Electronics Industry in Serbia

Electronics Technical ArticlesSouth-East European INDUSTRIAL Мarket - issue 3/2013

Serbia is a home to a rich tradition in the electronics industry, but the story of this field in the country begins with Nikola Tesla, one of the greatest pioneers and inventors in the field of electricity.

Of his countless discoveries and contributions to science, Tesla’s most notable achievements include a forerunner to commercial electricity, the alternating current (AC) system and important work leading to the invention of wireless communication and the radio.

 His colorful personality and groundbreaking achievements have rightfully been immortalized in science and popular culture alike, and it comes as no surprise that he is considered by many as the most important Serbian of all time.

Tradition of the Electronics Industry in Serbia
Serbia’s electronics industry dates back to the post World War II period when smallscale of manufacturing of radio devices began throughout the former Yugoslavia.

The main production centers of the electronics industry were in Slovenia and especially in Serbia. The biggest companies in this field were Iskra Kranj, Rudi Cajevac, RIZ and Electronics Industry Nis (EI Nis for short).

These companies grew to become especially large in the 1960s and 1970s. EI Nis was the largest of these: at the height of this company’s peak it employed 28,000 people in over 50 factories throughout the former Yugoslavia.

The assortment of electronics products manufactured in Serbia grew as quickly as the industry itself: Starting from the immediate postwar period of radio device production, companies in Yugoslavia moved into manfucturing consumer electronics in the 1960s.

In the subsequent decade, electronics production was also heavily focused on supplying the military. The 1970s also saw a rapid expansion in electronics exports from Yugoslavia.

This industry reached its peak in the 1980s: During this decade, Yugoslavia’s electronics industry was a $1 billion sector that employed around 100,000 people. About one quarter of these were employed in cutting-edge research and development.

Companies in Serbia alone accounted for about half of the Yugoslav industry’s production and employees at this time. Every major foreign electronics company had representative offices in the country, while many firms worked under license to foreign companies.

 EI Nis produced television sets in cooperation with Philips. Manufacturers of electronic components for the military industry did so in accordance with standards employed in the United States.

As was the case with most sectors, the 1990s in Serbia marked a period of sharp decline for the electronics industry: The political problems and economic sanctions imposed on Serbia during this decade had catastrophic consequences for the oncethriving sector.

By the mid-1990s, the size and profitability of Serbia’s electronics industry was less than 10% of what it was in the previous decade. The industry was limited to serving only the Serbian market. Reduced profits prevented local companies from investing in new technologies.

Electronics Industry in Serbia Today
Although the Serbian electronics sector today is only a fraction of what it was at its peak in the 1980s, recent foreign direct investment into the industry and various state-driven initiatives show that this sector has strong potential for future growth.

There has been a steady influx of FDI into the sector - roughly EUR 168 million - ever since the democratic changes of 2000; however, the most promising investments in thisfield have occurred in the past several years. This, coupled with the upcoming opening of several IT-electronics parks, illustrates that the best is yet to come for companies in Serbia’s electronics sector.

The growing Serbian electronics industry is a thriving, export-oriented sector that only figures to grow with the recent influx of foreign direct investment. Relative to 2008 and 2009, exports from the industry in 2010 grew by 15% and 44%, respectively.

The 2009 economic crisis gap was surpassed swiftly in 2010 and, with new export-oriented projects such as first Panasonic factory in Serbia, exports are expected to flourish further. Between 15 and 20 electronics companies export more than 1 million Euro per year. Many - such as Eaton Electric, ATB Sever, Gorenje, and Yura Corporation - are foreign-owned. On the other hand domestic brands are led by Fabrika Akumulatora Sombor, produce the globally-recognized "Black Horse" car starter batteries.

One of the advantages of Serbia is the local production of high quality copper in mines of the Bor region. This enables highly-developed production of wires and cables. Leaders in the field are Polish-owned TF Kable and Serbian companies Kablovi Jagodina and Novkabel.

Recognizing this potential, Korean company Shinwon constructed their brand new wire factory in City of Nis in 2011. In all, sub-sectors which dominate Serbian exports are wires, cables, insulated electrical conductors, electrical circuits, and accumulators. Exports of these products account for more than half of all electronics exports from the Republic of Serbia.

Heating apparatuses, transformers, panels and consoles are also heavily represented in products produced in Serbia but sold abroad. With the entry of Slovenian company Gorenje, home appliances are becoming one of the interesting outputs of Serbian industry.

 Just four years after the establishment of the factory, some 50 million euros of refrigerators are now being exported from Serbia. The government is looking to attract more investors in this labor-intensive sector by creating especially favorable conditions for potential investors.

Foreign Investments in the Electronics Industry in Serbia
From 2001 onwards, Serbia has witnessed the steady revival of the electronics industry. This has been primarily driven by a continual inflow of foreign direct investment. The first significant investment in this sector was that of Austrian giant ATB Gruppe, which purchased Sever Subotica at the end of 2004 for EUR 25 million.

Undoubtedly the most significant foreign investor in the sector is Slovenian home appliance company Gorenje. Since 2006, Gorenje has invested EUR 50 million three separate locations in Serbia -Stara Pazova, Valjevo and Zajecar - and employed 1,150 workers. 2005 saw German electronics giant Siemens acquire Loher GmbH and employ 500 workers and invest EUR 13 million to establish a wind turbine manufacturing facility in Subotica.

Siemens will expand its Serbia footprint by investing a further EUR 20 million and employing an additional 250 full-time workers. Furthermore, Japanese electronics giant Panasonic has already begun production in planned to be a EUR 13 million facility in Svilajnac in central Serbia.
The government of Serbia is actively promoting the growth of this sector: Along with the automotive and ICT industries, the electronics sector has been designated one of the priority sectors in Serbia’s National Development Strategy.

This allows investors in this sector to receive more favorable investment incentive packages. Companies in this industry have taken advantage of this fact: investments in the electronics industry are third when it comes to the number of projects which have been approved for funding and the fourth highest in terms of all investments in Serbia since 2000. Furthermore, numerous initiatives, including the promotion of IT and Research and Development parks throughout the country and the founding of an electronic systems cluster, will propel the sector even further.

Within a few years, investors will be able to purchase land and facility space in areas specially designed with their needs in mind in Belgrade, Novi Sad, Kragujevac, Indjija, and Nis. The recently-formed embedded cluster encourages further collaboration between companies from the industry and public sector and educational institutions.

Source: Serbia Investment and Export Promotion Agency (SIEPA)

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