) said total sales of its 18 members were expected to fall to 38.7 billion ringgit (US$10.18 billion) amid the global downturn, from 43.9 billion last year.

Semiconductor and non-semiconductor sales were forecast to decline by 12.7 and 11.3 percent respectively according to a recent MAEI survey, said MAEI chairman Teh Chin Bin.

"The general assessment is that the third quarter could be the bottom," Teh told a press conference. "There is a general expectation of positive growth going into next year."

Among MAEI members are world number one chip-maker Intel Technology, Advanced Micro Devices, Motorola, Western Digital, Dell Asia Pacific, Seagate Industries, Texas Instruments and ChipPac.

Last year, the group accounted for 20 percent of Malaysia's electronics exports and 14.2 percent of total manufactured exports.

The survey said investment from MAEI companies was expected to fall to 1.8 billion ringgit this year, down from 2.6 billion in 2000.

But allocation for research and development is seen rising 10 percent to 251 million ringgit, while procurement of local materials and services is also expected to increase 10 percent to 7.4 billion.

Nicholas Zefferys, president of the American Malaysian Chamber of Commerce, which is the umbrella body for MAEI, described the industry downturn as a "temporary trial."

"We are bouncing along the bottom. Purchases of chip-making equipment have started to increase in the last three months which speaks positively for the future," he told AFP.

"This is a temporary slowdown. The IT revolution continues and we'll see a resumption of growth. There'll be an industry shakeout, no question, ... but the stronger companies, those that are engaged in new product development, research and development, will be the winners.

Zefferys said the U.S. electronic sector had become "meaner and leaner" after selling off most of the inventories built up last year amid strong growth of Windows 2000 and dotcom companies.

"All the write-offs and all the layoffs that you have seen in the U.S. means they are going to come back with strength and earnings per share are positioned to start increasing in the year 2002," he added.