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U.S. Exports of Electronics Plunge

China is among the few markets where demand stayed strong in 2001 and 2002. Imports also see a double-digit drop.

June 19, 2003|Jube Shiver Jr. | Times Staff Writer

WASHINGTON — Overseas demand for U.S. technology products has fallen dramatically during the last two years -- except in China, whose acceptance into the World Trade Organization in 2001 has helped create a big appetite for semiconductors, mobile phones and other electronic goods.

U.S. high-tech exports fell to $166 billion last year from $223 billion in 2000, a 26% drop, according to AeA, a Washington, D.C., trade group formerly known as the American Electronics Assn.

The group also found that U.S. electronics imports were down 19% during the same period. The figures cover both finished and unfinished high-tech goods but not services, an AeA spokeswoman said.

Both drops were largely attributed to a worldwide economic slowdown that followed explosive technology spending in the late 1990s, when companies raced to overhaul their telecommunications, banking and transportation infrastructures to reliably handle computer data in 2000 and beyond.

"Clearly, the worldwide economic downturn is taking a toll on the technology industry," said William T. Archey, president of AeA.

But some experts are forecasting a modest upturn in worldwide spending on information technology over the next two to five years. They say emerging technologies such as wireless networking promise to fuel interest in technology upgrades. Still, they concede, the U.S. is unlikely to enjoy a quick return to the red-hot technology spending that preceded 2000.

"Just as the car industry once" stood as a symbol of American manufacturing prowess around the world, "the high-tech industry is maturing [and is] going to be a less significant" factor of U.S. export growth in the future, said Hugh Bishop, a senior vice president at the Aberdeen Group, a Boston-based technology research firm.

Another factor in the falloff was U.S. companies relocating production plants abroad to take advantage of cheaper labor costs and access to fast-growing regional markets.

Since the late 1990s, for instance, chip giant Intel Corp. has invested $500 million in manufacturing facilities in Shanghai, China, alone, primarily to make computer circuit board chips, computer memory and wireless devices. Intel's plants in China, a country whose factories did little more than put together portable radios and electronic toys from components made in more developed parts of Asia, now are the major suppliers of the electronic brains that control the main circuit boards in the latest generation of personal computers powered by Pentium 4 microprocessors.

"It's hard to say how much of a factor" overseas relocation is, but "clearly, U.S. companies are not only doing business overseas but setting up shop there as well," said Michaela Platzer, vice president of research at AeA.

The lion's share of the U.S. export drop came in the European Union, which spent just $36 billion on American high-tech goods in 2002, compared with $51 billion in 2000, the AeA found.

That pattern of lackluster demand was repeated around the globe -- with China, India and Costa Rica among the few markets where demand for U.S. exports grew over the last two years.

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