A downbeat ecsn is forecasting growth between 1.5% and 3% for the UK and Ireland component distribution market in 2015.
The electronics industry trade body cites election uncertainty and a slowing UK economy will see the market creep forward from a value of £1.079bn in 2014 to £1.085bn in 2015.
This modest increase comes off a 2014 that failed to live up to expectations. A sluggish second half of the year put paid to ecsn’s prediction of a bullish 3.5% to 7% market expansion.
Aubrey Dunford, ecsn Market Analyst blamed slowing growth in global markets, principally in the key market of Europe for a performance which will see the market edge forward between 2.6% to 3.1% this year.
Excess inventory in the supply chain is also depressing expectations. Dunford points to the slowdown in Asia-Pacific causing a component glut to build up. Distribution customers have shied away from scheduling orders when they can rely on purchasing from stock as and when required
“We believe that it will take some months for the supply chain to come back into balance,” Dunford commented. “In the meantime with stock and short lead times we do not expect to see an increase in the book to bill ratio.”
The book to bill ratio started to slide in the first half of this year and hit unity in the third quarter.
Distribution has also suffered as market sectors where it has a smaller footprint have surged.
“Automotive and military/aerospace have remained buoyant,” observed Adam Fletcher, ecsn chairman. “The industrial sector on which the bulk of the UK and Ireland electronic components market is reliant lagged behind other markets in the first half of the year.”
“It then caught up and exceeded UK GDP growth in the second half,” he added.
The ecsn forecast contrasts with more bullish outlooks which vary from a 15% surge in the global semiconductor market forecast by Future Horizons and a 7.5% push prediction from IC Insights.
In its Q3 2014 review the Semiconductor Distribution and Manufacturers Association (DMASS) reported semiconductor sales grew 7.3% in Europe to 1.57bn Euro though its chairman Georg Steinberger tempers too much optimism commenting, “The outlook for 2015 is only moderate.”
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