Although seasonality became almost meaningless during the Covid pandemic, component sales forecasts hint at a return to “normal” demand patterns, according to the ECIA.
Amidst an ongoing component shortage, overall component sales sentiment increased from December’s level to reach 116.5 in January, the association reported. (100 is the baseline between growth and contraction in the Electronic Component Sales Trend (ECST) report.) All major component categories and subcategories achieved a sentiment index rating at 100 or higher with discrete semiconductors and electromechanical components leading the pack with index scores above 122.
In an encouraging sign of stability, the overall index outlook for February sales is just slightly lower at 113.1. In a typical year, February sales are softer than the January results. This return to a “normal” pattern would be a welcome result after the wide swings experienced by the industry over the past two years, said ECIA Chief Analyst Dale Ford in a report.
The end-market index follows closely with the component index with the overall average measured at 114.8 for January and dipping slightly to 109.9 in the February expectations. Only two end markets report an expectation of sales sentiment below 100 for January and February – consumer electronics and mobile phones. Softness in these areas reflects a typical seasonal pattern for these markets.
- Automotive electronics leads with strong sales sentiment above 125 in both January and February.
- Industrial electronics scores above 120 in January and then dips slightly below in February.
- Avionics/military/space represents another bright spot as it measures roughly 118 in January and then jumps above 125 in February.
- Medical electronics also sees very positive sentiment around 117 in January and then topping 120 in February.
Market analyst TrendForce also notes seasonality regarding end-markets. “The market’s supply situation is expected to be approximately the same as in 4Q21. However, some end products have entered their traditional off-season cycle and the slowdown in demand momentum is expected to alleviate the immediate pressure on OEMs and ODMs regarding supply chain stocking.”
Among the three groups surveyed for the ECST, distributors report the greatest optimism in January and actually see improved expectations in February. Early earnings results show record component sales for calendar Q4 and distributors — big customers for component suppliers — are fulfilling orders. On the other hand, manufacturers report solid 100+ sentiment in January that then collapses below 85 in February – the only negative expectation among all three groups.
Manufacturer representatives reported stable expectations above 110 for both months.
The reason for the strong divergence in expectations for February between manufacturers and the other groups is not clear, said ECIA. Manufacturers may be concerned about economic and inflationary challenges that may slow end-market demand and soften long term bookings, said Ford.
Manufacturers are also facing raw materials shortages, shipment delays from Asia and a host of other supply chain disruptions. Suppliers may also be concerned about their ability to meet demand. Lead times are increasing and there is no relief on the horizon regarding component supplies, companies report.
The good news in all of this, ECIA said, is that even with seasonal softness, the broad end-market demand indicates growth in January and projects continued growth in February.
- Semiconductor sales sentiment continues to show the greatest optimism among the three major component categories with the index measuring at 122.2 in January and sustaining a strong level at 120.9 in the February expectations.
- Discrete components continue to achieve the strongest index levels among the component subcategories as they lead the group in January and remain strong with an index score above 120 looking toward February.
- Electro-mechanical components come in just behind discrete semiconductors in January but then drop below 115 in February expectations. In the next tier MCU/MPU and analog/linear ICs deliver stable, optimistic results with index scores between 113 and 118 and January and February.
- Capacitors are another bright spot with index measures above 110 in both months.
- Resistors, inductors, and memory ICs see the lowest scores but still all solidly above 100 looking toward February.
All three of ECIA’s component indices project a drop between January and February with passive components coming in at the bottom end with a still respectable 107.6 in January and 105.9 for the February projection. However, the overall actual component sales sentiment index has now registered above 100 for 18 straight months dating back to August 2020. “This represents a very encouraging start to the new year,” said Ford..