The UK and Ireland component distribution market is forecast to grow 10% to £1.55 billion in 2022, topping £1.5bn for the first time, says component industry body ecsn.
This follows a 15% acceleration to £1.41bn in 2021.
“ecsn members are entering 2022 with a strong order book,” says ecsn market analyst Aubrey Dunford.
He predicts a strong first half to 2022, followed by a slowing of growth in the second half of the year due to comparisons with a strong second half to 2021.
The question mark hanging over the industry is product availability.
“The consensus opinion held by ecsn members is that by mid-2022 lead-times will be declining rapidly to around an average of 12-to-16 weeks for most components but there will still be some ‘outliers’ on much longer lead-times”, adds ecsn chairman Adam Fletcher.
Book-to-bill ratios have risen to new, rarely seen levels close to 1.4 in the UK and Ireland before settling back at 1.2
Fletcher remains concerned about availability: “I suspect that proprietary semiconductors and interconnect products will “normalise” first, whilst commodity products (other than memory chips) will not be on track until 2H’22, but my real concern is the longer-term availability of the legacy, larger case size multilayer ceramic capacitors and thick-film chip resistors components used widely by customers in the US and Europe. The lack of focus on increasing manufacturing capacity for these parts has the potential to be the next significant industry supply problem”.
As Aubrey Dunford points out the components industry has shifted from its typical cycle which saw the European and north America markets growing in the first two quarters of the years and slowing in the second half while Asia/Pacific markets were typically up in the second half and slow in the first half.
COVID-19 has scuppered that trend. “All boats are rising on the same tide,” observes Dunford.
Distributors’ bookings are at unprecedented levels. “Electronics is finding its way into more and more applications, so our members are confident that the underlying strong demand from their customers will continue”, Dunford said. “We therefore predict that bookings will remain strong throughout the first half of 2022, although we do expect to see the ‘book-to-bill’ ratio decline as the supply conditions improve. In the second half of the year growth in the market will continue although the rate of growth will decline compared to 2H/21.”
One concern is the growth of the so-called grey market for components. “Customers have been sourcing components that maybe they shouldn’t to keep production lines open,” says Adam Fletcher.
Distributors have in place rigorous safeguards to ensure counterfeit devices are not returned to the authorised channel.
“It’s a problem we are very, very conscious of,” says John MacMichael, Managing Director of Solid State Supplies.
Moving on up: Bar chart shows the DTAM (Distributor Total Available Market) and TAM (Total Available Market for the UK and Ireland from 2008 to 2022.
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