Front End | Electronic Components Supply Network


European electronic components market – Q2 ’24 overview


In an article for CIE readers earlier this year Adam Fletcher, chairman of the Electronic Components Supply Network (ecsn), suggested that the market was suffering a severe bout of “indigestion” caused by the excess inventory that had built up right across the supply network since the COVID pandemic. Fortunately, the ‘medicine’ of order cancellations, re-schedules and consumption of in-house inventory is working, and its efficacy is reflected in the UK and European electronic components supply network Q2’24 results. In his latest article, Fletcher takes the opportunity to ‘flesh-out’ the latest figures and provide his thoughts on the outcome for the rest of the year.


Global industry association In common with many electronic components trade associations elsewhere in the world, ecsn is a member of the International Distribution of Electronics Association (IDEA), an association of associations that each month collects a wide range of industry statistics directly from its members, which it compiles into reports that enable member management teams to accurately benchmark their organisation’s performance. Just as importantly, the reports provide a useful insight into overall industry trends, broken down by subsets including component type and geographic market.


Manufacturer authorised distributors in the European electronic components supply network support over 98 per cent of the buyer / seller relationships, so the data IDEA provides to member associations is both accurate and timely. Primarily established with systems integrator organisations (customers), these relationships often benefit from indirect commercial support from the manufacturer of the components being sold and bought. Customers primarily choose to buy from manufacturer authorised distributors because these partners support known quality products with technical support and a wide range of value-added services and are best placed to ensure full manufacturer supply traceability. The graphic 2nd QTR. 2024 Total Components displays some of the data collected from IDEA member organisation over the past twelve quarters. Looking at the graphic from left to right the brown bars show amortised European “Bookings” (Net New Sales Revenue Entered) growing from Q3’21, peaking in Q1’22 then declining for seven quarters before returning to (low) growth in Q1 and Q2 ’24 and improving slightly last quarter. The blue bars show amortised “Billings” (Sales Revenue Shipped and


12 September 2024


Invoiced) which from Q3’21 grew for seven consecutive quarters, peaking in Q1’23 but then declining in the following five quarters. The Book-to-Bill ratio (a key industry metric) peaked at 1.66:1 in Q4’21 (an outrageous number and beyond anything recorded in the past 40 years) but declined over the next eight consecutive quarters before returning to growth in the first half of this year.


Continued recovery from the indigestion phase of the cycle The recovery in Europe we’re currently experiencing is seemingly part of the overall improvement in global demand


Components in Electronics


for electronic components, but we must always be mindful of ‘false dawns’. I’m going to ‘stick my neck out’ and state that the global electronic components market reached an inflection point at the end of Q2’24 when the supply and demand of electronic components became balanced (albeit probably only for a short period). The global market is today on an (almost certain) oscillating trajectory of modest mid-term improvement in sales revenue which I believe will continue for the rest of 2024, but in the UK we’ll have to wait until the first half of next year for the return of stronger, more consistent growth.


Known factors


The progress of our industry in 2025 will be dependent on a number of ‘known’ factors: The demand for electronic components in EU, US and Japan historically declines in the second half of the year, whilst demand in Asia-Pac increases. The relative strength of demand in Asia-Pac during the rest of the current year will have a major impact on what happens to components supply in the rest of the world in 1H’25. But regression forecasting (calculating future demand based on previous history) in electronic component markets is almost impossible due to the market instability we’ve seen over the past three years.


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