Front End | Electronic Components Supply Network
Marching forward into 2022...
According to chairman Adam Fletcher, despite all the ‘headwinds’ many members of the Electronic Components Supply Network (ecsn) set new records in 2021 and presumably many of their customers did too. “Our members are not complacent however and they continue to keep their heads down to positively and pragmatically do battle with the numerous issues they and their customers will be faced with in 2022,” Fletcher says. “New difficulties and new challenges will need to be managed this year as the pendulum of supply and demand returns to equilibrium and probably swings in towards overcapacity”
2021 outcome and 2022 forecast The bar-chart UK and Ireland Electronic Components Distribution Market displays actual sector sales revenues from 1985 to 2021, together with ecsn’s forecast for the current year. Note that ecsn members’ predicted growth in the range 0 per cent-to-6.5 per cent in 2021 but the year finished showing growth of 17.2 per cent, a welcome surprise for all. Concern remains however about just how much of this sales ‘growth’ is represented by components actually ‘consumed’ on customers’ production lines, as opposed to just being stacked-up in ‘inventory building’ strategies implemented in response to extending manufacturer lead-times. The honest answer is no one’s telling - yet - but the truth will become apparent later this year. In their latest forecast ecsn members predicted that the UK Ireland electronic components market would close 2022 showing growth in the range 8 per cent-to-12 per cent, which remains realistic if supply can be maintained. It’s interesting to note that it has taken almost twenty years for manufacturer authorised distributors to replicate the sales revenues they achieved in the UK & Ireland in 2001, which highlights the damage done to our industry by the transfer to off-shore manufacturing over this period.
Equilibrium in supply and demand? Opinions amongst ecsn members about when the balance of supply and demand will be re-established are many and varied. They range from “around Easter 2022” to “sometime in 2023”, but in general the
10 February 2022
mood is positive! The expectation is that proprietary semiconductors and interconnect product lead-times will ‘normalise’ (return to between 12-to-16-week lead-times) in Q2’22, whilst commodity semiconductors (other than memory chips) will not be on track until 2H’22. Inevitably some outlier components will take longer to normalise and will remain on extended lead-times for a while longer.
Components in Electronics
Demand in the early months of 2022 continues to be strong throughout the global electronic components supply network. At long last investment is beginning to flow back into semiconductor and other electronic components manufacturing but this is not being reflected in the availability of the legacy, larger case size MLCC and TFCR components still widely used in the US and Europe. The
small number of manufacturers and the poor return on capital - coupled with the very strong demand for the smaller case size devices that continues to monopolise most of Asia’s manufacturing capacity - is a strong dis-incentive for companies to increase production of legacy, large case size devices, a situation that could potentially trigger the next significant components industry supply headache.
www.cieonline.co.uk
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