Front End | Electronic Components Supply Network
Optimism persists among ecsn member companies despite predictions of ‘flat’ UK electronic components market in 2026
Estimates of the final returns from members of the Electronic Components Supply Network (ecsn) indicate that 2025 will close showing a (9%) sales revenue decline compared to 2024. In its forecast for 2026 the association predicts an essentially ‘flat’ market that will probably show little growth over 2025. Adam Fletcher, ecsn chairman, admits that this is a disappointing outcome but says that his members remain confident that the mid and long- term trajectory for global electronic components markets continues to be ‘up and to the right’. Fletcher sees a return to stronger underlying growth in the second half of 2026, and in this article he provides further analysis of both the
’25 outcome and the prospects for our industry in ‘26. We were wrong
The Book to Bill Ratio (B2B) has always been an important measure of the future outcomes for the electronic components supply industry. Way back in November 2024 when ecsn members were considering their prospects for 2025, the B2B ratio had been healthy positive for three months and looked likely to remain so, giving rise to a high degree of collective optimism. Please see the Graphic “ecsn – Members: Book to Bill ratios by Month”.
In a normal ‘reasonable’ growth market most geographic regions would expect to see the B2B hover around 1.05:1 but as the black ‘polynomial trend line’ in the graphic shows the B2B ratio stood at 1.18:1 back in January ’22, (a very strong indicator of future growth), but in November ‘22 it turned negative again, (indicating a future revenue decline). The B2B ratio rallied in June ’24 but then retreated back into negative territory in April the following year.
It would appear that the strong B2B performance throughout the second half of 2022 led ecsn members to believe that the technology industry had entered a recovery phase in the economic cycle, giving them the confidence to forecast growth in 2025 in the range of 4.9%-to-2%. And they weren’t on their own! At the time many industry analysts considered ecsn’s Forecast ’25 to be conservative. Sadly, we all got it wrong! Instead of growing in 2025, the UK and Ireland markets for electronic components actually retreated!
So, what went wrong? In the process of establishing ecsn’s annual forecast our members try to model a whole range of different scenarios and economic variables and consider a wide range of likely
12 December/January 2026
outcomes, but it’s always difficult to call. In December ’24 Donald Trump had yet to reveal his policy on the imposition of Trade Tariffs, but the markets were already twitchy. In the event the ‘across-the-board’ Tariffs imposed by new administration in 2025 have hugely disrupted global supply networks, suppressed global demand and created an artificial stop / go demand cycle around arbitrary and seemingly ‘elastic’ implementation dates and presidential concessions. The impact of the US’s actions has suppressed global economic growth and as a result extended the ‘post-Covid’ customer inventory overhang in the electronic components market much longer than ecsn member companies expected.
The only growth seen in the global electronic components supply network in 2025 has been in the Hyperscale Computing market where the demand to build-out AI based infrastructures has driven demand for specific Graphics Processing Units (predominantly supplied by Nvidia) together with large volumes of the high bandwidth memory manufactured by only three suppliers to unprecedented levels in the US and Asia. Other sectors of the market have not seen the same upturn and many manufacturers
Components in Electronics
of semiconductors are still holding elevated inventory levels, particularly of microcontrollers, standard logic and analogue devices.
Domestic issues
The UK and Ireland electronic components markets are driven primarily by the ‘Professional’ sector (an overall nomenclature that encompasses: Industrial, Medical, Aerospace, Defence and related sectors, as opposed to the Hyperscale Computing, Mobile Phones and Automotive sectors that dominate other markets and only obliquely impact the UK/ Ireland). The direct impact of tariffs on the UK ‘Professional’ sector has been very limited, but the indirect effects of confusion, instability and uncertainty have severely curtailed both ongoing and new investment opportunities, where there continues to be uncertainty about the likely return on any investment. As a result, most European electronic components markets - including UK and Ireland – and alongside Japan, effectively “stalled” in 2025. It will take some time before technology markets accept the new US trade position and significant financial persuasion will be needed if they are ever to fully regain ‘normal’ growth levels.
ecsn members predict that the UK & Ireland electronic components market will continue to decline in the first half of 2026 and that sales revenues (Billings) will shrink between 4%-to-3% compared to last year and show a mid-point result of around 0%. In the second half of the year the association predicts that ‘Billings’ will recover modestly in the range of 1%-to-6% to give an outcome for the full year in the range of 2.1%-to-4.7% compared to 2025 but will show only 1.4% growth at the mid-point. The actual and forecast scenarios are shown in the graphic Forecast Billings 2026. It’s only a small consolation for ecsn members but we got the shape of the outcome of 2025 right but unfortunately not its magnitude! With the (albeit) slight improvement in the UK, European and Japanese economic situation, it’s likely that at some point demand for electronic components in all of these geographic markets will rise at the same time, as it did after the Covid lockdowns, creating a demand ‘spike’ that manufacturers of electronic components will simply be unable to fulfil. Manufacturer lead times are currently averaging 16 weeks but are bound to extend considerably. Couple this with the current geopolitical situation and rising pricing for almost all components and it’s apparent that UK customers need to adopt a more robust and strategic procurement policy to protect their organisation from availability and pricing fluctuations, possibly by placing longer term (6-to-12 month) scheduled order cover with their suppliers. In addition to securing continuity of supply, a realistic order backlog provides components manufacturers with a very useful indication of likely future demand and enables them to schedule their investment and production capacity
www.cieonline.co.uk
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