Front End | Electronic Components Supply Network
Despite forecasting low single digit growth for the electronic components industry in 2025 ecsn remains optimistic
At the end of each year the Electronic Components Supply Network (ecsn) canvases its manufacturer authorised distributor (afdec) and electronic components manufacturer members for their opinions on how their businesses and the industry in general will fare in the coming year. In this article the association’s chairman - Adam Fletcher and market analyst - Aubrey Dunford provide a summary of the Forecast 2025 and share their members’ consolidated thoughts about the year in prospect in the hope of providing CIE readers with a practical insight into our domestic, and the wider electronics components market.
E
lectronic components manufacturers and their authorised distributor partners have strived hard throughout 2024 to meet the real needs of their diverse customer base, rather than seeking to meet the artificial demand created as the global economy kick-started post-pandemic. The rapid and violent swings in demand and supply over the past few years have left many customer organisations with little credible data on which to base their material forecasts going forward but faced with potentially horrendous manufacturer lead-times they dramatically over-ordered the components on their BoM. In a normal growth year, the ‘Book-to-Bill’ ratio in electronic components markets would hover around 1.05:1 but in 2023 the B2B escalated, hitting an unprecedented and unsustainable peak of 1.45:1. At the time ecsn in common with many other European industry bodies warned of a ‘bookings bubble’ and looming ‘inventory indigestion’.
Predicted 2024 outcome Prior to compiling its Forecast for the coming year, ecsn must predict how the final weeks of the current year will pan out. In its Forecast for 2024 ecsn members predicted a decline in growth in the UK and Ireland electronic components markets throughout 2024 but just didn’t recognise how steep that decline would be. At that time ecsn forecasted single digit ‘Billings’ (sales revenue) growth in the range of 1.6%-to-4.1% in 2024 compared to the previous year, but it now looks likely that
12 December/January 2025 Components in Electronics
the year will end with a decline of 19.7%, driven primarily by weak demand and an industry-wide inventory overhang. The significantly reduced demand behind this decline is due to a number of adverse factors following the global pandemic, not least increasing geopolitical tensions resulting from the Russian invasion of Ukraine, multiple armed conflicts in the Middle East and the additional sanctions imposed as a result of the ongoing US / China trade war, exacerbated by significant (and cynical?) customer over-ordering. The net result is a slowing of economic growth in the global economy and an inventory ‘glut’ of electronic components held by components manufacturers, their authorised distributors and their system integrator customers, who continue to struggle to rebalance their supplier order books in the face of weaker demand from their own end customers.
Low growth forecast
In its Forecast for 2025 released on 11th December ecsn members predict that the UK & Ireland electronic components market will continue its negative growth pattern in 1H’25, with ‘Billings’ (sales revenues) declining between 8.7%-to-2.6%, and showing a mid-point decline of around 4.6%. In the second half of the year the association predicts that ‘Billings’ will recover modestly in the range 1%-to-9% to give an outcome for the full year in the range 4.9%-to-2% but believes that the market will still be in negative territory at the mid-point compared to the previous year. Please see the graphic “DTAM by Quarter for 2017 to 2025”, the blue bars represent actual results, the yellow and red bars are the forecast and range. Despite the ongoing headaches in the electronic components supply network ecsn members generally remain
optimistic about the prospects for 2025 as innovation continues to create new market opportunities. In the UK, and indeed in most of the European countries, the market for electronic components is driven by manufacturers of industrial and specialist professional equipment. The roll-out of 5G handsets and related infrastructure is continuing to enable more IoT applications whilst the deployment of artificial intelligence (AI) is rapidly increasing in mobile phones and computing but is probably two-to-three years away from making a major impact on edge computing and new applications outside of datacentres that will be purchased in the UK / Ireland market. Global demand for electronic components by military and aerospace customers is, for obvious reasons, remaining very strong, but these manufacturers represent a small proportion of the European total market. The automotive sector is suffering particularly badly due to lower-than- expected customer demand for electric vehicles (EVs) but will improve, probably as a result of additional direct consumer subsidies together with increased investment in charging infrastructure but, that said, current emission targets look unlikely to be met.
Concluding thoughts Despite ecsn forecasting essentially “flat” growth in 2025, Fletcher and Dunford are confident that the mid- and long- term trajectory for UK/Ireland and global electronic components markets continues
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