Electronic components market flat but improving in 2013
07 January 2013
The afdec group within ecsn has released its 2013 Forecast for the UK / Ireland electronic components market.
It believes that the market will be flat in 2013, with growth returning in the second half and that distributors’ share of the UK components market will grow.
Analysis of the consolidated returns from the association’s membership indicate that the overall UK / Ireland Distributor Total Available Market (DTAM) in 2012 is likely to have declined by approximately (14%) when compared to the previous year. In 2012 DTAM is expected to be £1.01bn, with the Total Available Market (TAM) also expected to decline by over (16%) to £2.6bn. “
Presenting the forecast, Aubrey Dunford, ecsn Market Analyst confirmed that in 2012 the decline in the UK / Ireland electronic components markets continued a quarter beyond the association’s expectations, reaching a low point in Q2 2012 and has experienced an unusually slow recovery: “The year ended (9%) lower than our original forecast but in-line with our revised mid-year forecast,” said Dunford. “Returns from our members forecast that the UK / Eire electronic components markets will continue to improve sequentially throughout 2013, with positive growth returning in the second half of the year. We’re likely to see a slight reduction in the TAM (down by 1% to £2.58bn), however the DTAM will remain around the same and therefore a larger share of the total, as customers consolidate their use of manufacturer authorised distributors.
On a positive note, Dunford confirmed that the ‘Book to Bill ratio’ an important industry indicator, started trending up in March ’12: “The Book to Bill became positive in July ‘12 confirming an improving trend in overall demand and suggesting that there is momentum towards a recovery”, Dunford said, “We have been witnessing an extended period of weak demand resulting in a continued inventory correction right across all global electronic components markets. The lead-times for modest volumes of most electronic components is currently less than four weeks with many manufacturers reducing spare production capacity, which will take time to bring back on-line as demand increases”.
According to ecsn / afdec chairman Adam Fletcher the well publicised macro-economic problems in the Eurozone and beyond have contributed to a continued deterioration in both consumer and business confidence, resulting in very limited supply network visibility. “Most ecsn members are beginning to conclude that uncertainty is the ‘new normal’ and along with their supply network partners are adapting their systems and processes to cope with greater dynamic change”.
Ben Green, Technical & Marketing Communications Manager at Harwin comments: “Although overall the forecast may be flat, electronics is vital in many emerging sectors – such as UAVs, robotics, oil & gas exploration and alternative energy. These markets demand constant innovation and fast response, which is why we maintain comprehensive, state-of-the-art, design and manufacturing facilities here in the UK for our high performance connectors and PCB hardware components.”
"Though the ecsn forecast shows that the market in 2013 will be little different from 2012, Omron is seeing much more encouraging interest from our focus markets. Innovative products like the D6T IR sensor which helps manage energy use in buildings and the G9EN which simplifies the design of electric and hybrid vehicles are exactly what the European electronics market needs at the moment.” Alex Grout, Distribution Manager EMEA, Omron Electronic Components Europe.
“In our opinion there still are strong growth elements to the electronics business to be exploited in the UK and rest of world over the next year and beyond, and as a more specialised electronics business we see a strong future going forward in most of our divisions. However, as the UK and EU economies are changing and having to compete in a different way we must expect some companies to experience mixed fortunes over the next year.” Nick Lidington, Managing Director Sequoia Technology Group.
Comments Graham Maggs, Director Marketing EMEA, Mouser: ““Although the market overall is indeed flat, the UK has always been a powerhouse of design which is why we at Mouser see business growing here. Distribution must support design activity by providing comprehensive information resources, the latest technologies and immediate access to parts.”
“The somewhat lack lustre market-growth forecast by afdec members must encourage our industry to accept what’s become the true role of the UK and Ireland in the global electronics market place. In common with the rest of Europe (and the USA) we have become a ‘design centre’ for manufacturing operations in the low cost Eastern economies and the Design Win revenue generated in the UK & Ireland in 2013 will probably be worth more than twice the actual sales revenue” said Nigel Watts, Managing Director, Ismosys.
“Though I suspect that the ecsn forecast calls the general market correctly, Avnet MEMEC is in a good place. Our vertical market focused demand creation model means that we’re able to provide customers in key growth segments with a real advantage, as we have access to some very innovative technologies supported by a team who can work with them effectively”, said Chris Shipway, Country Director, Avnet MEMEC UK
ecsn / afdec chairman Adam Fletcher believes the continued inventory correction has been exacerbated by weaker than anticipated global consumer demand, which has significantly reduced electronic components market growth in China from historical norms of 8% to 10% growth to probably less than 5% in 2012, “Unfortunately when the largest market sneezes we all catch a cold, if it wasn’t for the huge volumes being driven by smart-phones and tablets we may well have caught pneumonia”, Fletcher concluded.
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