In today’s scenario, the electronics supply chain happens to be optimistic that component sales will surge in early 2024, tempered with the usual caution. The ECIA’s Electronic Component Sales Trend- ECST survey went on to jump 20 points in January 2024 to 98 points, just slightly less than the 100-point threshold, which goes on to indicate growth. It is well to be noted that this is the ECST’s highest level in 21 months.
Apparently, there are no overt reasons for this rise in optimism, as component inventory levels within the supply chain remain high and the worldwide demand for electronics softens. As a matter of fact, inventory burn within the channel happens to be taking longer than thought about, a channel executive went on to tell Edgewater Research. In its entirety, distributor inventories continue to be noted as stubbornly high, and though the supply chain goes on to hold onto the 2024 recovery expectations, concerns with regards to the duration of the digestion and the shape of the recovery within distribution remain, translating into a muted 2024 perspective of flat to low single-digit growth in POS, Edgewater remarked in its January Component Insights report.
As per Dale Ford, the ECIA Chief Analyst, the supply chain continues to be in a comparatively healthy state in spite of the ongoing elevated inventory levels.
It is well to be noted that semiconductor results when it comes to the ECST jumped almost 39 points to 105 points in January 2024, said the ECIA. Electromechanical as well as passive components both achieved double-digit index score enhancements. Growth within the overall index fell short of the 27.8-point improvement as anticipated in the December survey, but even delivering half of the forecast would indicate a robust start to the new year, said ECIA’s chief analyst, Dale Ford, in a statement.
ECST respondents anticipate the total component sales index to enhance by another 9.4 points to break more than 100 and touch 107.4 in February. Semiconductors are most likely to enhance their score to 117, and electromechanical components are anticipated to join them more than the 100 thresholds at 105. Even though passive components happen to be projected to deliver a robust improvement in the index for February with an enhancement of 11.8, this growth will still leave it just short of positive progress territory at 98.8.
Rebound vs. Recovery
The fact is that if the February projections hold true, it will result in the index getting better by 29.6 points in a 2-month period. Apparently, the index has just surpassed this performance twice in its history, as per Ford.
It is worth noting that the last time the index progressed at this rate was in September 2020, said Ford, but this prior leap within the index followed the crash in the total index score of 59 points between February and May 2020. This earlier index performance can very well be described as a rebound from the COVID impact, whereas the present period happens to be behaving more as a recovery from a broad slump of 1.5 years.
Notably, the end-market index also went on to report a solid improvement in January, even though it is slightly weaker than the progress seen in the component index. The January market index grew to a total score of 93. The avionics, military, space, medical, as well as industrial markets all scored more than 100 points. Every market, but not telecom or mobile phones, is anticipated to attain scores of more than 100 in February. The overall end-market index is anticipated to reach 103.1.
Apart from this, Adriot Market Research goes on to predict that the electronics components market will rise at a CAGR of 7.8% from 2023 to 2032. The worldwide market when it comes to electronic components was forecast to be $192.22 billion in 2022 and is most likely going to reach $369.1 billion by 2032.
The supply chain goes on to be in a relatively healthy state in spite of ongoing elevated inventory levels, remarked Ford. Product lead times continue to have a solid performance that is dominated by reports of stable lead times that average 66% share of respondents for January 2024. The number reporting increased lead times grew across all three component categories. Still, the highest number of reports came from passive components, at just 7%. The overall percentage of survey participants reporting growing lead times surged slightly, from 3% to 5%. At the same time, the average percentage reporting dipping lead times went on to remain stable at 28%.
Significantly, the supply chain managers are delivering a robust performance when it comes to the management of the flow of products by way of the supply chain, concluded Ford.
