Front End | Electronic Components Supply Network


accelerating slightly into 1H’26. The tightening supply and increasing prices have driven semiconductor “Bookings” (new orders) to ridiculous, and totally unsustainable highs that will in turn inevitably trigger a rash of order cancellations and industry recriminations. There is evidence that demand for some passive components is following the semiconductor trend but demand for interconnect and E-mech components currently remains stable. Sadly, the graphic also highlights the current huge disparity between “Bookings” and “Billings” that is indicative of customers over-ordering in a bid to protect their organisations position.


Any real growth?


Growth in most semiconductor cycles is generally defi ned by the increase in units shipped rather than by revenue, but in the current cycle unit growth has been low and highly fragile. While the Interconnect and E-mech sectors are infl uenced by overall market conditions they generally exhibit much less volatility. The rapid rise in ASPs (average selling prices) of semiconductors coupled with the low unit growth rate has distorted data across the entire electronic components market. It’s currently very diffi cult to determine the real underlying growth but accepted industry data suggests that the semiconductor growth rate in Europe in 1H’26 was in the range of 11 to 13 per cent, but this is calculated only from reported sales revenues, not units shipped. The element of price increases within this data is probably in the range of 3 to 5 per cent, suggesting that the “real” growth rate is around 8 per cent, only slightly higher than IDEA forecast for the period.


And into 2H’26


In Europe the indicators are that “Bookings” in the traditional market sectors will cool signifi cantly towards the close of 2026 and


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the year will end showing low single digit “Billings” growth. Things are unlikely to improve much in the early part of 2027: it’s likely that manufacturer lead-times will remain extended and there will almost certainly be sporadic shortages. Pricing however, will stabilise and remain close to current levels unless infl ation drives further increases. In the long-term however I expect pricing for electronic components in ‘traditional’ market sectors to continue to rise. Dominant manufacturing foundries and supply network partners are being coerced by their governments, the US in particularly, to globally disperse their state-of-the-art manufacturing locations beyond Asia, resulting in falling economies of scale and increased costs. Escalating oil prices won’t help either.


In conclusion As we head into the fi nal quarter of 2026 the electronic components demand and supply balance will remain challenging, as it will into 1H 2027. The current supply problems will only be mitigated by continued successful industry collaboration. If customers report their organisations “real” demand to their supply network partners, rather than artifi cially infl ating their order books, the current problems and risks will be minimised, leading to a much better outcome for all participants in our industry.


For information


Adam Fletcher is chairman of the Electronic Components Supply Network (ecsn), a business association established in 1970 that today offers support to all organisations with an interest in electronic components throughout their entire lifecycle. He is also chairman of the International Distribution of Electronics Association (IDEA), an association of individual country electronic components associations whose objective is to arrive at and share best industry practice.


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