The Instrumentation Market for Cable Assemblies: Testing the Times
By David Pheteplace, Bishop & Associates Inc.

A prominent factor driving test and measurement demand is the continuous development of wireless standards and network deployment. With the increasing popularity of broadband network services, in addition to broadband services such as music and video download and IPTV, new services such as cloud computing are entering the marketplace. With the start of full-scale construction of 40Gbps networks that can handle the rapid increase in high-speed traffic, as well as full-fledged research and development for 100Gbps network equipment, demand for related test and measurement equipment is increasing. The growth in wireless electronics is leading to a similar surge in the need for systems capable of testing them.

This market growth is also due to the general recovery the worldwide economy experienced in 2010. As the economy has come back, all market sectors, for the most part, are doing better. As factories get back up to speed, many of these instrumentation products are needed to sustain the manufacturing. Semiconductor manufacturing is a good example where test and measurement equipment is heavily used.

The following is some information on key companies in this industry. 

• Advantest has completed its acquisition of Verigy, who will initially operate as a wholly owned subsidiary, with additional integration to occur over a six- to nine-month period. Each entity will maintain its current strategy through the transition. Based on industry estimates, the two companies hold a market share of 42%. Their primary goal is to take the #1 spot for SoC (system on a chip) testing among tester companies; however the combined companies also expect to compete with measuring companies who attempt to perform in the semiconductor-test space.

• Danaher added Keithley Instruments to a group that already included Tektronix and Fluke, test and measurement brands. Combined, the Danaher family of test companies recorded $2.8 billion in sales in 2010, edging out Agilent for the number-one spot in the top 10. Last year, Tektronix introduced a new mixed-signal oscilloscope platform, and unveiled new high-bandwidth and low-capacitance passive voltage probes, plus instruments to support test work on DDR3 and DDR4.  

• Agilent’s measurement group continues to implement a multi-year product introduction program. In 2010, it launched more than 200 products. Agilent’s business growth is also attributed to test applications for 3G and 4G communications. New R&D activity focuses on applications related to cloud computing and green technology. |
  
   

• Teradyne’s revenue surged 96% as the company captured $800 million from growth in the SoC (system on a chip) test market. Teradyne has expanded its UltraFlex testers for advanced microprocessors, chipsets, disk drives, and video game devices.
  
  
  
  
  
   

• National Instruments continues to grow, thanks to its release of the industry’s first PXI vector network analyzer and high-density PXI switching platform. Other growth drivers include strong interest in its RF and NI FlexRIO products used in automated validation and production test for smartphones and other mobile devices. The company is also positioning its PXI platform for semiconductor testing.
   

Bishop Comments:

• The telecommunications market for wireless infrastructure will continue to see better than average growth. This will help the instrumentation market.

• Semiconductor manufacturers will also see better than average growth, as their products are generally used in computers, smartphones, and electronics. This will help the instrumentation market.

• We do not see any short-term trends or factors that will shorten the recovery period for the world economies. We believe the recovery will be slow, taking two or more years. It is possible that certain political or economic factors could throw the world economy into a second recession.

• The slowing GDP growth forecast for 2012 in Europe and the U.S. will negatively impact the world economy.

• The slowing GDP growth in China and India, coupled with high inflation and tighter credit, will negatively impact these economies and their instrumentation spending.

The world economy is still very fragile. Bishop & Associates expects the worldwide market for instrumentation cable assemblies to grow only 4.2% in 2011, to a worldwide value of $3.4 billion. The highest growth rate is expected in China, at 16%. Growth in 2012 is expected to be 3.2%.