Continued growth for electronic components markets in 2011
13 December 2010
Aubrey Dunford, ecsn Market Analyst
The Manufacturers’ Authorised Distributor (afdec) group within the Electronic Components Supply Network (ecsn) has released its 2011 forecast for the UK / Eire electronic components market served by Distributors.
Following significantly better than expected returns in 2010, the association anticipates that the overall UK Distributor Total Available Market (DTAM) will grow by 24% to £1.15bn in 2011, with the Total Available Market (TAM) growing by 26% to £3.75bn.
“The recovery in the UK / Eire electronic components markets has been much quicker and stronger in 2010 than we anticipated,” said Aubrey Dunford, ecsn Market Analyst (pictured). “The sales revenue has recovered to beyond pre-global financial crisis levels two years earlier than we forecast.”
The UK / Eire electronic components markets now need to consolidate this growth in 2011 but afdec is optimistic that this is achievable in the current situation, based on its members’ strong bookings growth in the second half of 2010.
Dunford believes that the Book to Bill ratio is an important industry indicator: “The Book-to-Bill is now trending towards unity suggesting that bookings (new orders) in the first half of 2011 will be lighter, with billings (invoiced sales revenue) driven by the true underlying demand from customers,” he said. “It’s no longer possible to identify a single driver of demand and growth in the UK / Eire electronic components market as we have been able to do in the past. Much of the growth we are seeing is the result of a silent invasion of electronics into many new markets and applications.”
Despite the turbulence in the global economic outlook during 2010, the primary international markets for electronic components have all experienced similar growth to the UK with a few notable exceptions such as China and Germany, where growth rates continue to be significantly higher than the average.
As a result of this rapidly increased global demand, the manufacturing lead-times for many electronic components extended considerably in 2010 with sporadic critical shortages arising for some key components.
According to ecsn /afdec Chairman Adam Fletcher, component manufacturers and their authorised distributors have experienced a difficult 18 months of matching real customer demand to their available capacity. “Fortunately this process has generally been managed well and many of the outstanding supply issues are expected to be resolved in the first half of 2011,” said Fletcher.
afdec members remain confident that their customers will continue to prosper as innovators in electronic system design, and forecast that in 2011 the UK and Ireland electronic components markets will grow, albeit at a lower, and therefore more sustainable, rate. On that basis, the association forecasts that sales revenues will grow in the range of 0.1% to 8% with a midpoint of 4.3%, which will result in a TAM of just under £4bn.
Fletcher believes that the high growth achieved in the UK and Ireland electronic components markets in 2010 will be consolidated in 2011, but cautions that his members will experience a more modest but sustainable growth rate. “The UK, Ireland, and global electronics markets are at the mercy of the global economic recovery which, whilst generally improving, remains fragile and may yet prove challenging for all parties in the electronic components supply network.”
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