UK and Ireland component distribution body afdec has slashed its market prediction for 2019 from an initial 8% to a more likely 1% to 3%. In Q1 sales drooped 1.3% compared to Q1 2018.
Three years or 12 quarters of consecutive growth ground to a halt in Q1 2019 – “it’s knackered my bar chart,” said ecsn/afdec chairman Adam Fletcher (see illustration).
The culprit in this disappointing, though not entirely unexpected outcome, is the semiconductor sector where sales have fallen 7.4% to 155.9m Year on Year (YoY) in Q1 2019. Passive sales grew 13% YoY and e-mech grew a more modest 3.9%.
The result confirm the view that OEMs are burning off inventory, especially the higher value semiconductor products, while continuing to purchase lower value components like capacitors and resistors.
One obvious issue is Brexit,” said Fletcher. “The market grew on companies buying components in anticipation of Brexit happening in the first quarter of this year.”
“Now the industry has no idea when Brexit will happen or what it will look like and that is feeding the uncertainty,” Fletcher continued.
The good news is that once Brexit is done and dusted one way or the other, Fletcher is optimistic.
“It will be completed by the end of the third quarter and whatever the outcome, hard or soft Brexit, the industry will thrive post-Brexit,” thinks Fletcher.
Changing into his International Distribution of Electronics Association chairman’s hat Fletcher revealed contrasting fortunes in Europe’s major component distribution markets in the first quarter.
Of the major industrial countries Italy’s component market grew fastest at 7.1% and the Nordic countries were up 6.4%. Germany’s 3.8% rise is seen as disappointing.
Sackcloth and ashes were worn by the UK and in France where sales fell 2.7% YoY in Q1 2019.