2024 Outlook: ECSN Embraces Cautious Optimism

Last year, Aubrey Dunford, the ECSN (Electronic Components Supply Network) market analyst declared the UK electronics components market had returned to normality. At this year's Electronics Components Forecast, he reclassified its status as a new, new normal.

According to the 2024 total forecast, the market is expected to grow between 1.6% (min) to 4.1% (max).

At the end of 2022, ECSN suppliers were preparing for 2023 with strong order books and confidence in customer demand. They also expected prices to generally be maintained. Another prediction for 2023 was that growth in the first half of the year was likely, but the second half would be less certain due to pent-up demand for 5G and smart vehicle infrastructure systems. The book-to-bill ratio was expected to remain strong in 2023 as lead times returned to more normal levels, although some shortages were expected. Despite uncertainties such as product availability, global trade and political tensions, and falling consumer confidence, Dunford maintained that authorised distributors are "key to helping the industry find its way through uncertainties".

In 2023, the component market sales reached a DTAM (Distributor Total Available Market) of £1886m and a TAM (Total Available Market) of £4254m, compared to £1722m (DTAM) and £3938m (TAM) in 2022.

Looking ahead to 2024, ECSN members are cautious due to various statistics. Firstly, inventory is still high, making it difficult to judge demand. Price pressures are expected to be minimal, and the price levels achieved in 2023 are anticipated to be maintained. A flat first half of the year is expected, supported by the HM Treasury's comparison of independent forecasts predicting an average UK economy growth of 0.5% for 2023 and 0.4% for 2024. The second half of the year will depend on trade and political tensions, including the unrest in the Middle East and its potential impact on oil prices.

While there is still a demand for 5G and vehicle infrastructure systems, particularly in the industrial sector as UK manufacturing output rises, the overall picture remains uncertain. Dunford mentioned that some market sectors will likely remain strong, but there are indications that the growth in UK consumption may not be reflected in sales in 2024. It is important to note that manufacturers do not know the exact amount of stock available, as double ordering of inventory during the pandemic is still being resolved. Dunford added that the DTAM quarter-on-quarter growth since 2021 is primarily due to price increases in a commodity market rather than increased unit sales.

The one seeming certainty is moderate growth in the first half of 2024, estimated at around 1.4%, according to Dunford.