ATE Vendors Need to Anticipate Demand Variations in End-User Markets for Optimal Resource Allocation.

PALO ALTO, Calif. -- The economic downturn of 2001 and 2002 caused an inventory build-up along the chain of consumption that led to a fall in demand for automatic test equipment (ATE) services. However, stringent cost-cutting measures and a strong demand from end-user applications such as semiconductor testing have revived the markets. Nevertheless, considering the history of an excess of supply in key electronics end-user applications, ATE vendors need to monitor demand variations and realign their productive resources accordingly.

New analysis from Frost & Sullivan (http://www.testandmeasurement.frost.com), World ATE Services Markets, reveals that revenue in these markets totaled $551.4 million in 2004 and projects to reach $913.1 million in 2011.

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants an overview of the latest analysis of World ATE Services Markets, send an e-mail to Trisha Bradley, Corporate Communications, at [e-mail] with the following information: your full name, company name, title, telephone number, fax number and e-mail address. Upon receipt of the above information, an overview will be sent to you by e-mail.

The current growth in the demand for ATE equipment is largely driven by the progress of the consumer electronics industry. While the strong output in China has increased the consumption of integrated circuits (ICs) designed for applications in consumer electronics, worldwide growth in the mobile phones market along with pent-up demand for flat-screen televisions and DVDs have further boosted the need for ATE services.

"With the increase in new age electronic equipment, ATE vendors are developing sophisticated testing mechanisms to cater to the changing technology needs of electronics manufacturers," notes Frost & Sullivan Industry Analyst Karthik R. "Specifications and technical details of these instruments are often complicated and customers seek additional services such as technical support and training."

Hence, ATE vendors need to provide a one-stop solution encompassing a plethora of services. By providing an efficient ATE setup requiring minimal operational skill sets accompanied by continued service and support, vendors can command better prices.

As Asian countries offer more economical labor and raw materials, electronics manufacturers are shifting their manufacturing bases to this region. In accordance with this shift, ATE vendors are having to set-up their own service centers in these areas. While most of these service centers maintain a lean spare part inventory of around two days to one week, the greater challenge is to cater to the service requirements with reduced downtime.

On the technology front, test solutions have seen a shift from hardware to software-based strategies. While software-based solutions are far more flexible and offer a user-friendly interface, they can also be modified or upgraded easily by installing new programs in the existing system.

The increase in ATE software-based solutions is beneficial for both the ATE manufacturer and end user. It is clearly a driver for revenues because proportionally higher selling prices can be commanded and the size of the end-user market for such tests is also growing.

"The immediate cause for the market growth between 2003 and 2004 was the uptake in the semiconductor industry that led to increased revenue in the application engineering support services," says Karthik. "Applications in electronic functional testing and telecommunications are expected to provide stable market revenue for ATE systems over the next few years."

World ATE Services Markets, part of the Test and Measurement total subscription, is a competitive analysis of the global ATE services markets. It lists major market and technological trends and provides consolidated market forecasts. It further studies key end-user application segments and provides forecasts across application engineering support services, after-sales support services, and geographic regions. Executive summaries and analyst interviews are available to the press.

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics. For more information, visit http://www.frost.com.

World ATE Services Markets
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Keywords in this release: automatic test equipment, ATE, application engineering support services, semiconductor testing, integrated circuit, IC, consumer electronics, electronic functional testing, research, information, market, trends, technology, service, forecast, market share