DISTRIBUTION
ecsn 2023 Forecast for UK & Ireland Electronic Components Market
Authorised Distributors Forecast Single Digit Growth in 2023 A
t the Electronic Components Supply Network (ecsn) forecast for 2023 chairman Adam Fletcher said: “The strong growth that global electronic components markets saw throughout 2022 exceeded the Forecast ecsn issued at the end of last year. Our members predicted strong Billings growth in 2022 in the range 8%-to-12% but we now believe that the outcome is likely to be 18% growth, driven primarily by customers’ concerns about components availability. The geopolitical tensions resulting from the Russian invasion of Ukraine, additional sanctions imposed as a result of the ongoing US/China trade war, and ongoing international and domestic logistics delays have encouraged customers to maintain their increased in-house inventory and order backlogs”.
With all geographic regions of the global economy simultaneously emerging from COVID-19 lockdowns demand outstripped the ability of component manufacturers to supply in 2021 driving a steep change in average lead-times that jumped to over 26 weeks plus. Strong demand continued throughout 2022, but supply remained problematic exacerbated by continuing extended lead-times, particularly for Semiconductor and Passive components with ongoing disruption to long-medium-and local-distance logistics, product shortages, price increases, delivery de-commits, logistics delays etc.
Despite the very good outcome for the UK/Ireland electronic components markets reported by ecsn members the performance of semiconductor manufacturers around the world has at times been imperfect. Much of this failure is due to manufacturers having little or no control of the activities of their multiple sub-distributors EMS and OEM customers in Asia, particularly in China, where they have little visibility and control and product appears to simply ‘disappear’ into a black hole. As a result, customers in Europe and the USA have increasingly turned to Grey Market Brokers who have been able to source semiconductors from Asia in large volumes to satisfy customer demand, albeit at highly inflated prices. ecsn members believe that semiconductor manufacturers must increase their capability to manage their global inventory, particularly in Asia. They must be able to exercise effective control over when, where and to whom their product is shipped, re-directing it as necessary
Digi-Key’s new product distribution centre expansion (PDCe) opened in August 2022
The PDCe features more than 43 kilometers of automated conveyor inside the building, and an average order will travel more than 975 meters inside the building
to serve real customer demand and not the “phantom” demand created by organisations seeking to exploit failures in the market.
The Forecast for 2023
The Forecast predicts that the UK & Ireland electronic components market will continue its modest growth in the first half of 2023, returning ‘Billings’ (Sales Revenues) growth of between 0%-to-6.3%, with a mid-point growth of around 3.5%. In the second half the association predicts that ‘Billings’ will slow modestly in the
6 DECEMBER/JANUARY 2023 | ELECTRONICS TODAY
range (4%)-to-3% to give an outcome for the full year in the range (2%)-to-4.9% and showing a mid-point of 2.8% growth over the previous year. ecsn Market Analyst, Aubrey Dunford confirmed that the market conditions in 2019, 2020, 2021 and 2022 had been far from normal due to the COVID-19 global pandemic but that some “normality” can be expected to return to the market in 2023: “The problem however is trying to determine what the “new normal” is in a global economy still recovering from the after shocks of a global pandemic such as
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