Distributor figures: UK components market will be ‘flat to improving’ in 2013

RSS

The UK’s manufacturer authorised distributor group, AFDEC, has released its analysis of the UK and Ireland’s electronic components market for 2012 and 2013. AFDEC’s market analyst, Aubrey Dunford, said the results were worse than anticipated.

Dunford’s estimate for the UK and Ireland’s DTAM (distributors’ total available market), which includes figures from Digi-Key for the first time, declined 14% in 2012 to £1.01bn, while the TAM (total available market) was down 16% to £2.6bn. Looking on the bright side, he did point out that this meant distributors had increased their share of the market. This, he said, was likely to increase further in 2013.

“Returns from our members forecast that the UK and Ireland electronic components market will continue to improve sequentially throughout 2013, with positive growth returning in the second half of the year,” he said. “We’re likely to see a slight reduction in the TAM – down 1% to £2.58bn – however the DTAM will remain around the same, and therefore a larger share of the total, as customers consolidate their use of manufacturer authorised distributors.”

AFDEC Chairman Adam Fletcher believes continued inventory correction has been exacerbated by weaker than anticipated growth in China.

“Unfortunately when the largest market sneezes, we all catch a cold; if it wasn’t for the huge volumes being driven by smartphones and tablets we may well have caught pneumonia,” he said.

According to AFDEC’s figures, the book-to-bill ratio started trending up in March ’12, became positive in July ’12, possibly indicating momentum towards a recovery.  

 

Trends in the UK market

The UK’s manufacturing output is 5-10% less than it was 5 years ago as the trend for offshoring continues.

“In common with the rest of Europe and the USA, we have become a ‘design centre’ for manufacturing operations in the low cost Eastern economies… the design win revenue generated in the UK and Ireland in 2013 will probably be worth more than twice the actual sales revenue,” said Nigel Watts, Managing Director of Ismosys.

In a panel discussion following presentation of the UK and Ireland market figures, Watts pointed to the importance of design houses and consultancies in the UK, which are not reflected in AFDEC’s TAM figures. Answering, AFDEC chairman Adam Fletcher said that the activity of these consultancies was notoriously difficult to measure – projects are often counted twice, he said, since consultants habitually work with more than one distributor during  the design process and then choose one to work with at the end. AFDEC would like to get some data from design houses directly, rather than from channel members, but this has not yet materialised.

The discussion about offshoring, of course, brought up the old chestnut of design tracking. Avnet Memec’s UK & Ireland Country Director Chris Shipway said the company had excellent internal systems for design tracking, so the part of the business that does the demand creation is rewarded, even if it’s only a commission rather than credit for the full sale.

However, one manufacturer’s representative at the meeting assured me that while many distributors now have systems in place to track design wins offshore, it is still far from prevalent. 

Newsletter Signup

Please or Register to post comments.

What's Crosstalk?

Blogs covering all areas of the European electronics industry, particularly in wireless communications and displays technology

Contributors

Sally Ward-Foxton

Sally Ward-Foxton is Associate Editor of Electronic Design Europe. Her beat covers all areas of the European electronics industry, but she has a particular interest in wireless communications and...
Commentaries and Blogs
Guest Blogs
Nov 11, 2014
blog

How to Outsource Your Project to Failure 3

This article will address failure to carefully vet a potential manufacturing or “turnkey” partner and/or failure to transfer sufficient information and requirements to such a partner, a very common problem I have seen again and again with my clients over the years, and have been the shoulder cried upon by several relatives and clients in the past....More
Nov 11, 2014
blog

Transition from the Academe to the Industry Unraveled 1

There have been many arguments here and there about how short-comings of universities and colleges yield engineers with skill sets that do not cater to the demands of the industry. There have been many arguments here and there about an imminent shortage of engineers lacking knowledge in the sciences. There have been many arguments here and there about how the experience and know-how of engineers in the industry may vanish due to the fact that they can’t be passed on because the academic curriculum deviates from it....More
Nov 11, 2014
blog

Small Beginnings 5

About 10 years ago I received a phone call from an acquaintance. He had found a new opportunity selling some sort of investments and he wanted to share it with me in case I was interested. Ken had done fairly well for many years as a contract software developer primarily in the financial services sector. His specialty was writing RPG code. (RPG is often referred to as a write only language.) But he was seeing the handwriting on the wall as the industry moved on to other methods, and saw himself becoming a fossil....More

Sponsored Introduction Continue on to (or wait seconds) ×