BMI View: We project that Malaysian consumer electronics spending will grow by about 6% in US dollar terms in 2013 to US$8.7bn, with strong sales of smartphones and LED TV sets reported in H12. Despite a sharp moderation in consumer demand apparent in early 2012, sales remained relatively robust in these key consumer electronics product segments. We expect private consumption to accelerate towards 5.5% in 2013, mainly due to the positive effects of cash handouts and increased welfare spending by the government. However, uncertainties over the export market and the outlook for employment could also weigh down consumer confidence and spending on discretionary lifestyle products such as TV sets. Malaysia has emerged as one of the fastest-growing regional smartphone markets and vendors will look to product innovation to drive revenue. Growth areas include tablets and smart TV sets.
Headline Expenditure Projections
- Computer hardware sales: US$2.7bn in 2012 to US$2.9bn in 2013; +6% in US dollar terms. Forecast in US dollar terms unchanged, but PC sales will be supported by the government's push for greater broadband penetration.
- AV Sales: US$3.9bn in 2011 to US$4.1bn in 2013; +4% in US dollar terms. Forecast in US dollar terms unchanged, with HD and smart TV sets providing strong growth areas.
- Handset Sales: US$1.6bn in 2012 to US$1.8bn in 2013; +11% in US dollar terms. Forecast in US dollar terms unchanged with smartphones the main revenue growth driver.
Malaysia's score was 62.5 out of 100.0, which gave it fifth place in our latest Asia CE RRR table. BMI expects rising Malaysia to remain a growth market, with rising penetration of consumer electronics devices such as smartphones and flat-screen TV sets.
Key Trends & Developments
- Malaysian PC sales will be supported by the government's push for greater broadband penetration; the government has set an optimistic target of 75% by 2015. The IT market is distinguished by a marked digital divide, which effectively creates two separate markets. In the Klang Valley area around Kuala Lumpur a mature urban population surpasses even some developed nations in terms of IT adoption on some indicators.
- A combination of new technologies such as 3D, LED and internet-enabled TV, along with more competitive pricing, should help support AV demand. Smart TV sets proved a strong growth area in Malaysia in 2012, with vendor estimates that this category accounted for around 35% of total TV set sales. Overall TV net sales growth has been declining in volume terms over the past few years because of increasing competition from other multimedia devices such as computers and mobile phones. The growing popularity of LED backlit TVs and pay-per-view will drive revenue growth, due to the greater proportion of sales accounted for by high-end and large-screen models.
- Half the handset market is made up of the youth segment, defined as those younger than 24. This segment is therefore a key target for handset vendors and operators. The youth demographic regards handsets principally as lifestyle devices and are mainly prepaid subscribers. Competition among the leading operators has intensified, with all three offering a broader range of product offerings and packages.