Components supply forecast without crystal ball!

“I’m certain that stability will return, but I will need a crystal ball to predict just when…!” - Adam Fletcher

Adam Fletcher - Chair ecsn

At the end of each year the Electronic Components Supply Network (ecsn) provides a provisional twelve month Forecast for the year in prospect. The forecast issued by the association in December 2019 reflected the ‘reasonable’ confidence expressed by ecsn members for the first half of the year but the association chose to limit its predictions for the second half of the year to ‘best guidance’, due to the lack of customer visibility in the electronic components market coupled with ongoing geo-political uncertainties. The association is now able to firm up this ‘best guidance’ and has today confirmed its forecast to the end of the year, together with the provisional release of the results for H1 2020.

According to ecsn chairman Adam Fletcher, the outcome for the electronic components market in the first half of 2020 revealed a decline of (10%) when compared to the same period last year. The association’s forecast for the second half of the year suggests that the market decline will slow and reveal a 2H’20 decline in the range (9%)-to-(3%), with a mid-point decline of (6%). The mid-year forecast released today by ecsn predicts that the British & Irish electronic components market will conclude 2020 showing a full year decline in the range (10%)-to-(6%), with a mid-point of (8%) decline on the previous year.

“The sharp decline in growth in 2020 is primarily the result of a global economic slowdown caused by the COVID-19 pandemic, which was not a forecastable event in 2019”, said Aubrey Dunford, ecsn Market Analyst. “However, the ongoing trade war between China and the US had already reduced demand in Q4’19 and enabled customers to de-stock based on increased availability due to tumbling component lead-times and because of their weakening customer order book”. 

The ‘Book to Bill’ ratio which was positive in Q1’20 but declined slightly in Q2’20 but the polynomial trend suggests that the B2B ratio is likely to remain positive into the 2H’20: “Customers who had been destocking in Q4’19 increased their in-house inventory and order cover in Q1’20 as manufacturer lead-times for components started to increase and with it, the potential risk of product shortages due to the population lock-down and China’s closure of much of its manufacturing industry” Dunford continued. “Fortunately, the supply situation has eased considerably in Q2 ’20, partly aided by lower global demand for electronic components”.

Continuing Limited Visibility…
ecsn’s afdec members’ visibility in the electronic components market remains very limited due to the almost total absence of clear guidance from their customers, and there is understandably a wide and diverse range of opinions on the likely outcome for 2020: “It’s always our aim to provide the electronic components markets, our members’ customers and investors with a balanced and evidence-based forecast and our forecast for the second half of the year reflects careful analysis of our members’ statistical data, reports from industry analysts and empirical data from a wide range of sources”, said Adam Fletcher. “Looking further ahead we believe that 2021 is likely to be a year of low growth and modest recovery for the electronic components markets. Stronger real growth will probably not return until 2022, however the range of member and industry analyst opinions about when and what the rate of the growth will be remains very diverse”.

That said, Fletcher remains confident that the trajectory for the electronic components markets in the mid-term is up and to the right: “If we assume that the final outcome for 2020 is a sales revenue decline of (9%) when compared to the previous year, then the performance of the electronic components market and the wider electronic industry will have been fairly remarkable given the dreadful economic environment in which we are all currently operating”. He remains confident that stronger underlying growth will return although the odd ‘bump’ along the way will be inevitable: “I predicted that any growth would adopt a hockey-stick shaped curve towards the end of 2020 and into 2021 and in my opinion the curve has now simply shifted by a further 18 to 24 months, due primarily to COVID-19 but also to the US China Trade War delaying the inevitable 5G roll-out but also reflecting weakness in the automotive market - which was set to return to growth in 2020 but has now been delayed by 12 months, the impact on the commercial avionics sector is likely to continue well in to 2023, and slower than anticipated growth in IOT applications: In the cloud computing and military markets growth remains strong, while PC / laptops, medical and industrial markets are set to continue modest growth rates”.

Looking even further ahead, Fletcher is confident that the electronic components markets will return to growth over the next few years but at a rate lower than the global average rather than at the top of the growth curve. He believes that stronger international economic growth, the impact of mega mergers and acquisitions and continued underinvestment in capacity for the manufacture complex electronic components will once again drive extended lead-times and shortages of some electronic components: “The pendulum of supply and demand continues to swing very erratically and will continue to cause a ‘stop-start’ effect on our industry”, Fletcher concluded. “Until the entire electronics industry starts to really collaborate effectively and share its business intelligence throughout the supply network, we will all be at risk from these extreme market oscillations. I’m certain that stability will return, but I will need a crystal ball to predict just when…!”

@ECSN_UK #Electronics #PAuto 

Uncertainties to lead to slower development in 2020.

Endress+Hauser remains on course for growth. In 2019 the Endress+Hauser Group increased its net sales by almost 8% to over €2.6 billion. The measurement and automation technology specialist created 400 new jobs worldwide. At the end of the year the company had more than 14,300 employees.

Matthias Altendorf

"We have grown across all fields of activity, industries and regions," said Matthias Altendorf, CEO of the Group. Strong impetus came from Asia. Europe, the Americas, Africa and the Middle East developed positively, but at a much slower pace. "With good product innovations, we have set a clear benchmark in the industry."

In 2019, order entry rose faster than sales. "Endress+Hauser has started 2020 with a significantly higher order backlog than the year before,"  reported Chief Financial Officer Dr Luc Schultheiss.
"The Group was able to maintain the return on sales at the previous year?s level. We are satisfied with our profit before taxes."

However Endress+Hauser expects slower development in 2020. Sales growth in the mid-single-digit percentage range is anticipated and the group aims to maintain profitability at a good level. "However, there are still many uncertainties," stresses Schultheiss.

Endress+Hauser will present its audited 2019 financial figures  next May (2020) in Basel (CH).

#PAuto @Endress_Hauser @Endress_US

The IoT and the Explosion of Data.

The top trends driving the industry as it becomes more connected

National Instruments has announced the release of NI Trend Watch 2016. The third annual report examines a range of topics  focused on the IoT and its impact on how we manage data – from the consumerisation of software to prototyping 5G to make it a reality.

“As the world becomes more connected, the incredible amount of real-world data available today promises engineers and scientists great insight, but getting that insight can be a challenge,” said Eric Starkloff, NI Executive Vice President of Global Sales and Marketing. “We strive to help our customers stay ahead of the deluge of analog data by investigating the trends that will help them handle the increasingly complex amount of information they’re acquiring to make the right decisions at the right time.”

NI Trend Watch 2016 explores these topics:

Prototyping Takes 5G From Concept to Reality – 5G will undoubtedly evolve our wireless networks to heights never before imagined, but its pursuit doesn’t come without challenges.

Big Analog Data of the Future: From the Edge to the Enterprise – With the proliferation of sensing and networking technologies, it’s never been easier or more cost effective to add measurements to systems.

It’s About Time: Evolving Network Standards for the Industrial Internet of Things (IoT) – Network technologies must evolve to satisfy the requirements of next-generation industrial systems and radically advance the way we operate machines, electrical grids and transportation systems.

Testing the Big Bang of Smart Devices – Instead of designing a unique test system for each device-under-test, test leaders must design smart test systems that can adapt to and test all smart devices.

The Consumerisation of Software – In a marketplace that’s rapidly demanding convergence, and the best of all possible worlds, it’s up to software vendors to answer the call.

Company outlook from Managing Director!

AdoptSMT Outlook for the year 2014 by Erhard Hofmann, MD AdoptSMT Group Europe

"I started this outlook for 2014 before Christmas. Trying to finish it after the holidays I can confirm one thing: The New Year is starting as busy as the old one ended.

Productronica 2013 held in Munich last November was for us by far the best show ever (we had our own booth at every productronica show since 1995), kept us busy into the start of 2014 and raises our confidence that 2014 will bring another nice increase of business (even no-one will bet on future business growth any more like it was done before 2008).

Erhard Hofmann

We at AdoptSMT expect little changes to the trend we saw during 2013. There is no uniform market. Even comparable companies in the same geographic area and in the same industry segment can show different levels of success, one can expand, the other one be forced to reduce head count and machines in use.

"While these differences between our customers help our business in our pre-owned equipment market (we need both demand and supply) we expect to gain market share in the overall stable market of consumables, spares and tools. Our additional customers in 2014 will be in the situation as the ones were we could win during 2013: They have enough business so they needed parts and supplies but are not too busy to look for alternative suppliers who save them money without compromising on quality. During 2013 we managed to enter many additional accounts, also multinationals, with our range of AdoptSMT Premium Parts and also with many parts and supplies distributed under the suppliers’ brand names including Hover-Davis, Count On Tools, Nortec, Thermaltronics, JBC, Techspray and Indium Corporation. The basis for our growth of business was of course to keep our existing customers, which was the case with the exception of some customers in areas which still suffered from the banking crises (in the South East and South West of Europe).

"We do expect higher investments being done by our customers in 2014 compared to 2013. But what we see even more is the focus of them on optimizing the utilization of their existing equipment. This is where we see ourselves as their prime partner – we help them to keep their SMT lines running. This will have us continue the growth we already experienced in 2013.

"AdoptSMT want to wish all customers and suppliers a successful year 2014”.