What’s driving the global demand for electronic components?
There’s been much discussion in recent months about the increase in the global demand for electronic components and the undeniable effect that this is having on the lead-times for manufactured products. The past twelve months in particular have seen an exponential increase in demand for electronic components.
Electronic component supply has a major impact on manufacturers and as a result, it is an aspect of the industry that many are keen to forecast and prepare for changes in the engineering, technology and manufacturing industries.
Slack demand for electronic components results in shorter lead times and lower prices, whereas greater demand gives rise to much higher prices, but more importantly the lead times extend quite dramatically. Some components can have up to 52-week lead times or longer, which can have a major impact on the UK’s manufacturing sector.
Each year, the manufacturers’ authorised distribution (afdec) group within the Electronic Component Supply Network (ecsn) prepares a forecast for the UK and Ireland’s electronic component sector.
This year ecsn predicts that the UK and Ireland’s electronic component market will grow between 3.4% - 8.5%, achieving a mid-point of 5.9%. The forecast further reveals that the market is likely to have grown by 9.2% in 2018, and Distribution’s share of the TAM (Total Available Market) in the UK will have grown to about 41%. An encouraging consensus opinion that the recovery in the high-tech manufacturing sector of the economy will remain strong and, despite the many uncertainties, is likely to outperform the macroeconomic environment.
We ask Brett Longden, Redline’s Recruitment Consultant what has been driving the global demand for electronic components.
“This growing demand has most definitely resulted from the impact of new product development. A significant contributor to the scarcity of components has undoubtedly been the unprecedented growth in the automotive, mobile and industrial markets and the Internet of Things (IoT).”
Brett continues: “The release of any new device or product inevitably continues to provoke a spike in consumer demand, which in turn places pressure on the manufacturers of essential electronic components. After a period of a relatively stable market, it would appear that semiconductor manufacturers in particular have been caught unprepared by not making the required investments to enable them to respond to the surge in demand and increase their production capacities.
With multiple companies fighting for the same limited supply of products, it stands to reason that franchise distributors and component manufacturers are going to seek to prioritise the needs of their most valuable clients first.
Technology giants like Apple have also fallen behind due to supply constraints which resulted in their own market share taking a widely-publicised hit last year when the product release for the i-Phone 8 was delayed.
The automotive industry is used to sporadic production shutdowns often for months at a time, as they handle shortages in microchips and other electronic components. Technological developments within the automotive industry have also had an effect on electronic component supply, as car manufacturers look to add innovative new electronic-based products (sensors) such as advanced driver assistance systems (ADAS) into their vehicles.
In recent years, the development of white goods and wearable technologies have also been strong drivers behind the increase in demand for electronic components, which has also given the rise in consumer demand for smart tech and interconnectivity between lifestyle devices. This trend is only going to rise in years to come. As a result of tech innovation, wearable gadgets and white goods are rapidly becoming smarter, boasting increased connectivity across platforms. They are also becoming more refined and functional, as well as more energy efficient.
Hence why interconnectivity is higher than ever before, which requires electronic manufacturing services (EMS) companies to keep up with technological progress and to ensure they deliver components that are up to par with the latest standards in the industry. These components must serve to support the latest features which the modern consumer expects to receive in every smart product today.
Redline are specialists in electronics recruitment with a broad variety of clients in some of the fastest moving industry segments including Automotive, Aerospace, Broadcast, Communications, Consumer, Defence, Industrial Control, Medical and Semiconductors. Click here to see our latest electronic engineer jobs.
The future is exciting, and we’re looking forward to seeing how the latest technology will affect the role of people in Technical Sales, and the products that they sell. With so much change happening in the electronics industry, now is the perfect time to take the next step in your career. Speak to Redline today, we have over 35 years of technology recruitment experience. Discover your future with our range of Technical Sales jobs, or send your CV to our team of talented recruiters today.