THE ELECTRONICS INDUSTRY OF HUNGARY 1954-65

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• Document Creation Date: December 27, 2016
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• Sequence Number: 1
• Publication Date: December 1, 1961
• Content Type: REPORT

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Economic Intelligence Report
N? 1
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THE ELECTRONICS INDUSTRY OF HUNGARY
1954-65
CIA/RR ER 61-58
December 1961
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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SECRET
Economic Intelligence Report
THE ELECTRONICS INDUSTRY OF HUNGARY
1954-65
CIA/RR ER 61-58
WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
SECRET
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FOREWORD
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The purpose of the report is to summarize the progress of the Hungarian
electronics industry during 1954-60, to estimate the probable course of
the industry during 1961-65, and to provide a general assessment of the
capabilities of the industry based on an analysis of aggregate levels of
production. Estimates, conclusions, and the derivation of all tables in
the body of this report are accompanied by methodologies included under
appropriate section headings in Appendix B.
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CONTENTS
Page
Summary and Conclusions
I. General Survey
1
3
A.
Organization and Structure of Production
3
B.
Growth and Magnitude of Production
5
C.
Research and Development
7
D.
Labor and Productivity
8
E.
Investment
10
F.
Foreign Trade
11
1. Trading Organizations
11
2. Imports
12
3. Exports
12
II.
Production Trends in Major Branches
13
A.
Electron Tubes and Semiconductor Devices
13
1. Electron Tubes
13
2. Semiconductor Devices
17
B.
Consumer Entertainment Equipment
17
1. General
17
2. Television Receivers
19
3. Radio Receivers
20
C.
Industrial Electronic Equipment
21
1. General
21
2. Civil Communications Equipment
21
3. Electronic Instruments
24
D.
Military Electronics
26
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Appendixes
Appendix A. Major Producers of Electronic Equipment
in Hungary
Appendix B. Methodology
Page
29
31
Tables
1. Estimated Net Value and Indexes of Production of Elec-
tronic Equipment in Hungary, 1954-65 6
2. Estimated Value of Exports of Electronic Equipment
from Hungary, 1954-60 and 1965 14
3. Estimated Production of Electron Tubes in Hungary,
by Volume and by Value, 1954-65 16
4. Estimated Production of Consumer Entertainment Equip-
ment in Hungary, by Number of Units and by Value,
1954-65
18
5. Estimated Value of Production of Civil Communications
Equipment in Hungary, 1954-65 25
6. Estimated Value of Military Electronic Equipment
in Hungary, 1954-65 27
7. Distribution of Domestically Produced Electron
Receiving Tubes in Hungary, 1954-65 45
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Charts
Figure 1. Hungary: Estimated Net Value of Pro-
duction of Electronic Equipment,
by Major Commodity Groupings,
1954-65
Figure 2. Hungary: Estimated Value of Exports
of Electronic Equipment, 1954-60
and 1965
Following Page
6
Figure 3. Hungary: Estimated Value of Produc-
tion of Electron Tubes, 1954-65 . . 16
Figure 4. Hungary: Estimated Value of Produc-
tion of Consumer Entertainment
Equipment, 1954-65 18
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THE ELECTRONICS INDUSTRY OF HUNGARY*
1954-65
Summary and Conclusions
The electronics industry of Hungary has expanded since World Wax II
from a relatively small production of electron tubes and telephone equip-
ment to a diversified production of a broad range of vacuum tubes and tele-
communications products. Although still not large in absolute terms -- the
net value of production in 1960 is estimated to have been only 3.7 billion
forints** ($185 million) -- this industry has become, after East Germany
and Czechoslovakia, the third most important producer of electronic equip-
ment among the European Satellites. The industry has shown a remarkable
viability considering the disruptions resulting from the Hungarian revolt
and the relatively low level of technology that had prevailed. The Hun-
garian electronics industry has made notable progress since its earlier
stages, in which production of microwave equipment was virtually non-
existent; transistor technology was only beginning to be investigated;
production of cathode ray tubes was minor; television receivers were pro-
duced only in token numbers; and the main producers such as Beloiannisz,
Tungsram, and Orion functioned with obsolete equipment and aging facili-
ties. The industry has assumed a leading role among countries of the
Soviet Bloc in production of multichannel microwave radio-relay equip-
ment,*** and production of television receivers is growing rapidly. The
application of transistors, germanium diodes, and printed circuitry to
the latest export models of radiobroadcast receivers testifies to the
advances that have been made in the manufacture of components. Plant
efficiency and labor productivity have improved markedly in recent years
with the expansion and renovation of plant facilities and production
equipment.
* The estimates and conclusions in this report represent the best judg-
ment of this Office as of 1 December 1961.
** Forint values in this report are given in 1956 forints and may be con-
verted to US dollars at the rate of exchange of 20. forints to US $1. This
rate, while appropriate for this report, is not necessarily applicable
outside the Hungarian electronics industry.
*** Hungary began production of its GTT 4000/600 equipment (see II, CI 2,
p. 21, below) in 1961. East Germany's competitive equipment, the RVG 958,
is scheduled to go into production in 1963. Thus Hungary appears to be
developing a significant lead over East Germany in a field of telecommuni-
cations engineering in which East Germany historically has been considered
superior to Hungary.
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On the negative side the electronics industry of Hungary has been ex-
ceedingly slow in beginning to realize the potential with which it has
been endowed by an advanced educational system, the natural aptitudes and
energies of the Hungarian people, and a long tradition in the manufacture
of certain types of electronic equipment. The following factors have been
the principal retarding influences: the Hungarian revolt of 1956, which
resulted in heavy losses of engineers and technicians and a condition of
widespread lassitude and worker apathy; a lack of originality and initiative
in basic and applied research, which sacrificed the long-run benefits from
native innovations to short-run gains from the imitation of Western tech-
nology; and a lack of native resources of needed raw materials, which
necessitated the continuing importation of copper, nickel, ferroalloys,
polyethylene, teflon, raw quartz, and other items.
The industry is developing a vigorous export program, and it is esti-
mated that by 1965 three-fifths of all production will be exported. Grow-
ing attention is being given to non-Bloc exports of consumer entertainment
equipment, particularly television receivers. At the present time the in-
dustry exports telephone equipment and consumer entertainment products
(radiobroadcast receivers and television receivers) throughout the world,
but the USSR continues to be the principal consumer of Hungary's exported
electronics products. Electron tubes, radio and television studio equip-
ment, frequency-modulation (FM) transmitting facilities, automatic tele-
phone exchanges, and multichannel microwave radio-relay equipment are
among the chief items of export to the USSR. Hungary also exports radio
transmitters, telephone equipment, and carrier equipment to Communist
China.
A prominent characteristic of the industry in postwar years has been
its lack of autonomy. In effect an adjunct to the electronics industry
of the USSR, the electronics industry of Hungary lacks flexibility in the
use of its production capacity and in the mobility of its finances. Since
World War II, Hungary's dependence on the USSR for investment capital and
its subordination to Soviet requirements for equipment have contributed
substantially to worker apathy and have militated against the organization
of a strong base for long-range developments. The electronics industry of
Hungary is unlikely to become more independent through 1965. The pattern
for the immediate future, as indicated by industry investments, exhibits
a threefold orientation, as follows: the development of a strong compo-
nents base, a greatly increased emphasis on the export of television to
non-Bloc countries for the accrual of more foreign exchange, and an in-
tensive effort to expand production of multichannel microwave equipment.
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I. General Survey
A. Organization and Structure of Production
The Hungarian electronics industry* consists of eight major pro-
ducers and a number of minor enterprises subordinate to the Ministry of
Heavy and Machine Industry (Koho es Gepipari Miniszterium).** The Direc-
torate of Telecommunications, headed by a deputy minister of the Ministry,
is responsible for the coordination and direction of all matters pertain-
ing to telecommunications generally that are outside of the jurisdiction
of the Ministry of Communications, which is an important consumer of the
Directorate's production.***
These electronics plants are concentrated preponderantly in the
Budapest metropolitan area, which already contains 52 percent of the total
industrial production of Hungary. A rapidly increasing population has
made an overhaul of the Budapest industrial structure increasingly impera-
tive, and plans for the development of small peripheral cities to allevi-
ate the detrimental effects of the burgeoning population reportedly have
been integrated into the Second Five Year Plan (1961-65). Nevertheless,
with the exceptions of a television picture tube plant which has been
built at Vac and an affiliate of Remix being constructed in Szombathely,
no major trend toward decentralization or redeployment of the electronics
industry to outlying areas is discernible as yet. Rather, the industry
today, as before World War II, is oriented around the expansion and mod-
ernization of existing plants such as Beloiannisz, Orion, and Tungsram
which were built originally with German, UK, and US capital and have long
constituted the core of the industry.
* The electronics industry may be defined as that branch of electrical
engineering which produces devices, equipment, or systems in which a flow
of electrons is emitted that is amplified, controlled, or directed by the
use of vacuum tubes or semiconductor devices. Production includes a wide
variety of components and end equipment such as electron tubes; transis-
tors; radiobroadcast transmitting and receiving equipment (including tele-
phone, telegraph, radio, and television); radar; data-processing machines;
instruments; and similar items adaptable for consumer, industrial, and
military application. Some purely electrical items such as resistors and
capacitors are included in the industry, and some vacuum products such as
incandescent and fluorescent bulbs are not included.
** Also referred to as the Ministry of Metallurgy and the Machine Indus-
try.
*** For a listing of the major electronics plants in Hungary, the names
by which they are usually known, and a general indication of the products
manufactured, see Appendix A.
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Production of electronic equipment in Hungary may be conveniently
divided according to the following commodity groupings: consumer enter-
tainment, industrial electronics, military electronics, and electron
tubes. Production of consumer entertainment equipment is mainly concen-
trated in the following three plants: Orion, the Telephone Plant, and
the Hunting Cartridge Plant. Production of industrial electronic equip-
ment is handled principally by the Beloiannisz and EMG plants, which
specialize in civil communications equipment and electronic instruments,
respectively. Production of military electronic equipment is primArily
the responsibility of the Precision Mechanics Enterprise (FMV), with a
small contribution being made by the Telephone Plant. In past years,
Beloiannisz has engaged in production of military equipment but is not
believed to be currently so engaged. Electron tubes are produced by
Tungsram and the Hungarian Transmitter Tube Plant.
The largest complex for production of industrial electronic equip-
ment in Hungary is the Beloiannisz plant. This plant is currently under-
going a major expansion which, when completed, will double its size and
assure it a prominent place as one of the largest factories for production
of telecommunications equipment in Europe. The history of telecommunica-
tions development and production in Hungary is, by and large, the history
of the Beloiannisz plant. Although the plant suffered no physical aamage
as a result of the Hungarian revolt of 1956, the loss, through defection,
of approximately 10 percent of its personnel (including about 100 engi-
neers and highly trained technicians) temporarily slowed its production
during the fourth quarter of 1956 and during 1957. As a consequence, its
ambitious program of microwave development was seriously retarded.
At the present time, on the basis of loans from the USSR, Beloian-
nisz is undergoing a structural and organizational transformation, the ob-
jective of which is to provide for intensive concentration on production
of microwave equipment. By 1962 the plant will produce this equipment at
a rate estimated to be in excess of 1 billion forints per year, which, even
granting a high level of organizational competence and technological skill,
represents an impressive achievement.
Hungary has long been a producer of radiobroadcast and other trans-
mission equipment, much of which has been delivered to the USSR in postwar
years as reparations payments. The early 1950's were characterized by
production based on the reproduction of Western patents. Three-channel
and 12-channel items of carrier equipment, designated in Hungary as the
BBO-3 and the BSOJ-12, respectively, were copied from designs developed
by Standard of London, and the turbator (special magnetron) used in Hun-
gary's 24-channel microwave equipment, the PM-24, was reproduced from a
Brown-Boveri tube. Such exploitation of Western prototypes, publications,
and patents was perhaps inevitable in view of the lack of suitable facili-
ties and an adequate pool of scientifically trained personnel. In 1956,
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only 16 percent of the telecommunications workers in Hungary were tech-
nically trained, and, even more significantly, only 3 percent were engi-
neers. 1/*
B. Growth and Magnitude of Production
The estimates of the total net value of production of electronic
equipment in Hungary in 1954-65 are given in Table 11** including esti-
mates for the constituent sectors of end use (see also the chart, Fig-
ure 1***). The figures for the electron tube sector exclude that portion
of its output which is included in the output of other sectors.t
Annual production of the Hungarian electronics industry during
1954-60 is estimated to have grown from 1.2 billion forints to 3.7 billion
forints, implying an average annual rate of growth of about 20 percent.
Such a relatively high rate of growth would normally be expected in an
expanding industry starting from a low base. Nevertheless, considering
the dislocations of the 1956 revolt, which caused output in 1956 to drop
to about 92 percent of the level of 1955 and in 1957 to 94 percent of
the level of 1955, this growth record represents a very substantial
achievement. The greatest increase was registered during the period of
the Three Year Plan (1958-60), when the labor force of an already labor-
intensive industry was augmented by more than one-third, and about 340
million forints were invested in the modernization and expansion of ex-
isting facilities. Particular emphasis was placed on production of tele-
communications equipment, output of which is estimated to have risen from
1.2 billion forints in 1957 to 3.1 billion forints in 1960. During this
period the Beloiannisz plant was expanded and modernized on the basis of
an investment of 100 million forints. 2/
The Three Year Plan for the Hungarian electronics industry re-
flected a growing concern on the part of the Hungarian regime with the
balance-of-payments problem generally and gave rise to a heightened em-
phasis on increased exports of electronic equipment as a realizable
method of making that balance more favorable. The plan formally recog-
nized the inherent limitations of a trade program based on the export of
heavy industrial products requiring large outlays for expensive raw ma-
terial and the correlative advantages of an expanded electronics industry
which requires a minimum of raw material but a maximum utilization of
human technical skills. The plan also reflected an increasing awareness
by Hungarian planners of the value of increased telecommunications exports
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Table 1 follows on p. 6.
*** Following p. 6.
The gross value and volume of production of electron tubes are shown
in Table 3, p. 16, below. For a detailed discussion of production of
electron tubes, see II, A, 1, p. 13, below.
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Table 1
Estimated Net Value 2/ and Indexes of Production of Electronic Equipment in Irongary 12/
1954-65
Consumer entertainment equipment
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
(million 1956 forints)
170
250
260
370
510
64o
850
940
1,200
1,550
2,030
2,660
Index (195)4 = 100)
100
146
152
212
296
367
488
541
692
895
1,167
1,533
Industrial electronic equipment
(million 1956 forints)
740
1,240
1,110
890
1,140
1,990
2,360
2,880
2,950
2,950
2,870
2,650
Index (195)4 = 100)
100
166
149
120
153
268
318
387
396
397
386
357
Civil communications equipment
680
1,180
1,060
820
1,050
1,900
2,260
2,760
2,820
2,810
2,710
2,480
Instruments
60
6o
50
70
80
100
110
120
130
150
160
180
Military electronic equipment
(million 1956 forints)
no
60
4o
220
270
270
270
270
270
270
270
270
Index (195)4 = 100)
100
50
40
205
247
245
245
245
245
245
245
245
Electron tubes 2/
(million 1956 forints)
170
180
170
140
210
240
260
280
300
310
310
300
Index (195)4 = 100)
100
103
98
82
119
139
150
163
171
176
177
171
Total (million 1956 forints)
1 200
1,730
1,590
1 630
2,130
3 140
3,740
4 37o
4 72o
5 080
5,470
5,88o
Index (195)4 = 100)
100
-144
132
135
177
261
311
364
392
423
455
489
a. Net value is basically a value-added series, representing values based on factory prices and therefore excluding double
counting.
b. Values have been rounded to the nearest 10 million forints to show the actual extent of the computations. Accuracy,
however, should not be presumed to extend beyond two significant digits. Because of rounding, components may not add to the
totals shown.
c. Consisting of spares and exports of tubes.
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Figure 1 50X1
MILLION 1956 FORINTS
3000
2000
1000
0
1954
HUNGARY
ESTIMATED NET VALUE OF PRODUCTION OF ELECTRONIC EQUIPMENT
BY MAJOR COMMODITY GROUPINGS, 1954-65
?1
ELECTRONIC
INDUSTRIAL
I
EQUIPMENT
1
.".......".".%4
/
/
i
CONSUMER
ENTERTAINMENT,/
EQUIPMENT/'
f
/
/
/
/
/
--- .........
-,.....
?MILITARY
.....?-? -
...?.'"
....???? ...???`'
/
...
--.*'.- ..../
....-.........-??
ELECTRON
TUBES*
.
I
ELECTRONIC
I
EQUIPMENT
35500 10-61
1955 1956 1957 1958 1959 1960
*Consists of tube exports and spares
1961
1962
1963
1964
1965
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which, for a given volume of forint expenditure, frequently yield more
than three times as much foreign exchange as does the sale of other com-
modities. 1/ Under the influence of this new policy, Hungary initiated
an expanded program for production of household television sets. As a
result, production of these items increased 21-fold during 1957-60.
During the Second Five Year Plan (1961-65) the Hungarian elec-
tronics industry will continue to grow but at a reduced rate. The in-
dustry will achieve a volume of output estimated to be 5.9 billion fo-
rints by 1965, implying an annual rate of growth of slightly less than
8 percent. During this period the industry will continue to be dominated
by an emphasis on production of telecommunications products, particularly
household television sets and multichannel microwave radio-relay equip-
ment. By 1965, production of these two items alone will amount to 3.4
billion forints and will constitute almost 60 percent of the total output
of the Hungarian electronics industry.
The simultaneous expansion of television receiver and multichannel
microwave production expresses the peculiar ambivalence of the industry.
On the one hand, the industry is attempting to become self-supporting
through expanded exports of commodities capable of competing effectively
on world markets, and, at the same time, it extensively engages in the
less profitable enterprise of satisfying Soviet requirements for micro-
wave equipment -- a situation that leads to greater dependence on the
USSR and a diminishing likelihood that the objective of effective par-
ticipation in the world markets will be achieved. The USSR has been and
will continue to be the principal source of Hungarian investment capital
and the principal consumer of Hungarian production.
C. Research and Development
The most prominent organizations in Hungary conducting research
and development in the field of electronics are as follows: the Tele-
communications Research Institute (Tavkozlesi Kutato Intezet TKI),
the Technical Communications Research Institute (Hiradastechnikai Kutato
Intezet HIKI), and the Military Technical Institute (Haditechnikai
Intezet HTI). In addition to these organizations, specialized re-
search is carried out by the Central Research Institute for Physics, the
Research Group for Cybernetics (both of the Hungarian Academy of Sciences),
and the Chair of Special Electronic and Automatic Machinery at the Tech-
nical University of Budapest.
Generally speaking, applied research and development of military
importance in the field of telecommunications is the primary mission of
TKI and HTI, and research efforts on projects of industrial application
are the responsibility of HIKI. This dichotomy is not absolute, however,
as research by both institutes is likely to have application to both mil-
itary and nonmilitary end usage.
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Before 1950, electronics research and development efforts were
small and were largely accomplished in the laboratories and research de-
partments of existing plants, mainly the Telephone Plant, Orion, Tungsram
Beloiannisz, and Remix. This effort was fragmented and lacked centralized
direction and coordination. During 1950-51, personnel and equipment of
these groups were integrated into the newly formed TKI. As currently or-
ganized, this institute is subordinate to the Telecommunications Directo-
rate of the Ministry of Heavy and Machine Industry. During 1951-55, ex-
penditures of this institute are estimated to have amounted to 130 million
forints, an average of 26 million forints a year. This sum was equivalent
to less than 6 percent of the net production of the Beloiannisz plant
alone in 1956 and less than 2 percent of the net value of production for
all telecommunications output, Until 1956, TKI worked on the development
of electronic components for proximity fuses for antiaircraft shells under
the supervision of Soviet technicians and conducted extensive experimenta-
tion on microwave systems and special-purpose tubes such as magnetrons,
klystrons, traveling wave tubes, and cathode ray tubes. HIKI in 1956
was responsible for research in semiconductors (silicon diodes and tran-
sistors), transmitting tubes, electron tube applications, resistors, and
capacitors. The activities of both institutes since the revolt may be
assumed to have crystallized around the development of microwave compo-
nents at TKI and intensified semiconductor research at HIKI.
The pace of Hungarian research and development in electronics has
been comparatively slow owing principally to the following two factors:
first, the pattern of research has been imitative rather than basic and,
as a result, has suppressed the best efforts of a number of creative and
highly qualified scientists. Second, the revolt of 1956 exacted a very
heavy toll of the available scientific and engineering talent. Estimates
by defectors of the percent of highly qualified telecommunications engi-
neers who left the country have been as high as 8o percent.12/ At TKI
alone it is estimated that 80 to 85 persons, the majority of whom were
engineers and technicians, left Hungary after the abortive revolt.
D. Labor and Productivity
Generally speaking, the Hungarian electronics industry has an ade-
quate labor supply but suffers from a serious shortage of engineers and
technically skilled personnel. This industry was particularly hard hit by
defections during the 1956 revolt and has functioned throughout 1956-60
with second-line technical and engineering skills. The problem was par-
ticularly acute in areas requiring engineering experience and project con-
tinuity for the resolution of complicated technical problems such as mi-
crowave development, for example, where a commitment to export in quantity
to the USSR during 1956-60 had to be greatly reduced. In spite of the
disruptive effects on research and development, the defections do not
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appear to have greatly undermined the confidence of the USSR in the capa-
bilities of the Hungarian electronics industry or to have precipitated any
major reassessment of Soviet requirements on that industry.
The labor force of the electronics industry is estimated to have
been in excess of 40,000 in 1959. This figure represented an increase of
one-third since 1957. It is likely during the Second Five Year Plan that
the labor force will continue to expand in order to satisfy new labor de-
mands generated by the expansion of facilities at the Orion, Tungsram)
and Beloiannisz plants as well as at new plants presently under construc-
tion. Thus labor intensiveness in the Hungarian electronics industry may
be expected to continue as a prominent characteristic of the industry's
profile through 1965. At the same time, it is suggested that the new em-
phasis on procurement of machinery and equipment, as reflected in the
multimillion forint allocations for this purpose during 1958-60, 2/ should
result in increased mechanization of production technology and a more ef-
ficient utilization of labor power. Aside from the television picture
tube plant at Vac, which allegedly is highly automated, there are no evi-
dences of such advanced technology in the industry. It may be assumed,
however, that Vac gives an indication of future trends.
The average productivity of workers in the electronics industry
in Hungary as measured by annual per capita value of output can be reev-
sonably estimated for 1957 and 1959. Productivity in the industry as a
whole is estimated to have grown from 54,200 forints per employee in
1957 to 78,500 forints per employee in 1959. Comparing the two main
branches of the industry, manufacture of telecommunications equipment
and of electron tubes, productivity rates are markedly different. Pro-
ductivity per employee in 1957 in the telecommunications branch, for ex-
ample, was approximately 58,000 forints, and the corresponding figure in
the electron tube branch for the same year is estimated to have been
40,000 forints.
A number of factors have prevented the achievement of higher rates
of labor productivity within the Hungarian electronics industry -- obso-
lescent equipment; personnel losses owing to the revolt and, in the case
of electron tubes, physical damage sustained by the Tungsram plant; worker
apathy; and a reject rate of 4 to 8 percent for telecommunications end
items and frequently as high as 30 percent for electron tubes.
Productivity also was affected by delays in production resulting
from abnormnlly heavy dependence on imports from other countries of the
Soviet Bloc. The latter factor was most noticeably operative in produc-
tion of telecommunications equipment at the Beloiannisz plant, which im-
ported 70 percent of its specialized instruments and 25 percent of its
electron tubes as well as electrolytic capacitors, precision resistors,
test instruments, permalloy, nonferrous metals, and other electronic
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parts. Owing to the shortage of raw materials, the Beloiannisz plant
frequently substituted materials on the production line, necessitating
changes in production methods which in turn resulted in production delays.
Additional delays were caused by similar shortages at other Hungarian
electronics plants that supply Beloiannisz with semifinished products.
By 1959, however, the investment program of the Three Year Plan
began to take effect. Labor productivity in the telecommunications branch
is estimated to have increased by 6o percent above 1957 and in the elec-
tron tube branch by 73 percent. As noted above, average productivity per
employee on an industrywide basis in 1959 amounted to 78,500 forints for
an over-all increase of approximately 45 percent above 1957.
E. Investment
With the launching of the Three Year Plan (1958-60), a long-term
trend toward a more vigorous development of the Hungarian electronics in-
dustry was initiated. The Three Year Plan called for investment outlays
in the electronics industry in the magnitude of 340 million forints,
a large proportion of which was allocated for the expansion and reequip-
ping of the Beloiannisz telecommunications plant, the construction of
the television picture tube plant at Vac, and the modernization of the
main Tungsram and Orion plants. Of these outlays, 83 million forints, or
25 percent of the total, were earmarked for the procurement of machinery
and equipment. The Second Five Year Plan (1961-65) will accelerate this
trend of more vigorous development by providing for an investment nearly
three times as large as the Three Year Plan investments, or approximately
1 billion forints. 1/ This sum amounts to almost 12 percent of all in-
vestment planned for the Hungarian machine industry during 1961-65. As-
suming that the pattern of capital outlays in the electronics industry
adheres to that programed for the Hungarian machine industry as a whole,
one-third will be allocated for construction and two-thirds for new equip-
ment.
The implied increase in equipment allocations, from one fourth of
the total investments in 1958-60 to two thirds in 1961-65, would tend to
buttress an earlier observation that the Hungarian electronics industry
intends to fulfill its production commitments at least through 1965 by
increased productivity from existing facilities rather than by an ex-
tension of the industry's base through new construction.
These investments will result in substantially increased mechaniza-
tion of existing facilities. Moreover, Hungary will achieve a consider-
ably improved capability both in the manufacture of competitive television
receivers and in the output of microwave equipment. One highly signifi-
cant feature of this new orientation will be the development of a much
stronger components-manufacturing base, the lack of which in postwar years
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has greatly retarded development of the electronics industry. Before
World War II the supply of components required by the Hungarian elec-
tronics plants was met by parent organizations operating outside Hungary.
By nationalizing its plants in 1948, Hungary cut itself off from these
traditional sources and was obliged to provide for its own manufacture of
components. The Remix plant in Budapest has attempted to fill the vacuum,
but its limited experience in this field has resulted in both a low level
of technology and inferior products.
The anomaly of an industry capable of producing advanced circuitry
but utilizing unreliable components persisted throughout the decade of the
1950's. In 1959, construction of a new plant subdivision of Remix was
begun in Szombathely. On completion, the conventional production of the
main Remix plant will be transferred to the new facility, leaving the main
plant intact with its pool of skilled technicians available for production
of technologically sophisticated parts. It is estimated that by 1965 Hun-
gary will have developed a high-quality components-manufacturing sector.
Although the development of a domestic components base will reduce
the dependence of the industry on imports, Hungary nevertheless will con-
tinue through 1965 to be dependent on the importation of a wide variety
of raw materials, specialized components, and precision instruments. It
is not believed, however, that dependence on such imports will be suffi-
ciently disadvantageous to preclude the attainment of a vigorous elec-
tronics industry by 1965.
F. Foreign Trade
1. Trading Organizations
Trade in electronic products in Hungary is handled by the
following organizations: Budavox, Tungsram, Metrimpex, and Elektroimpex.
All four organizations engage in the export of electronic equipment, but
only Metrimpex and Elektroimpex are concerned with imports as well.
In terms of the sectors of end use as treated in this report,
these trading organizations have export responsibilities as follows:
Budavox, industrial electronics (not including instruments); Tungsram,
electron tubes; Metrimpex, electronic instruments; and Elektroimpex,
consumer entertainment equipment. Before 1956, Elektroimpex was the
exclusive agent for the export of all electrical (including electronic)
equipment, and it now services all electronics plants engaged in the ex-
port of nonmilitary equipment (except Beloiarnisz and Tungsram) -- that
is, producers, prim:Fray, of consumer entertainment equipment. The former
responsibilities of Elektroimpex for nonelectronic export have been as-
signed to Transelektro and Metrimpex. Transelektro is responsible for
marketing high-tension electrical equipment such as generators, motors,
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transformers, lighting equipment (except bulbs), cable, and wires. The
Beloiannisz and Tungsram plants enjoy a special status not accorded other
Hungarian electronics producers. in that they are authorized to handle the
export of their own products. For this purpose, Beloiannisz established
a subsidiary department known as Budavox. Tungsram exports under its own
trade name.
2. Imports
In comp= with the Hungarian economy as a whole, the Hungarian
electronics industry is vitally dependent on the import of a wide range of
raw materials for successful functioning and is particularly dependent on
imports from the USSR. For example, of those raw materials which are im-
portant to the electronics industry, Hungary imports from the USSR 30 per-
cent of its copper, 65 percent of its lead, 100 percent of its nickel,
40 percent of its tin, and 98 percent of its ferroalloys. LEY In addition
to this list, the following specialized alloys and components are imported:
powder-iron cores from Philips of the Netherlands, permalloy (special lam-
inated magnetic material used for transformers and coils) from West Ger-
many, polyethylene from various countries of Western Europe, teflon (plas-
tic insulating material used primarily for microwave equipment) from
Western Europe, and quartz from East Germany and South America. Other
imports include specialized types of vacuum tubes; special ceramic capaci-
tors and resistors for use in receivers, transmitters, and carrier equip-
ment; and cobalt, nickel, silver, magnesium, and other nonferrous metals.
In addition, Hungary is dependent on outside sources for specialized test
and measuring equipment. The total monetary value of these imports for
the electronics industry is not believed to be significantly large, but
an uninterrupted supply is considered essential.
3. Exports
The Hungarian electronics industry exports a wide variety of
telecommunications equipment, electron tubes, and standard electronic in-
struments to countries of the Soviet Bloc. In the years since World
War II the major portion of Hungarian electronic exports has been shipped
to the USSR, initially as products of German-owned plants seized by Soviet
occupation forces and later, when these were sold to the Hungarian govern-
ment, as reparations payments. Current trends indicate that the USSR will
continue to be the principal beneficiary of Hungarian exports, at least
through 1965. Although this trade has proved to be of dubious economic
benefit to Hungary over the years, it has nevertheless stimulated the in-
flow of investment loans from the USSR which may ultimately redound to
the greater advantage of the Hungarian electronics industry.
Hungary's exports to the USSR include automatic telephone ex-
changes; high-power radiobroadcast transmitters; transmitting, receiving,
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and special-purpose electron tubes of all types; signal generators; elec-
tronic switches; oscillographs; and other electronic instruments. Since
1958, FM broadcast transmitters and multichannel microwave radio-relay
equipment have assumed special importance among exports to the USSR.
Similar items of electronic equipment are exported to Communist China,
with emphasis on 120-kilowatt (kw) radiobroadcast transmitters; the PM-24
and PM-28 microwave equipment; and 3-channel, 12-channel, and 24-channel
cable and open-wire carrier equipment. A small percentage of the total
exports go to non-Bloc countries in Western Europe, the Middle East, and
South America, particularly Argentina. Principal exports to non-Bloc
consumers are household radio receivers and television sets, telephone
exchanges, and related items of telephony. Estimates of the annual value
of the total exports from Hungary during 1954-60 and for 1965 are given
in Table 2* (see also the chart, Figure 2**).
In 1954, exports of electronic equipment constituted 46 per-
cent of the total net production of the industry, and approximately the
same ratio obtained in 1959. Since the rate of growth of exports is now
greater than that of the industry, and, in consideration of the concen-
trated efforts being expended on production of microwave and television
receiving sets for export purposes, it is estimated that by 1965 about
three-fifths of net production will be exported. During the period of
this estimate it is expected that exports to non-Bloc countries will
claim a greater proportion of the total than in the past.
II. Production Trends in Major Branches
A. Electron Tubes and Semiconductor Devices
1. Electron Tubes
Products of the electron tube branch of the Hungarian elec-
tronics industry include more than 200 types of radio receiving tubes,
cathode ray tubes, special-purpose tubes (klystrons, magnetrons, and
transmit-receive tubes), and miniature and subminiature tubes as well as
a wide variety of rectifier, X-ray, and gas discharge tubes. The vacuum
tube industry is a part of what is officially referred to as the vacuum-
technical or vacuum-engineering industry, which includes (in addition to
electron tubes and incandescent, fluorescent, and special-purpose lamps)
tube and lamp manufacturing machinery and related items. It is concen-
trated in two major facilities, Tungsram and the Hungarian Transmitter
Tube Plant, with a secondary contribution being made by a number of
smaller enterprises. The gross value of production of the vacuum-
technical industry in 1959 was 832 million forints, 2/ of which the
* Table 2 follows on p. 14.
** Following p. 14.
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Table 2
Estimated Value of Exports of Electronic Equipment from Hungary 2/
1954-60 and 1965
Million 1956 Forints
1954
1955
1956
1957
1958
1959
1960
1965
Consumer entertainment equipment
48
56
46
97
150
250
340
1J____ 100
Industrial electronic equipment
360
340
350
370
510
990
1,900
2,200
-
Civil communications equipment
300
280
300
300
430
890
1,800
2,000
Instruments
61
59
54
71
84
98
110
180
Electron tubes
140
160
120
140
190
210
240
290
Transmitting tubes
36
44
32
28
46
32
36
36
Receiving tubes
110
120
90
120
150
180
200
250
Total
550
560
520
610
850
1,500
2,500
3,500
a. Data are rounded to two significant digits and may not add to the totals shown.
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550
HUNGARY
ESTIMATED VALUE OF EXPORTS
OF ELECTRONIC EQUIPMENT, 1954-60 AND 1965
(Million 1956 Forints)
560
520
610
850
1,500
2,500
3,500
Figure 2 50X1
ELECTRON TUBES
INDUSTRIAL
ELECTRONIC
EQUIPMENT
CONSUMER
ENTERTAINMENT
EQUIPMENT
1954 1955 1956 1957 1958
35501 10-61
1959 1960 1965
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electron tube sector is estimated to have accounted for 337 million fo-
rints, or about 4o percent.
Although most of the machinery and machine parts and some
critical raw materials are imported, the industry is in other respects
largely self-contained, having its own facilities for the manufacture
of all semifabricates necessary for production of its end items, such
as glass tubing, glass bulbs, and facilities for processing tungsten and
for the regeneration of molybdenum acid. The industry has been chroni-
cally hampered in past years by the use of obsolescent equipment, by
excessive dependence on the import of critical raw materials, and by
the lack of an adequate number of skilled and scientifically trained
personnel. The latter deficiency was acutely compounded during the
Hungarian revolt through defection of production line workers, as a
result of which production in 1957 declined 6 percent below the level
of 1954. Nevertheless, the adverse effects of the revolt do not appear
to have persisted beyond 1957. Resumption of rapid growth appears to
have been achieved in 1958, during which year production reached a
level 50 percent greater than in 1957 and 41 percent greater than in
1954. By 1965 it is estimated that output of the electron tube indus-
try will climb to 950 million forints, a level almost 4.5 times as
high as in 1954. These figures imply an average annual rate of growth
on the order of 14 percent during the decade 1955-65.
Estimates of production of electron tubes in terms of units
and values for 1954-65 are given in Table 3* (see also the chart,
Figure 3**). The main emphasis of the electron tube industry through
1965 will be on the manufacture of cathode ray tubes. Physical out-
put will grow from the insignificant level of 41400 units in 1957 to
582,000 units (estimated) by 1965. Table 3 shows that in 1965 produc-
tion of cathode ray tubes will constitute approximately 40 percent of
the total production value of the electron tube industry. This figure
represents a significant departure from 1957, when production of such
tubes constituted less than 2 percent. The increase is attributable
to a new plant, located in Vac, which began the automated production of
cathode ray tubes in the latter part of 1959. It is estimated that
production of cathode ray tubes will have reached the rate of 200,000
per year by the end of 1961. Although official statistics indicate
1957 as the beginning year of production of cathode ray tubes, infor-
mation from defector sources indicates that at least small-scale pro-
duction of these tubes for military application had been started as
early as 1955.
* Table 3 follows on p. 16.
** Following p. 16.
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Table 3
Estimated Production of Electron Tubes in Hungary, by Volume and by Value
1954-65
Type of Tube
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
Production (Million Units)
Receiving 2/
6.3
6.9
6.9
6.1
8.8
10.4
12
13
14
16
17
19
Transmitting 2/
0.045
0.054
o.o4o
0.o34
0.056
0.040
0.040
0.040
0.040
0.040
0.040
o.o4o
Cathode ray12/
Negl.
Negl.
0.004
0.011
0.019
0.120
0.200
0.260
0.340
0.450
0.580
Gross Value 2/ (Million 1956 Forints)
Receiving
170
190
190
170
240
280
310
350
380
430
470
520
Transmitting
46
55
40
35
57
4o
46
46
46
46
46
46
Cathode ray
Negl.
Negl.
3
8
13
81
130
170
220
290
380
Total
220
240
230
200
310
340
440
52o
600
700
810
950
Index (1954
. 100)
100
113
106
94
141
156
203
242
278
321
374
439
a. Data for 1960-65 are rounded to the nearest million.
b. Data for 1960-65 are rounded to the nearest 10,000.
c. Components are rounded to two significant digits and may not add to the totals shown. Totals are rounded to the nearest 10 million forints.
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220
240
230
HUNGARY
ESTIMATED VALUE OF PRODUCTION
OF ELECTRON TUBES, 1954-65
MILLION 1956 FORINTS
200
310
340
440
520
600
700
810
950
Figure 3 50X1
CATHODE
RAY TUBES
TRANSMITTING
TUBES
RECEIVING
TUBES
1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965
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2. Semiconductor Devices
At the present time, Hungary has only a limited capability
in production of semiconductor devices. Initial research in this field,
as in other phases of telecommunications, was not original but was based
on the duplication of Soviet and Western models. The developmental pro-
gran in solid-state technology began some time during 1956 at the main
Tungsram plant under the aegis of HIKI and consisted in the creation of
germanium diode prototypes of the Soviet DGC-16 type and transistor pro-
totypes of the Philips 0C-70 and 0C-71 types. Work on the development
of selenium diodes also was being done. The Hungarian revolt in 1956
arrested these developments, and by 1959 Hungary still had not advanced
beyond the laboratory stage in production of transistors and diodes. The
absence of a capability in production of germanium base material, the lack
of prepared crystals and other raw materials, and the lack of adequate
equipment were inhibiting factors. In 1959 the total production of semi-
conductor devices was 660,000, of which 160,000 were transistors. An in-
crease of three times that amount was planned for 1960. 110/ At the pres-
ent time, germanium diodes are still considered to be the only semicon-
ductor device produced in quantity in Hungary, and transistor development
is believed to be restricted to low-frequency transistors.
As a general appraisal, the state-of-the-art in solid-state
technology is not believed to be very advanced at this time. Hungary,
however, is intensifying its efforts in the research, development, and
production of semiconductors, and it may be anticipated that by 1965 the
country will have achieved a capability in production of transistors
more nearly compatible with the underlying objectives of the electronics
industry -- that is, to make its export items to non-Bloc countries more
competitive with Western European products. Production of transistorized
radio receivers in 1960 is estimated to have amounted to 20,000 units.
B. Consumer Entertainment Equipment
1. General
Production of consumer entertainment equipment in Hungary is
the fastest growing sector of the electronics industry. By 1965 this
category of production will have grown by more than 14 times above the
level of 1954 and will constitute 45.3 percent of the total output of
electronic equipment. Product mix has been expanded to include all the
standard items such as radiobroadcast receivers, television receivers,
phonographs, and tape recorders. Estimates of annual production of these
items, expressed in physical and value terms, are given in Table 4* (see
also the chart, Figure 4**).
Table 4 follows on p. 18.
** Following p. 18.
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Table 4
Estimated Production of Consumer Entertainment Equipment in Hungary
by Number of Units and by Value
1954-65
Equipment
1954
1955
1956
1957
1958 1959 1960 1961
1962
1963
1964
1965
Production 2/ (Thousand Units)
Radio receivers
258.3
377.2
352.3
454.2
453.3 263.5 210 200
200
200
200
200
Television receivers
2.2
6.4
37.0 88.1 140 160
220
290
390
530
Phonographs
10.3
15.5
18.3 13.8 18 20
22
24
26
29
Tape recorders
2.5
7.6
8.4 17.0 19 21
23
25
27
30
Value12/ (Million 1956 Forints)
Radio receivers
170
250
240
310
300 180 140 130
130
130
130
130
Television receivers
10
29
170 400 640 730
990
1,300
1,800
2,400
Phonographs
10
16
18 14 18 20
22
24
26
29
Tape recorders
6
19
21 42 46 51
56
62
68
75
Total
170
250
260
370
510 640 850 940
1,200
1,550
2,030
24_660
Index (1954 = 100)
100
146
152
212
296 367 488 541
692
895
1,167
1,533
a. Data for 1960-65 are rounded to two significant digits.
b. Components are rounded to two significant digits and may not add to the totals shown. Totals are rounded to
the nearest 10 million forints.
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Figure 4 50X1
MILLION 1956 FORINTS
3000
2000
1000
HUNGARY
ESTIMATED VALUE OF PRODUCTION
OF CONSUMER ENTERTAINMENT EQUIPMENT
1954-65
TAPE RECORDERS
PHONOGRAPHS
TV RECEIVERS
RADIO RECEIVERS
1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965
35503 10-61
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Since 1957, production of radio receivers has declined rap-
idly, and, concomitantly, production of television receivers has in-
creased sharply. By 1965, almost 530,000 television units, having an
estimated value of 2.4 billion forints, will be produced. Production of
radio receivers, on the other hand, probably will remain stabilized at
about 200,000 units per year during the Second Five Year Plan -- that is,
a level less than 45 percent of that registered in the peak production
year of 1957. This decline in production of radios is occasioned pri-
marily by a shifting export market that is increasingly dominated by
television. In order to stay abreast of this shift, Hungary's leading
producer of household radios, the Orion plant, is being converted into
its leading facility for the manufacture of television receivers. Re-
sponsibility for production of radio receivers has been transferred to
the Telephone Plant in Budapest and the Hunting Cartridge Plant (Vadasztol-
teny) at Szekesfehervar. During the period of the Three Year Plan, Hun-
garian exports of radio receivers declined from a high of 116,000 units
in 1958 to about 61,000 in 1960. At the same time, exports of television
receivers grew from 16,000 in 1958 to 64,200 in 1960, representing an in-
crease of more than 300 percent. Any reversal of the downward trend in
production of radio receivers is unlikely in the absence of a transistor
technology sufficiently advanced to justify their widespread application
to the manufacture of the increasingly popular portable models. Although
the period 1961-65 probably will reflect an improved capability to produce
radio receivers that are more competitive in the world market, no radical
change in the production trend is anticipated.
2. Television Receivers
Hungary has been producing a 43-centimeter (cm) (17-inch)
television receiver, the Benczur, which is primarily for domestic con-
sumption, and several 53-cm (21-inch), 12-channel models, such as the
AT-505 and the 53T816, for export. In 1960, Orion produced the AT-511
and a more luxurious superheterodyne set, the AT-611, both of which have
12-channel capacity, utilize printed circuitry, and have picture tubes
with a 110? deflection angle. Compact assembly and reduced weight and
chassis dimensions make these models suitable for export. Hungarian
television reportedly is of good quality and will in all probability
continue to improve as competition with East Germany for Near Eastern
and other markets becomes more intense. Production of television sets
suffers from a lack of glass for the domestic manufacture of television
tubes, and a considerable volume of glass imports was continuing as of
1960. Efforts are underway, however, to expand the facilities of the
Nagykanizsa Glass Factory, which, when fully employed, should reduce
substantially or eliminate the necessity for importing glass.
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3. Radio Receivers
Before 1956 the inexpensive Nepradio (people's radio), in
both battery-operated and plug-in models, was more commonly purchased in
domestic trade than any other radio. By 1960, however, more versatile
household sets costing in excess of 1,500 forints had become highly popu-
lar -- in particular, the Terta sets made by the Telephone Plant. The
following sets are currently the main export models:
Model Description
Conventional
AR-306 Superheterodyne, 6 tubes, 3 AM wave bands, 1 FM wave
band
AR-311 Superheterodyne, 4 tubes, 3 wave bands
AR-312 Superheterodyne, 5 tubes, printed circuits, 2 germa-
nium diodes, 2 AM wave bands, 1 FM wave band,
short-wave band spread
AR-511 6 tubes, 4 AM wave bands
AR-512 7 tubes, 4 AM wave bands
AR-612 7 tubes, printed circuits, 2 germanium diodes, and
4 AM and 1 FM wave bands, short-wave band spread, 4
loudspeakers
B-858 Battery and AC Morris, superheterodyne, 3 wave bands
magic eye
BR-211 Battery-operated, superheterodyne, 4 tubes, 2 wave
bands
R-035F AC medium superheterodyne, 5 tubes, 3 AM wave bands
R-629 Superheterodyne, 3 tubes for 1 wave band
R-946F Superheterodyne, 5 tubes, 3 wave bands
R-999F Superheterodyne, 5 tubes, 2 wave bands
Transistorized
B-037F Superheterodyne, 7 transistors, 2 germanium diodes,
3 AM wave bands
Orionette 1004 Portable, 7 transistors, 2 germanium diodes, 3 AM
wave bands
Automotive
Lilliput Car radio; long, medium, and short waves
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As shown above, two export models feature printed circuitry
and have germanium diodes, and two others, the Orionette and the B-037F,
are fully transistorized. In 1960 these transistorized export models
are estimated to have accounted for 10 percent of the total production
of radio receivers. This share can be expected to increase significantly
in proportion to advances in production of transistors.
C. Industrial Electronic Equipment
1. General
Production of industrial electronic equipment in Hungary is
reflected primarily in the manufacture of civil communications equipment
and, to a lesser extent, in the manufacture of electronic instruments.
Civil communications equipment includes Multichannel carrier equipment
for use on open-wire and coaxial cable, jamming transmitters, radiobroad-
cast transmitters, television and FM transmitters, small manual and auto-
matic telephone exchanges with step-by-step and rotary systems, main ex-
changes with rotary systems, crossbar telephone exchange equipment,* toll
dialing equipment, multichannel microwave equipment, and industrial tele-
vision equipment for closed-circuit monitoring of plant operations.
Production of industrial electronic equipment has always
been the largest sector of the electronics industry in terms of value.
In 1960 this sector constituted approximately 63 percent of the industry,
and it is estimated that it will grow in absolute magnitude from 2.4 bil-
lion forints in 1960 to 2.7 billion forints by 1965 but that its percent-
age share of the total production will drop to 45 percent and will be ex-
ceeded for the first time by the consumer entertainment sector in value
of production.
Although a projection of trends beyond 1965 is not justified
by available evidence, it may be expected that production of industrial
electronics will constitute an increasing share of the total production
as the developmental efforts of the early 1960's (particularly in respect
to microwave and carrier equipments) result in the mass production of a
salable end product.
2. Civil Communications Equipment
In respect to production of civil communications equipment
the industrial electronic sector of the Hungarian electronics industry
is undergoing a structural transformation in favor of a more restricted
product mix -- a more narrow specialization of production along a few
* Reportedly, crossbar systems eventually will replace the 7-A2 rotary
dial equipment (similar to UK Standard rotary exchanges) that is installed
throughout the main Hungarian cities and towns.
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selected lines. For example, production of broadcast transmitters is
becoming increasingly centered about television and FM, and primary
emphasis in the field of telephone equipment is now being focused on
production of automatic exchanges. Stimulated by the increasing needs
of the USSR and the heightened demand for such equipment in many coun-
tries of South America, production of automatic telephone exchanges is
scheduled to triple during the Second Five Year Plan. 11/ The level of
production of carrier equipment will be lowered to some extent because
of the developmental program underway and also because of the uncertain-
ties surrounding the Chinese export market that has been the main consumer
of this equipment.
Hungarian anticipations of a rising and lucrative Chinese Com-
munist market have not materialized, and China's own achievements in build-
ing a radiotechnical industry suggest that its requirements from the Hun-
garian electronics industry will decline over time. 12/
The principal Hungarian exports of carrier equipment have been
the BB0-3 and the BS0-31 which are 3-channel open-wire carrier systems;
the BSOJ-12, a 12-channel open-wire system; the VK-12, a 12-channel cable
carrier; and the VT-241 24-channel voice-frequency telegraph equipment.
Current development efforts are directed toward a new family
of equipment designated BKM. The BKM group will eventually include
3-channel, 6-channel, and 12-channel equipment for open-wire systems;
12-channel equipment for use on cable circuits; 60-channel equipment for
use on either cable or microwave circuits; and 120-channel, 240-channel,
and 600-channel equipment for microwave link circuits. The BKM-60 (60-
channel equipment) reportedly is in development at the present time.
Hungary's development and production of carrier equipment has
been persistently fettered by a lack of quality crystals for filters, and
the inability of the EMG plant to grind crystals to the critical tolerances
required has resulted in a high reject rate. Because the crystals often
did not meet the required specifications with respect to frequency and
drift tolerances, compensatory factors had to be built into filters, caus-
ing frequent delays in development.
It is in production of multichannel microwave equipment that
the future perspectives of industrial electronics in Hungary are best
seen. Although production of microwave equipment is estimated to remain
at a constant level between 1962 and 1965, it is likely that, as the needs
of the Bloc are more precisely defined and the capability of Hungary to
satisfy those needs is more effectively demonstrated, production beyond
1965 will increase significantly.
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Microwave research and development was carried on with in-
different success throughout 1950-60. Until 1955 this program was
limited, and was oriented around the development of mobile military
microwave equipment for the Hungarian armed forces and resulted in a
limited production of prototypes of the MH series of equipments --
MH-10, MH-6, and MH-5. In 1956 the Hungarian electronics industry took
its first significant step toward acquiring an effective capability in
the field of microwave development with the expansion of the Beloiannisz
microwave department from 30 to 300 personnel. Moreover, in response to
the increasing demands of the USSR, which in 1956 offered to purchase
equipment worth 6 billion rubles over a 7-year period, emphasis shifted
to production of 24-channel, 21000-megacycle radio-relay equipment, the
PM-24. During the same period, Communist China also evinced interest
in obtaining. 24-channel equipment from Hungary. Limited development of
mobile military microwave equipment continued abreast, and an improved
version, the MH-81 was scheduled for production in 1958-59.
Because of its high noise level, the PM-24 was limited to
short distances, and although production (estimated to have begun in
1957) continued through 1960, the need for improved equipment to satisfy
Soviet and Chinese Communist requirements resulted in the development of
the PM-28. The PM-28, which consists of two complete 12-channel systems
plus control and synchronizing channels and Which uses a proportionately
greater number of relays than the PM-24, is designed to operate without
excessive signal attenuation at distances up to 2,000 to 3,000 kilometers.
Advantages of the PM-28 over the PM-24 include a reduction in crosstalk,
a higher signal-to-noise ratio, and the use of long-life components in
the multiplexing equipment. The latter feature permits long periods of
unattended operation. Although development of the PM-28 began in 1957,
it is estimated that serial production was not realized until 1961.
By 1958, Soviet interest in Hungarian 24-channe1 equipment
had become almost marginal and had shifted to broad-band microwave
equipment with a capacity of up to 600 channels. A laboratory prototype
of the Soviet 600-channel Vesna equipment was made available to the
Beloiannisz plant in 1958. It is estimated that Hungary will have its
version of this equipment, the GTT 4000/600, in production in 1961, and
it is estimated that Hungary between 1962 and 1965 will produce 250 units
per year.* The PM-28 will continue in production primarily for export to
Communist China.
The history of Hungarian microwave development reflects the
strengths and weaknesses of Hungarian electronics generally and provides
an insight into Hungary's lingering inability to fully realize its own
* A unit of microwave radio-relay equipment is considered to be one
transmitter and one receiver for initiating, relaying, or receiving one
radio frequency channel in one direction. 11/
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potential. Throughout its development the Hungarian microwave program
has been plagued by a persistent shortage of raw material, skilled tech-
nical personnel, and specialized test equipment. Hungary's ability to
provide the more common types of test equipment, such as vacuum-tube
voltmeters, ammeters, and common voltmeters, was overshadowed by its in-
ability to manufacture reliable test equipment such as microwave test
benches, wide-band oscilloscopes, and signal and pulse generators. In
addition, Hungary's entire program of development has been subordinated
to Soviet requirements and has been characterized by the frequent inter-
position of the Communist Party hierarchy into the affairs of the engi-
neers. Inevitably, this situation has led to apathy, low worker morale,
and a slow rate of progress.
These conditions were grievously aggravated by the Hungarian
revolt, during and after which a large number of Hungary's most experi-
enced microwave engineers and technicians fled the country. Notwith-
standing these factors, under the impetus of large investment (through
which the Beloiannisz plant was expanded and reequipped), microwave
production is estimated to have increased from 1 million forints in
1956 to 69 million forints in 1960. By 1962, microwave equipment at
Beloiannisz will be produced at an estimated annual rate of 1 billion
forints.
The value series for civil communications equipment in Hungary
during 1954-65) including subseries for microwave production and for tele-
phone, carrier, and transmitter production combined, is given in Table 51*
which indicates a gradual decline in output of this sector after 1963.
This decline may be at least partially explained by a changing product
mix. Although there will continue to be a rise in production of certain
types of civil communications equipments (FM transmitters and BKM carrier
equipment), the increasing specialization of production within this sector
will lead to an over-all decline in the aggregate value of the sector.
Such a narrowing of emphasis is, in any case, inevitable in view of the
massive attention being concentrated on the development of microwave tech-
nology at Beloiannisz, necessitating a priority allocation of personnel
and material resources and a concomitant reduction of efforts along other
lines.
3. Electronic Instruments
The EMG plant is the principal Hungarian manufacturer of elec-
tronic instruments for export. The major electronics producers, such as
Orion and Beloiannisz, manufacture these instruments for their own use.
Radiosondes and other measuring instruments (possibly electronic, for use
in nuclear research) are produced by another installation known as the
* Table 5 follows on p. 25.
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Table 5
Estimated Value of Production of Civil Communications Equipment in Hungary E/
1954-65
Million 1956 Forints
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
Telephone, carrier, and
transmitter equipment
680
1,200
1,100
810
1,000
1,800
2,200
2,500
1,800
1,800
1,700
1,400
Microwave equipment
1
11
22
69
69
230
1,000
1,000
1,000
1,000
Total
680
1,180
1,060
820
1,050
1,900
2,260
2,760
2,820
2,810
2,710
2,-80
Index (1954 = 100)
100
173
155
120
154
278
330
4o4
_
412
411
396
362
a. Components are rounded to two significant digits and may not add to the totals shown. Totals are
rounded to the nearest 10 million forints.
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Electrical Appliance and Measuring Instruments Plant (Elektromos Keszulekek
es Meromuszerek Gyara). Production of electronic instruments in 1960 is
estimated to have been less than 5 percent of all output of industrial
electronic equipment and less than 3 percent of the total net value of
production by the electronics industry. Hungary's past and present re-
liance on the import of a wide variety of electronic instruments for its
own research and development program suggests a continuing low level of
technology in Hungarian instrument manufacture. In 1959, on the basis
of credits extended by the USSR, the instrument industry (including pro-
ducers of nonelectronic instruments) received a quantity of new machinery
sufficient to replace one-third of the existing machine park. An addi-
tional stimulus to increased production is the Soviet commitment to pur-
chase 50 to 60 percent of all instruments offered for export by Hungary
between 1961 and 1965. 11?/ It is anticipated that Hungarian production
of electronic instruments during the period of the Second Five Year Plan
will reflect significant progress in terms of both quantity and quality.
D. Military Electronics
The military electronics section of the Hungarian electronics in-
dustry comprises the following types of production: radar equipment,
point-to-point field radio communications equipment, mobile telephone
switchboards, field telephones, and mobile microwave equipment for the
Hungarian armed forces. The total value of production of military elec-
tronics is not large and, as a percent of total output, is generally de-
clining. Production of military electronic equipment constituted 9 per-
cent of the total production of electronic equipment in 1954 and 7 per-
cent in 1960 and (it is estimated) will decrease to 4 to 5 percent by
1965. The estimated value of military electronic equipment in Hungary
during 1954-65 is given in Table 6.*
In value terms, production of radar equipment is the most sig-
nificant component of military electronic equipment. Hungarian experience
in production of radar extends back to 1951-52, at which time the Preci-
sion Mechanics Enterprise (FMV) was specifically constituted for produc-
tion of radar for the Hungarian armed forces.**
* Table 6 follows on p. 27.
** FMV now also produces tape recorders in limited quantity and has been
conducting extensive experiments with nonmilitary shipborne radar for
navigational purposes. This latter type of radar probably will be in
series production during the period of the Second Five Year Plan. Re-
cent information suggests that this plant also is participating in the
Hungarian program for production of multichannel microwave radio-relay
equipment.
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Table 6
Estimated Value of Military Electronic Equipment in Hungary 2/
1954-65
Million 1956 Forints
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
Radar
72
18
12
200
240
240
240
240
240
240
240
240
Radio communications equipment
37
37
32
27
27
27
27
27
27
27
27
27
Total
110
60
40
220
270
270
270
270
270
270
270
270
Index (1954 = 100)
100
50
40
205
247
245
245
245
245
245
245
245
a. Components are rounded to two significant digits and may not add to the totals shown. Totals are
rounded to the nearest 10 million forints.
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In the intervening years since 1952, Hungary has produced one
type of acquisition/early warning radar and two types of fire-control
radar but has not made any significantly original or creative contribu-
tions to radar design and technology. The regime has been guided through-
out, as in other areas of the industry, by a policy based on duplication
of US and Soviet radars. Hungarian radar has been of reasonably satis-
factory quality, but the unreliability of certain components (in parti-
cular, Hungarian-produced vacuum tubes) has militated against the develop-
ment of more effective equipment. Earlier production, at least until
1956, was accomplished with technical assistance from Soviet military
advisers. It is estimated that Hungary's technological base, engineering
skills, and experience in manufacturing techniques are now sufficiently
adequate to permit production of satisfactory radar without direct tech-
nical assistance. Assuming no expansion of the FMV plant and no sudden
change in the trends of the electronics industry, it is estimated that
production during 1961-65 will continue at the 1959 rate of 265 million
to 270 million forints.
In 1952, FMV produced a few fire-control radars based on the US
SCR-584. These were experimental models, later used for training pur-
poses, and were never produced in quantity. Between 1952 and 1955 an
acquisition/early warning type of radar, the Duna (comparable to the Soviet
Crossfork), was manufactured. In 1955-56, emphasis shifted to production
of a fire-control radar, the Drava, based on the Soviet Son-4 design.
This model in turn was superseded by the Ipoly, which is comparable to
the Soviet Son-9-A. The Ipoly went into series production in 1957 and is
estimated to have continued in production until 1959. It is estimated
that, in accordance with the general phasing-out of production of antiair-
craft artillery, fire-control radar will not be produced in Hungary during
1960-65 but probably will be superseded by production of other military
radar equipment for which the Soviet Bloc has a continuing requirement.
Before 1957, Hungary produced R-301 R-401 and R-50 point-to-point
radio communications equipment for army inventories, and it is estimated
that by 1962 the Hungarian army will be fully equipped with Soviet R-series
radio communications equipment. Hungary has been allocated Bloc respon-
sibility for production of the R-104. The Telephone Plant, Orion, and
Beloiannisz formerly participated in production of military radios. Future
production of R-series equipment probably will be carried out exclusively
at the Telephone Plant. It is anticipated that Hungary will continue to
produce telephones, telephone switchboards, and mobile microwave equipment
both for consumption by the Hungarian army and for export to military
forces in Communist China. In the field of mobile microwave equipment,
Hungary's program until 1959 was still in the developmental stage, having
resulted in only a few unsatisfactory prototypes of MH-101 MH-6, and 4H-5
equipment. A further modification, the MH-8, probably will be produced
in limited numbers during 1959-65, primarily for export to China.
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APPENDIX A
MAJOR PRODUCERS OF EUCTRONIC EQUIPMENT IN HUNGARY
Plant*
Address
Estimated Number
of Employees
Major Items of Production
Beloiannisz Hiradas Technikai Gyar
(Standard/BHG)
Budapest XI, Fehervari Utca
5,000
Telephone centrals, high-powered radiobroadcast transmitters,
carrier equipment, television and FM broadcast stations,
and microwave equipment
Egyesult Izzolampa es Villamossagi
(Tungsram)
Budapest, Ujpest IV, Vaci
Utca
10,000
Incandescent and fluorescent lamps; radio receiving tubes,
including miniature and subminiature; special-purpose tubes;
semiconductors, including germanium diodes and low-frequency
transistors; cathode ray tubes; and tube, lamp, and glass
manufacturing machinery
Elektronikus Meromuszerek Gyar
Budapest XIV, Cziraki Utca
1,500
Electronic measuring instruments
(EMG)
Finommechanikai Vallalat (FMV)
Budapest X, Feher Utca
2,500
Fire-control radar and nonmilitary navigational radar
Magyar Adocsogyar (Hungarian
Budapest XIII, Vaci Utca
1,000
High-powered radio transmitting tubes
Transmitter Tube Plant) (HIT)
Orion Radio es Villamossagi Gyar
Budapest X, Jaszberenyi
3,000
Household radio and television receivers
(Orion)
Utca
Remix Radio Technikai Vallalat
Budapest X, Pataki Istuan
1,500
Electrical parts and capacitors, resistors, and potentio-
(Remix)
Square
meters
Telefon Gyar (Telephone Plant)
Budapest XIV, Hungaria
Korut
3,000
Railroad signal equipment, household radio receivers, mili-
tary transceivers, and civilian/military telephones
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APPENDIX B
METHODOLOGY
1. General
Hungary does not publish statistical data on an "electronics in-
dustry," although data on those broad categories of production that
comprise the industry are substantially covered in the Hungarian sta-
tistical yearbook and other officially released statistics. The main
difficulty lies in defining and interpreting these categories. The
statistical category covering the major share of "electronics produc-
tion" as defined in this report is that given in official Hungarian
sources as "telecommunications machines and appliances." This cate-
gory has been interpreted as comprehending production of consumer en-
tertainment equipment, industrial electronic equipment (but not includ-
ing electronic instruments), and some military point-to-point radio
communications equipment. This category serves further as a basis for
the derivation of a value series on civil communications equipment as
outlined below. Two additional categories, "vacuum-technical" (in-
cluding electron tubes) and "precision instrument" (including elec-
tronic instruments), which generally round out the electronics in-
dustry, are considered to include a preponderant percentage of non-
electronic data, thus limiting the use of these categories in this
report to a corroborative or supporting role. The overwhelming pro-
portion of military production -- that is, military radar -- is not
believed to be reflected in published statistics.
2. Consumer Entertainment Equipment
a. Estimates of Physical Production
The Hungarian statistical yearbooks for 1957, 1958, and 1959
provide figures on the physical production of household radio and
television receivers, phonographs, and tape recorders for 1955-59.
Production for the remaining years between 1954 and 1965 was deter-
mined as follows:
(1) Radio Receivers
Production figures for 1954 and 1960 are available
from Hungarian periodicals. Production for 1961-65 was estimated
to be at a constant rate of 200,000 units per year. A constant rate
was selected because, although a rapidly declining output since 1958
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suggests a downward trend, this trend is opposed by other countervailing
forces within the industry. Such forces are as follows: Hungarian
efforts to market new, more competitive models; a developing capability
to produce the increasingly popular transistorized receiver; and an im-
provement in production capabilities through the expansion of existing
facilities and the modernization of equipment.
(2) Television Receivers
The official Hungarian estimate that production in 1965 will
be six times that of 1959 12/ was accepted as a reasonable projection.
On the basis of the figures for these 2 years, production during the
intervening years except 1960 (official data) was estimated by apply-
ing the implied average rate of growth of 34.8 percent per year.
(3) Phonographs and Tape Recorders
A sudden downturn in production of phonographs in 1959 is
'shown in Table 4.* This situation probably is explained by the shift-
ing emphasis in production at the Orion plant from radios, phonographs,
and other items of consumer entertainment equipment to the almost ex-
clusive production of household television receivers. Nevertheless,
the upward trend indicated for 1956-58 in production of phonographs is
expected to continue through 1965, although at a reduced rate. Normal
production after the 1959 dip is considered to have been resumed in
1960, and the years 1961-65 have been projected at an annual rate of
growth of 10 percent. Because the decline in output by Orion will have
to be compensated for by an increase in production at the Telephone
Plant and the Hunting Cartridge Plant principally, a higher rate of
growth would appear to be unjustified.
Production of tape recorders is centered at the Telephone
Plant. To a much lesser extent the FMV plant and a number of smaller
enterprises also manufacture them. The sudden upsurge in production
in 1959 is accounted for by the increasing export market and the
development in 1958 of a lightweight model capable of effectively com-
peting in this market. Nevertheless, the assumption of increased re-
sponsibility in production of consumer entertainment items occasioned
by the production shift at Orion and the absence of any significant and
corresponding increase in plant and production facilities make it un-
likely that output of tape recorders will grow at an annual rate in
excess of 10 percent. Accordingly, a 10-percent rate has been pro-
jected for 1960-65.
* P. 18, above.
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b. Estimates of Value of Production
Value series were derived by determining average factory prices
for the four types of consumer entertainment equipment and applying
these coefficients to the physical production series. The average
factory prices, as shown in the tabulation that follows, represent
selected retail prices deflated by 20 percent,* an estimate of the
amount of turnover tax, and distribution costs.
Equipment
Price per Unit
(1956 Forints)
Household radio receivers
672
Television receivers
4,583
Phonographs
1,000
Tape recorders
2,475
These estimates were derived as follows:
(1) Radiobroadcast Receivers
The three plants producing virtually all receivers in 1956
were Orion, BEG, and the Telephone Plant. From estimates by defectors
it has been possible to select representative receivers produced by each
plant, the corresponding retail prices, and the .relative weight of these
plants in relation to the total production of radio receivers. These
factors make it possible to determine an average factory price based
on a weighted arithmetic average. Retail prices have been deflated by
a factor of 20 percent to cover turnover tax and distribution costs.
Thus an average factory price of 672 forints for household radio re-
ceivers in 1956 was determined by the following calculations:
1956 Forints
Type of Receiver
Retail Price
Estimated
Factory Price
Weight
Factor
Weighted
Factory Price
(1956 Forints)
AR 602
Terta (5-tube)
Orion 230
Nepradio (plug-in)
Nepradio (battery-operated)
Total
3,100
1,600
1,340
800
380
1,000**
1,225
667
317
1
2
3
4
10
1,000
2,450
2,001
1,268
6,719
* Deflated by dividing the retail price by 120 percent.
** Not derived as above; based on an estimate of factory price by a
defector.
*** Estimated; derived from conflicting price information.
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(2) Television Receivers
The average retail price of television receivers in 1956
was 5,500 forints.
(3) Phonographs
The estimate used is based on the total unit sales in 1957
and the value of total sales as given in the 1957 Hungarian statistical
yearbook. The figure for the average retail price based on this infor-
mation (rounded to 1,000 forints) is equally applicable to 1956, there
having been no appreciable change in the retail prices of consumer elec-
tronic items in these 2 years.
(4) Tape Recorders
Primarily an export item, tape recorders are produced in
small quantities in a narrow assortment and tend to be expensive in
price. The 9-kilogram Terta Magna, retailing at 2,970 forints, has
been selected as representative.
3. Industrial Electronics
a. Civil Communications
The Hungarian Central Statistical Office periodically releases
production data on a category of electronics variously referred to as
"telecommunications," "telecommunications equipment," and "telecommuni-
cations machines and appliances." In spite of the variations in termi-
nology, the data comprehended by these categories apply to production
of consumer entertainment equipment and civil communications equipment.
A value series for civil communications equipment, therefore, is de-
rived as a residual by subtracting the value of consumer entertainment
equipment from the "telecommunications" total.
The Hungarian statistical yearbooks provide value figures in
factory prices on production of telecommunications equipment for 1957,
1958, and 1959. Figures for the remaining years, except for 1955,
were derived from other published data on the basis of yearly percentage
increases or planned objectives. For example, the figure for 1957 was
planned to be 90 percent of the level of 1956 1.?./ and 36 percent above
1954, the figure for 1960 increased by 22.2 percent above 1959, 17/ and
an increase of 19.1 percent was planned for 1961 LEI/
Value of production for 1962,
1963, and 1964 was interpolated on the basis of an annual rate of growth
of 8.5 percent (assuming achievement of the 19-percent increase in 1961)
necessary to attain a 65-percent increase by 1965. Considering the
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substantial rate of growth in both 1960 and 1961 and the increased in-
vestments scheduled under the Five Year Plan, it is suggested that this
rate of growth probably is conservative. The year 1955 marked the first
major emphasis in Hungary on the heightened production of telecommunica-
tions to include as well a more comprehensive product mix. Under these
conditions an extrapolated rate of growth which would result in a pro-
duction figure for 1955 that was belay the revolutionary year of 1956
would be unrealistically low and at variance with other available indi-
cators. Accordingly, recourse was made to the index of net production
in the electrical engineering industry as given in the 1957 statistical
yearbook, 22/ which places production for 1956 at 92 percent of the
level of 1955. This figure is believed to be a reasonably realistic
reflection of conditions then prevailing.
The civil communications portion of the telecommunications
category may be conventionally subdivided into two major classes of
equipment, as follows: (1) microwave equipment and (2) telephone,
carrier, and transmitter equipment. The estimated value of microwave
equipment was determined as outlined below and was subtracted from the
civil communications total to derive (2).
The value series for microwave equipment was derived by apply-
ing unit price estimates to the physical production series for the
three major types of Hungarian microwave equipment, the PM-24, the
PM-28, and the GTT 4000/600. Estimates for the physical production of
the GTT 4000/600 are based on reported Hungarian offers of Vesna equip-
ment to the USSR for 1961-65. 21/ The designations Vesna and GTT 4000/60o
are believed to refer to the same item of Hungarian broad-band micro-
wave equipment.
The PM-24 price was estimated to be 550,000 forints on the
basis of defector information, 22/ and the same price was estimated
for the PM-28. The unit price for the GTT 4000/600 was arrived at by
analogy with East Germany. A comparison of the PM-24 with the East
German 24-channel microwave equipment, the RVG-934 (costing 25,500 DME*),
yields a forint-DME ratio of 22 to 1. Application of this ratio to the
East German 600-channel RVG-958 (costing 180,000 DME) yields a forint
price for the GTT 4000/600 of 3.96 million forints. Because both
countries are producing 600-channel equipment to be compatible with
the Soviet Vesna and because, in addition, East Germany and Hungary
have approximately comparable technologies for microwave development
and production, this comparison is considered to be valid for pricing
purposes.
* Deutsche Mark East (East German marks).
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b. Electronic Instruments
An estimate by a defector of 4 million to 5 million forints
per month as the value of production of the EMG plant in 1956 was
used as a benchmark. _21/ Assuming a mean figure of 4.5 million
forints per month, the total value of production in 1956 was on the
order of 54 million forints. As a check on the reasonableness of
this figure, an effort was made to relate the wage bill of the EMG
plant in 1956 to the estimated value of production of electronic
instruments in that year. The estimated number of employees in
1956 was 1,000, and the average monthly wage for the precision in-
strument industry was 1,467 forints, yielding a total plant wage
bill for 1956 of 17.6 million forints. Thus wages are seen to be
approximately 33 percent of the value of production) which is a
reasonable figure and is consistent with a similar percentage re-
lationship for the instrument industry as a whole. The 1959 sta-
tistical yearbook provides an index of production for the instru-
ment industry as a whole for 1954-59. 21i/ A value series for EMG
for these years was derived by applying this index to the 1956
benchmark. An implied rate of growth of 10.2 percent was projected
for 1961-65.
4. Military Electronic Equipment
The estimated value of production of military electronic equip-
ment is a summation of the value of production of radar and pro-
duction of military field radio equipment. Other military items
such as field telephones, switchboards, and microwave equipment
have not been included, because of the paucity of information and
the practical difficulties involved in making even physical esti-
mates. In any case, the value of this production is not believed
to be sufficiently great to impair seriously the estimate which
has been made.
a. Radar
A large number of reports by refugees on activities at the
FMV plant, the only known radar-producing facility in Hungary,
permit a physical estimate of production of radar during 1954-59.
Moreover, estimates by defectors of factory prices on the Duna
(1 million forints) _21/ and Drava radars (2 million forints) 26/
greatly facilitate the construction of a value series. The 'poly,
which was a modification of the Drava, was assumed to have the
same factory price.
The figures for 1957-59 are
planned production figures 21/ and are assumed to have been imple-
mented. The chief difficulty in the series is the projection
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through 1965, for which no information is available. Nevertheless, an
annual production value equal to that of 1959 has been estimated for
each of the years 1960-65 in the belief that an organization such as
FMV, possessing adequate plant and equipment facilities and personnel
experienced in the technology of production of radar, would not cease
production in the face of a continuing need for military radar equip-
ment by the Hungarian armed forces and other armed forces of the Soviet
Bloc. Following is a tabulation of the estimated production of radar
during 1954-59:
Units
Type of
Equipment 1954 1955 1956 1957 1958 1959
Duna
72
8
0
0
0
0
Drava
0
5
6
0
0
0
Ipoly*
0
0
0
98
121
120
b. Radio Communications Equipment
The construction of a value series for field radio communi-
cations equipment is based on a determination of the factory prices
of the R-301 R-40, R-50, and R-104 radios and estimates of the num-
ber of each produced. Production and value series for this equip-
ment during 1954-59** are shown in the following tabulation:
Type of
Production
(Units)
Value of Production
(Million 1956 Forints)
Equipment
1954
1955
1956
1957
1958
1959
1954
1955
1956
1957
1958
1959
R-30
180
180
150
3.0
3.0
2.5
R-40
280
280
250
18.7
18.7
16.7
R-50
6o
60
50
15.0
15.0
12.5
R-104***
1,000
1,000
1,4000
27.0
27.0
27.0
Total
36.7
36.7
31.7
27.0
27.0
27.0
* Planned production. Although additional pint facilities were
being constructed for production of this equipment in 1956-57 and two
Soviet Son 9-A radars were being assembled at this plant as late as
January 1957, there is no confirmatory evidence of the actual imple-
mentation of this planned production.
** Before 1954, Hungary produced other R-series equipment, including
R-3, R-5, R-7, R-10, R-121 R-14, R-20, and R-51.
*** This is Soviet R-series equipment. Hungary has been delegated re-
sponsibility for production of the R-104 transceiver for use by all
Warsaw Pact armies. Initial production was scheduled for 1957.
t Figures for 1957-59 are strict arithmetic calculations based on
purported plan figures in an estimate by a defector for which no cor-
roborative evidence is available. As such, they should be accepted
only as an indication of the general order of magnitude.
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Production for 1960-65 has been carried at the 1959 level (see
Table 6*).
The chief obstacle to deriving factory prices for each of
these types of equipment was the inadequacy of technical data con-
tained in reports by defectors to permit close comparison with Soviet
equipment, for which factory price estimates already exist. By
making the most reasonable comparisons, however, it may be inferred
that the R-40 price is approximately four times as much as the R-30
and that the R-50 price i8 15 times as much as the R-30. Applying
these ratios to an estimate of the physical production of these types
of equipment at BHG in 1955 and an estimate by a defector of the total
value of production of military radios at BHG in 1955, the respective
factory prices were determined. The following tabulation shows these
prices and those of comparable Soviet types of equipment:
Hungary
Type of Factory Price
Equipment (1956 Forints)
USSR**
Type of
Equipment
Factory Price
(1956 Forints)
R-30
16,700
R-104
27,000
R-40
66,800
R-118
119,000
R-50
250, 500
R-102
398,000
5. Electron Tube Industry
a. Physical Production
Production of electron tubes in Hungary consists of receiving
tubes, transmitting tubes, and cathode ray tubes. Statistical data on
the physical production of these items for 1955-59 are contained in
the Hungarian statistical yearbooks. Production of receiving tubes
was extrapolated for 1954 and for 1960-65 at the annual rate of growth
of 10.7 percent that is reflected in the published data. Production
of transmitting tubes, on the other hand, fluctuated unevenly during
1955-59, frustrating any determination of trends and dictating the
use of a mean average for projection purposes. A mean average of
45,000 units was predicated for 1954 and 1960-65. Production of
cathode ray tubes was estimated for 1965, and production for 1961-65
was computed from an implied annual rate of growth of 30.6 percent
* P. 27, above.
** Computed from the US dollar price by applying a forint-dollar ratio
of 20 to 1.
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over this period. Production of cathode ray tubes in 1965 was estimated
on the assumption that the electron tube industry will be self-sufficient
by 1965 in its ability to satisfy requirements for picture tubes dictated
by increased production of television receivers. A replacement factor
of 10 percent was allowed for in computations.
b. Value of Production
(1) Receiving Tubes
Production of receiving tubes in 1956 was calculated to be
83.6 percent of normal production if there had been no revolt. This
percentage was applied to an estimate by a defector of the forint value
of the annual rate of production for 1956 .2.Y before the revolt in
order to derive an actual production value of 188.2 million forints.
Because actual physical production for 1956 was 6,895,000 units, 29/
an average receiving tube factory price of 27.3 forints was determined.
The physical totals for all other years were multiplied by this factor
in order to derive the value series.
(2) Transmitting Tubes
Transmitting tubes are manufactured by two plants -- the
Hungarian Transmitter Tube Plant (HTT) and the Tungsram plant, the
latter a producer of tubes of less than 100-watt capacity. Comparing
a defector estimate of the number of tubes manufactured by HTT in 1956
with the total number of tubes produced, as indicated in the statistical
yearbooks, it is concluded that HTT produced approximately 30 percent
of all transmitting tubes in 1956 and Tungsram 70 percent. These per-
centages were applied to the series for the total physical production
to determine the actual production for each plant. In addition, an
average factory price was determined for each plant and was multiplied
by the plant production, giving a value series. The average tube price
for HTT was determined to be 2,460 forints, and the average tube price
for Tungsram was determined to be 388.8 forints. Calculations for
1955-59 are Shown in the following tabulations:
Thousand Units
Producing Plant
1955
1956
1957
1958
1959
Hungarian Transmitter
Tube Plant
16.2
12.0
10.3
16.9
12.0
Tungsram
37.8
28.4
24.1
39.5
28.0
Total
54.1
40.4
34.5
56.4
40.0
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Million 1956 Forints
Producing Plant
1955,
1956
1957
1958
1959
Hungarian Transmitter
Tube Plant
39.9
29.5
25.4
41.6
29.5
Tungsram
14.7
11.0
9.4
15.4
10.9
Total
54.6
40.5
34.8
57.0
40.4
(3) Cathode Ray Tubes
The Hungarian 5CP1-A cathode ray tube was used to establish
a multiplication factor. This tube's retail price is carried in a
Tungsram catalog of 1957 as 787.68 forints, and this price is assumed
to have been in effect in 1956 as well. Deflating this price by a
factor of 20 percent (turnover tax and miscellaneous distribution
costs), an average factory price for cathode ray tubes is estimated
to be 656 forints. This figure was applied to the physical production
series to derive a value series.
c. Check on the Aggregative Estimate
The aggregate value figure for production of electron tubes
(summation of values of receiving tubes, transmitting tubes, and cathode
ray tubes) in 1957 is calculated to be 203.4 million forints. An
alternate methodology, which follows, was invoked to test the validity
of this result.
The 1957 Hungarian statistical yearbook presents the aggregate
value of production by the "vacuum-technical industry" in 1957 as
422.0 million forints and also contains information on the total number
of light bulbs produced. Bearing in mind that the nonelectron tube
sector of the "vacuum-technical industry" includes two major categories
of production -- (1) incandescent and fluorescent light bulbs and
(2) tube and lamp manufacturing machinery -- an estimate of the value
of production of electron tubes can be deduced by factoring these two
quantities out of the total.
(1) Incandescent and Fluorescent Light Bulbs
Hungary manufactures the following types of incandescent
and fluorescent light bulbs:
(a) Normal -- general lighting; 150 watts and below.
(b) Large -- general lighting; above 150 watts and
other large special-purpose incandescent bulbs.
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(c) Special and miniature (including automotive,
flashlight, and miniatures for medical, dental, and
other purposes).
(d) Fluorescent -- below 40 watts.
Price data on these items are lacking, but because Hungary has a long
history in the mass production of these items and because the quality
of Hungarian light bulbs compares favorably with that of Western
counterparts, an f.o.b. price, in dollars, for similar items was deter-
mined, a forint-dollar ratio was applied to derive comparable forint
prices, and the physical quantity of light bulbs was multiplied by
these prices.
A forint-dollar ratio of 20 to 1 is considered to be rep-
resentative for this purpose. The arithmetic results are shown in
the following tabulation of the value of production of incandescent
and fluorescent light bulbs for 1957:
Type of
Light Bulb
Quantity
(Million
Units)
Estimated US
Factory Price
(US Dollars)
Estimated
Tungsram
Factory Price
(1956 Forints)
Value of
Production
1956 Forints*)
Normal
29.7
0.09
2
6o
Large
2.8
0.28
6
17
Special
and
miniature
21.5
0.08
2
43
Fluorescent
1.2
0.87
17
20
Total
140
(2) Tube and Lamp Manufacturing Machinery
On the basis of an estimate by a defector, production in
1957 was valued at 65 million forints.
(3) Value of Production of Electron Tubes
The total of categories (1) and (2), above, is 205 million
forints. Therefore, by subtracting this sum from the 422 million
forints representing the total value of production of the "vacuum-
technical industry," the value of production of electron tubes for
1957 is seen to be 217 million forints compared with 203.4 million
forints calculated by the first method. Because of the difficulties
Rounded to the nearest million.
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of determination of a forint-dollar ratio and the imprecisions in-
volved in the assumption of comparability in the US and Hungarian
price structures/ this method is presumed to be less reliable than
the former. Assuming 217 million forints to be a maximum figure, the
margin of error involved in adopting the first methodology, in any
case, will not be greater than 7 percent.
d. Electron Tubes as a Part of Total Net Production
The annual value of electron tubes, either exported or allo-
cated as spares, was incorporated into the value series for the total
net production. The values for such tubes were determined as follows:
(1) Transmitting Tubes
It is estimated that 80 percent of the total production of
transmitting tubes is exported annually. The methodology of estimating
the total production of transmitting tubes was given above under b, (2).*
(2) Receiving Tubes
The value series for receiving tubes is based on the
physical series for exports and spares. These physical series were
derived as follows:
(a) Exports
Export figures (in physical units) for receiving tubes
are given in the Hungarian statistical yearbooks for 1955-59. On the
basis of these figures, an average annual rate of growth of 11.4 per-
cent was applied to derive the unknown years through 1962. Exports
during 1962-65 were projected as remaining at a stable level because
a continued extrapolation would involve a contradiction -- that is,
the total production of tubes would be insufficient for domestic needs,
thereby necessitating an import of the very tubes which are being ex-
ported. Such a situation would be distinctly atypical. Although a
small quantity of tubes is imported annually, these are, for the most
part, special or high-quality tubes used to fill specific requirements,
and any program for increasing exports of tubes that requires in-
creased imports of tubes is considered to be highly unlikely.
(b) Spares
The annual number of spares derives from the excess
of production of electron tubes above consumption. The total consumption
* P. 391 above.
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of tubes, in turn, is the sum of tubes used in household radio and
television receivers, assuming a unit consumption of 5 tubes per radio
receiver and 16 tubes per television receiver.
The figures for the total production, consumption, ex-
port, and spares of receiving tubes are Shown in Table 7.* The phys-
ical series on exports and spares were converted to a value series by
applying a unit price of 27.3 forints.** Results of the calculations
are as followsxxx:
Million 1956 Forints
Million 1956 Forints
Exports
Spares
Total
Exports
Spares
Total
1954
110
33
140
1960
200
22
220
1955
120
19
140
1961
230
22
250
1956
90
49
140
1962
250
11
260
1957
120
120
1963
250
19
270
1958
150
14
160
1964
250
22
270
1959
180
30
210
1965
250
11
260
6. Labor Productivity
Measurement of labor productivity for the Hungarian electronics in-
dustry is based on the total production of electronics (see Table it)
and on estimates of the number of employees in the industry. Relying
primarily on refugee reports, the most reasonable employment figure
for 1957 is considered to be 30,000. Employment figures after 1957
are more difficult to ascertain. Nevertheless, utilizing employment
information provided by the Hungarian statistical yearbook for the
electrical engineering and precision engineering branches of the econ-
omy and making appropriate allowances for the nonelectronic segments
of those branches, it is estimated that approximately 40,000 people
were employed in the electronics industry in 1959. Although the actual
figure may be somewhat higher than this, it will not be lower. The
productivity estimate for 1959, therefore, should be considered a maxi-
mum figure. Calculations of the average per capita productivity for
1957 and 1959 are shown in the following tabulation:
Table 7 follows on p. 45.
See b, (1), p. 39, above.
xxx Data are rounded to two significant digits. Because of rounding,
components may not add to the totals shown.
t P. 6, above.
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Number of
Employees
1957 30,000
1959 40,000
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Total Value Productivity Per Capita
of Production
(Million Thousand
1956 Forints) 1956 Forints
1,626.6 54.2
3,141.2 78.5
Current US Dollars*
2,700
3,900
Productivity in 1959 shows a rather considerable increase of 45 per-
cent above 1957. This increase is partially, if not wholly, explained
by the investment pattern of the Three Year Plan. Because renovation
of equipment and facilities was already underway in 1958, positive ef-
fects (in terms of increased productivity) could logically be expected
to be felt in 1959.
Productivity in the Hungarian electronics industry varies for dif-
ferent subsectors of the industry -- it is highest for telecommunications
workers and lowest for those engaged in production of electron tubes.
This differential pattern of productivity can be seen in the following
tabulations of labor productivity for the telecommunications and the
vacuum-technical branches of production of electronics, which are based
on the Hungarian statistical yearbooks for 1957, 1958, and 1959:
Telecommunications
1957
1958
1959
Number of
Employees
20,800
24,000
27,300
Value of
Production
(Million
1956 Forints)
1,216.2
1,594.0
2,560.7
Productivity
(Thousand 1956 Forints
per Employee per Year)
58.4
66.3
93.7
Vacuum-Technical
1957
1958
1959
Number of
Employees
10,600
11,000
12,100
* Based on a
Value of
Production
(Million
1956 Forints)
422.0
507.7
832.0
Productivity
(Thousand 1956 Forints
per Employee per Year)
39.8
46.3
68.7
forint-dollar ratio of 20 to 1.
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Table 7
Distribution of Domestically Produced Electron Receiving Tubes in Hungary
1954-65
Million Units
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
Total domestic production
6.3
6.9
6.9
6.1
8.8
10.4
11.5
12.7
14.1
15.6
17.3
19.1
Initial equipment
1.3
1.9
1.8
2.3
2.9
2.7
3.3
3.6
4.5
5.7
7.3
9.5
Radio receivers 2/
Television receivers 12/
1.3
1.9
1.8
0.04
2.2
0.1
2.3
0.6
1.3
1.4
1.1
2.2
1.0
2.6
1.0
3.5
1.0
4.7
1.0
6.3
1.0
8.5
Exports
3.8
4.3
3.3
4.2
5.4
6.6
7.4
8.3
9.2
9.2
9.2
9.2
Total initial equipment
and exports
5.1
6.2
5.1
6.5
8.3
9.3
10.7
11.9
13.7
14.9
16.5
18.7
Spares si
1.2
0.7
1.8
-0.4
0.5
1.1
0.8
0.8
0.4
0.7
0.8
0.4
Spares as a percent of
production
19.0
10.1
26.1
5.7
10.6
7.0
6.3
2.8
4.5
4.6
2.1
a. Based on 5 tubes per receiver.
b. Based on 16 tubes per receiver.
c. Derived as a residual by subtracting the allocations to initial ewipment and exports from the
total production.
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It should be noted that these tabulations do not permit a pre-
cise comparison of productivity in the telecommunications manufactur-
ing industry with that in the electron tube industry because the cate-
gory of "vacuum-technical" production does not wholly equate with
1
electron tube production. The category "vacuum-technical" includes a
large percentage of nonelectronic production, which probably imparts
an upward bias to the productivity figure. In any case, the tabula-
tions adequately illustrate the wide divergence in productivity rates
within the two main branches of production of electronics in Hungary.
7. Exports
The value series for exports of industrial electronic equipment
and consumer entertainment equipment is based on official Hungarian
indexes for Budavox-BHG and Elektroimpex for 1950-58 2/ and is predi-
cated on the assumption that the Budavox index equates to the export
of industrial electronic equipment (not including instruments) and
that for Elektroimpex equates to consumer entertainment equipment.
The value series for exports of electron tubes, previously calculated
for the net aggregate, and a value series for instruments were added.
The indexes for 1950-58, as given by the source, are as follows:
1950 =
100
Budavox
1950
1951
1952
1953
1954
1955
1956
1957
1958
i
i
100
49
95
125
167
158
168
169
238
1
Elektroimpex
100
129
109
116
181
209
173
362
564
!
These indexes are somewhat misleading and require clarification.
First, Budavox was not established until 1956. Second, Elektroimpex,
as explained in the text,* handled the export of electrical as well as
telecommunications equipment until 1956, at which time it assumed re-
sponsibility for the export of telecommunications equipment exclusively.
Therefore, it has been assumed that the Budavox index equates to the
exports of BHG both before and after 1956 and that the Elektroimpex
index equates to the export of all other items of telecommunications.
Because the major items of telecommunications not exported by Budavox
are radio and television receivers, Elektroimpex is assumed to repre-
sent the consumer entertainment sector of the electronics industry.
* P. 11, above.
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In order to apply these indexes, it was necessary to establish base
year estimates. In the case of Budavox, a reliable estimate by a de-
fector of the value of exports in 1956, in forints, for the BHG plant
was utilized. Estimates for 1954, 1955, 1957, and 1958 were derived
by applying the Budavox estimate to the base year estimate for 1956.
The figure for 1960 was based on an official Hungarian source stating
that 90 percent of BHG production in 1960 was exported. 31/ Because
BHG is conservatively estimated to produce at least 90 percent of all
industrial electronic equipment (excluding instruments), a value of
production of 2 billion forints was estimated for 1960 (see under in-
dustrial electronic equipment in Table 1*). The figure for 1959 was
derived by straight-line interpolation. The estimate for 1965 was
derived in the same manner as the estimate for 1960. The value esti-
mates of exports of industrial electronic equipment were next rounded
out by the inclusion of a value series for exports of electronic in-
struments. This series equates to the annual value of production of
the EMG plant (see 3, b, p. 361 above).
The annual value of exports of consumer electronics for 1958-60
was determined by applying known factory prices per unit to the
physical volume of exports of household radio and television receivers,
the principal components of consumer entertainment equipment. These
calculations are shown in the following tabulation of the volume and
value of exports of household radio and television receivers during
1958-60:
Units Million 1956 Forints**
1958
1959
1960
1958
1959
1960
Radio receivers
116,000
78,883
61,150
78.0
53.0
41.1
Television receivers
15,984
42,575
64,197
73.3
195.1
294.2
Total
151.3
248.1
335.3
Estimates of the annual value of exports of consumer electronics for
1954-57 were derived by applying the Elektroimpex index for these years
to the base year figure already estimated for 1958.
The estimated value of Elektroimpex exports in 1965 was based on
the expectation that the ratio of exports of consumer entertainment
equipment to the total production that obtained during 1958-60
* P. 61 above.
** Based on 672 forints per radio receiver and 4,583 forints per tele-
vision receiver (see Appendix A).
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(approximately 401 percent) will continue to be applicable in 1965.
Accordingly, the total value of export of electronic equipment in
1965 is estimated to be 3.5 billion forints, representing approximately
three-fifths of the estimated value of the total production.
Data provided in an official Hungarian input/output matrix for the
year 1957 support the general validity of these estimates. According
to the matrix, the value of exports of "communications and vacuum-
technical products" in 1957 amounted to 702.1 million forints. This
figure must be qualified to exclude the value of incandescent lamps
and lamp-manufacturing machinery and to include a value for the ex-
port of electronic instruments. Estimating 164 million forints for
the former (So percent of production of incandescent lamps and lamp-
manufacturing machinery) and 71 million forints for the latter yields
a net export figure for electronics alone on the order of 609 million
forints.
Although prices of Hungarian exports are believed to include a
tax, as in the case of domestically sold items, deflation of the above
figure by a factor of 15 to 20 percent would be unrealistic because of
the peculiar nature of the factory price structure in Hungary.* For
example, in extra-Bloc trade (and to a certain extent in intra-Bloc
trade as well) Hungarian electronics plants have frequently incurred
losses in the interest of overcoming other competitors or of achiev-
ing an advantageous penetration of markets deemed potentially favorable
for the future. In these cases a differential sum has been awarded
the producing plant by the Hungarian National Bank from a "price level-
ing fund" resulting in an over-all return on exported items equal to
the prime cost, a 2-percent factory profit, and an excise (turnover)
tax of 15 to 20 percent. It is doubtful that this factor is reflected
in the "exports" column of the input/output matrix, and the above
figure of 609 million is considered to be conservatively low.
8. Estimated Net Value of Production of Electronic Equipment
in Hungary, 1954-65
The aggregate figures included in this report, representing the
net value of production of electronics** for 1954-65, are a summation
* The Hungarian National Planning Office establishes a "price list"
for most commodities that rigidly governs the selling cost regardless
of prime cost, factory profit, and taxes. Its purpose is to keep
prime costs at a minimum. For goods not listed (primarily new prod-
ucts), plants are permitted to establish prices by adding an increment
of 15 to 20 percent to factory cost. There is no tax differential in
prices for military, industrial, or consumer goods.
** Electron tubes. and other component parts produced in Hungary and
Incorporated into end items of the electronics industry are not included.
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of separate value series for production of telecommunications equip-
ment, exported transmitting and receiving tubes (including a spares
factor), electronic instruments, and military radar. These aggregates
are based on the following assumptions:
First, it has been assumed that production of military radar
is not included in officially released statistics on the value of
telecommunications output but that other military end items are in-
cluded. This assumption is predicated in part on the fact that the
only Hungarian plant producing military radar, FMV, is operationally
subordinate to the Hungarian Ministry of Defense and responsive to its
mandate. Organizationally, FMV is subordinate to the Ministry of Heavy
and Machine Industry.
Second, it has been assumed that other items of military elec-
tronic equipment -- such as, for example, field radio transmitting
and receiving equipment, mobile switchboards, and field telephones --
are minor items of production in the preponderantly civilian output of
plants not sharing this dual subordination and are included in the
official statistical data on production of electronics.
Third, it has been assumed that the only large-scale producer
of electronic instruments for export is the EMG plant and that the
total production of this plant is exported.
The aggregates that have been obtained are believed to be accurate
within a small margin of error. The accuracy of the derived aggregates
is supported by several checks. For example, from a large number of
available reports by refugees, it has been possible to assemble indi-
vidual estimates of the value of production of the main electronics
plants that employ two-thirds of the industry's work force. These
estimates total 1.2 billion forints for 1956. Furthermore, the inter-
relationships among the wage structure, the total wage bill, and the
derived value of output were examined. Wages in the electronics in-
dustry ranged from 700 forints per month for totally unskilled workers
and beginning apprentices to more than 3,000 forints for senior engi-
neers and upper-level managerial personnel. Wages were highest in
the instrument manufacturing sector, closely followed by telecommunica-
tions, and were lowest in the electron tube sector. Making appropriate
allowances for the relation that these sectors bear to the aggregate
output for weighting purposes, the most reasonable average monthly wage
appears to be on the order of 1,350 forints per month in 1957. Assum-
ing an employment level of 30,000, this figure implies a total annual
payroll of 486 million forints. Thus labor costs in 1957 were approxi-
mately 30 percent of the net aggregate. Because of Hungary's dependence
on costly imported raw materials, labor costs can be expected to be
relatively low compared with material costs, in spite of the labor
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intensiveness of the industry. The figure of 30 percent is therefore
considered to be reasonable and tends in some measure to support the
accuracy of the aggregate.
A final check on the derived estimates was made possible by the
availability of a published input/output matrix covering all major
branches of the Hungarian economy in 1957. 32/ This matrix gives a
gross aggregate figure of 2,233.5 million forints (including turnover
tax) for production of communications equipment and vacuum-technical
products in 1957. The industry's consumption of its awn output (com-
ponents and subassembly manufacture) was entered as 340.5 million
forints, yielding a figure of 1,893.0 million forints to represent
"net" output for 1957. Assuming that this category equates to the
electronics industry (the value of nonelectronic vacuum products,
estimated to be 250 million forints, which probably is included, is
approximately compensated for by the value of electronic instruments
and military radar, 267 million forints, which is not included), the
difference between the net aggregates of 266.4 million forints, repre-
senting approximately 16 percent of the derived aggregate, is accounted
for by turnover tax. An estimate by a defector that turnover tax is
on the order of 15 to 20 percent .3.31 strengthens the reasonableness
of the above figure and further validates the derived aggregate.
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