NEWS
ecsn forecast remains positive for 22 as growth markets for electronics continue
T
he ecsn 2022 Forecast predicts that the UK & Ireland electronic components market will continue to grow strongly in the first half
of 2022, returning between 11%-to-15% growth, showing around 13% growth at mid-year. In the second half the association predicts that ‘Billings’ (Sales Revenues) will slow modestly to give an outcome for the full year in the range 8%-to-12% and showing a mid-point of 10% growth over the previous year. There are a great many “unknown unknowns” and geopolitical uncertainties that could impact the market however: “Despite the chaotic market conditions in 2021 ecsn members remain very positive about their organisation’s and its customers’ prospects into 2022”, Fletcher said. ecsn Market Analyst Aubrey Dunford referred back to 2019 pointing
out that the market consolidated in 2019 after exceptional growth in the preceding two years: “The market upswing we expected to commence in 2020 was delayed by the COVID-19 global economic slowdown, but not for as long as we forecast, coming as it did in at the start of 2021, Dunford said. “A further effect of the pandemic is that as a global event it has brought the ‘normally out-of-phase’ regional cycles that for decades have characterised our industry into sync, further contributing to a global supply issue”. The association predicted rising global demand and that lead-
times on some products were set to extend but like the Coronavirus itself, the trend spread exponentially to affect virtually all component categories within weeks. From the start of 2021 ecsn members saw ‘book-to-bill’ ratios rise to levels rarely, if ever seen in the electronic components supply industry, with unprecedented ‘Bookings’ being driven not only by the extending lead-times but also by price increases: “Any disruption to supplies that had been expected as a result of Brexit were dwarfed by the global supply issues,” continued Dunford. “Despite the high level of ‘Bookings’ (new orders entered), ‘Billings’ were both constrained by the supply issues and boosted by price increases throughout the year. About 15% was added to the DTAM (distributor total available market) as our members also expect a strong finish to the year” Authorised distributor order books (backlog) remain at historically
high levels as market expansion driven by technology such as 5G is now well underway: “Electronics are finding their way into more and more applications, so our members are confident that the underlying strong demand from their customers will continue”, Dunford said. “We therefore predict that bookings will remain strong throughout the first half of 2022, although we do expect to see the ‘book-to-bill’ ratio decline as the supply conditions improve. In the second half of the year growth in the market will continue although the rate of growth will decline compared to 2H’21”
Authorised Distributor Backlogs Leap Customer order backlog levels reported by ecsn’s afdec members
leapt to unprecedented heights in 2021, a trend that looks likely to TAM and DTAM 2007-2021
continue into 2022, driven not by customer forecast or actual demand but their need to have sufficient order cover and in-house inventory to match the very extended manufacturer lead-times. Fletcher believes that this will change as manufacturer lead-times inevitably decline but his members’ opinions about when this will happen and by how much, vary: “The consensus opinion held by ecsn members is that by mid-2022 lead-times will be declining rapidly to around an average of 12-to-16 weeks for most components but there will still be some ‘outliers’ on much longer lead-times”, Fletcher said. He remains concerned about availability: “I suspect that proprietary semiconductors and interconnect products will “normalise” first, whilst commodity products (other than memory chips) will not be on track until 2H’22, but my real concern is the longer-term availability of the legacy, larger case size MLCC and TFCR components used widely by customers in the US and Europe. The lack of focus on increasing manufacturing capacity for these parts has the potential to be the next significant industry supply problem”.
Up and To the Right... The trajectory for the electronic components markets in the mid-term
continues to be up and to the right. Despite the ‘difficult’ market conditions in 2021, which he believes will continue into the first half of the 2022, Fletcher remains confident that stronger underlying growth will return to global electronic components markets because there are so many competing applications driving it. He sees the roll-out of 5G handsets and infrastructure, cloud computing/high performance computing and automotive as the likely main ‘push’ applications: “Industrial automation and medical will run these sectors a close second in 2022 but I fear that avionics and military applications are likely to remain constrained”.
ecsn
www.ecsn-uk.org
Billings Actual and Forecast 2018-2022 6 DECEMBER/JANUARY 2022 | ELECTRONICS TODAY
TAM and DTAM 2007-2022
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