The UK's electronics market has lost much ground since 2001, but that the bottom had now been reached with sales continuing at the current rate during 2003 according to Gary Kibblewhite, chairman of the UK's Association of Franchised Distributor of ElectronicComponents, (AFDEC).
According to the Association's 17th Annual Forecast, which coversboth the distribution and manufacturing sectors of the UK electroniccomponents industry, the total market for electronic components inthe UK dropped 31.6% to £4577million.
On the positive side, says Kibblewhite, while it is clear thatalthough some of the large EMS companies have re-located overseas,the majority of distribution's customers are still operating in theUK and the volumes of components shipped has not been affectedanywhere near the same amount as value.
The figures produced by AFDEC are based on figures from itsmembers which represent around 75% of electronic components soldthrough distribution in the UK. For 2002, the sales by distributionfor industrial sectors will contract by 28% from £1560million to£1123million and it is predicted that for 2003, it will contractby 3% from £1123million to £1088million. Semiconductorswill be down 5%, passives by 6% and electromechanicals by 2%.
For 2004, AFDEC is predicting a growth of 3% from£1088million to £1126million.
The total market (direct plus distribution sales) for 2003 willcontract by 5% from £4577million to £4341million while in2004, it will grow by 2% from £4341million to£4413million
AFDEC says that where the larger distribution outlets areconcerned, there is now a growing tendency for the major OEMcustomers to source from the distributors rather than the componentmanufacturers. In addition, EMS companies continue to transfer theirpurchasing from the component manufacturer to the distributor. About20% of distribution sales in 2000 were to EMS companies – in 2001 theshare was over 27%. The UK distribution sector's monthly rates ofsales are at levels last seen in 1994.
AFDEC does not monitor unit price movements statistically but someinformation on this subject is available. It suggests that priceshave fallen during 2002 – perhaps by 10%, but in any case not enoughto explain the entire contraction in the market. If a 10% pricereduction is assumed, the drop in demand in unit terms is of theorder of 18% – a considerable number given the market history of anever rising requirement in volume terms for components.
While demand in unit terms is expected to rise in 2003, furtherprice falls are also anticipated with the overall result being asmall contraction in the market. Passives are likely to be worstaffected with billings down over 5%, whereas component assemblies areactually expected to show a very small rise of some 3%.
The forward outlook does not appear to be a lot more positive thanat present. AFDEC sees the economic climate in the UK and US becomingrather better which, in 2003 should generate slight growth but thiswill be too small to be at all exciting.
Copies if the Annual Forecast are available,price £95, from the AFDEC Secretariat: email:firstname.lastname@example.org Tel: +44 1763 274748.