• The video equipment sub-sector, including televisions and video recorders, accounts for a full forty-eight percent of all local production of electronics.
•  In the office equipment, industrial equipment, electronics components and intermediate inputs segments, some 90 percent of all domestic requirements are imported.
• Nearly fifty percent of the Egyptian PC market is controlled by the ten leading international IT suppliers, most notably, IBM, AT&T, ICL, Apple, Compaq and Hewlett-Packard, distributed through agents, importers and their own representative offices in Egypt. (Egypt & MiddleEast)

Limitations to Indigenous Hardware Manufacturing

    From the above statistics, the local electronics industry may still be regarded as underdeveloped: actual manufacturing is limited almost exclusively to assembly operations. The primary limitation to the local manufacture of electronics is the lack of locally supplied primary products – an estimated 75 percent of all inputs and components are imported.   This underlying lack of a primary product industry is a result of Egypt’s small market size (previously introverted import substitution economy) vis-a-vis the aforementioned large capital investment necessary for production facilities and the need for economies of scale to withstand low profit margins on small items such as capacitors, resistors, integrated circuits and semi-conductors. (Ibid.) 

    The single standout of the sector is the consumer electronics segment that has reached  a level of 51 percent of local integration.  This segment’s dominance is the result of a combination of factors – it is the oldest of electronic technologies and the most populist electronic product for a developing country. The segment is also assisted by high import tariffs (up to 50%) on finished electronic products, however, smuggling and customs evasion are negatively impacting local sales.  Based on 1992 performance, forecasts by market researcher Elsevier Advanced Technology suggest an annual rise in local production of electronics goods of 28 percent per annum up to 2000, based primarily on increased local assembly of consumer electronics. (Ibid.)

Catalysts to Increased Indigenous Hardware Manufacturing and Integration

    Despite implications from the above statistics, Egypt is cited by industry analysts as the fastest growing IT market in the Middle East. Total market volume in Egypt reflected a growth rate of 26 percent between 1994 and 1995.  While not reflected in the hardware sector, the  main drivers of this growth are sales of software, services, networks and PCs.  This is primarily due to shrinking profits in the hardware market and the subsequent bundling of hardware in total solutions by coordinating turnkey projects and frequently supplying operating systems free-of-charge.  Thereby, hardware is a catalyst for the other drivers.

    The total Middle East regional market for IT is estimated at over Ecu 900 million for hardware products alone as of 1994, or almost 2 percent of the world's personal computer (PC) production.  As regional economic cooperation expands, Egypt may be able to leverage other IT sectors and its economic size to produce hardware for the region. (Ibid.)