Front End | Electronic Components Supply Network UK electronic components market forecast – 2024
In November ’23 Adam Fletcher, chairman of the Electronics Components Supply Network (ecsn) provided CIE readers with a review of the major developments that occurred in the UK electronic components markets in 2023 and promised to update them with the association’s forecast for 2024: “The ongoing geopolitical tensions resulting from the Russian invasion of Ukraine, additional sanctions imposed because of the ongoing US / China trade war and more recently, events in the middle east, are strong indicators of yet another challenging year for our industry”, Fletcher said. “These tensions have encouraged our members’ customers (systems integrators) to maintain inflated in-house inventory and order backlogs, but we welcome the developing trend we’re seeing today towards a rebalancing of both their in-house inventory and their order books in line with their real demand, but this must be managed with great care.”
E
lectronic components manufacturers and their authorised distributor partners have strived hard throughout 2023 to reduce
components lead-times and meet the needs of their customers. Average lead-times today are in the 10-to-12-week range, although some outliers to this trend remain, particularly for some specific microcontrollers and discrete transistors. There is now a substantial inventory build- up right across the electronic components supply network which, coupled with anticipated weakening of customer demand into 1H’24, will further ease pressure on supply, but lead times are unlikely to reduce much further and will probably never return to pre-pandemic levels. It’s vitally important that systems integrators recognise this and continue to carefully track the lead-times of the electronic components their organisation needs and manage their order backlogs and in-house inventory accordingly. On the plus side, long, medium, and local distance logistics are now operating much more effectively, but as manufacturing capacity is transferred out of China to Vietnam, Singapore, India etc., some disruptions to supply must be expected as on-going revisions to routes and transport loading capacity are made and settled on during 2024 and into 2025.
The ecsn forecast for 2024 The Market Forecast 2024 released on the 30th of November by ecsn predicted that the UK & Ireland electronic components market will essentially be “flat-to-down” in the first half of 2024, returning ‘Billings’ (sales revenues) growth of between 3%-to- 1%, with a mid-point growth of around 1%. Members believe that ‘Billings’ will grow
12 December/January 2024
modestly in the range 1%-to-8% in the second half to give an outcome for the full year in the range 1.5%-to-4.1% over 2023, with a mid-point of 1.4% growth. In the graphic “DTAM By Quarter for 2017 – 2024” the blue bars show historical changes in the Distributor Total Available Market figures. The dark blue bar is an estimate of Q4’23 and the yellow bars show ecsn’s DTAM forecast for 2024 by quarter. At the end of 2022 the association predicted that following the chaotic market
Components in Electronics
conditions that COVID-19 caused in 2020 and 2021 some “normality” would return to the electronic component market in 2023. The scramble for product caused by the aftershocks of the global pandemic and a war in Europe however left the entire supply network under stocked and over capacity which in turn triggered an extended period of shortages. Product availability has started to return to ‘normal’ levels now that manufacturers and their distributors are again being asked to service ‘real’
rather than ‘inflated’ customer demand. So, although remaining strong in the first three quarters of the year it is almost inevitable that ‘Billings’ will decrease at the end of 2023 and into the first half of 2024 at least, as global inventory is brought back in-line with current demand levels throughout the electronic components supply network.
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The underlying demand for electronics in virtually every area of modern life continues
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