January electronic-component orders up slightly

FEBRUARY 26--Electronic-component orders were up slightly in January 2002 compared to December 2001, but the 12-month moving average appears to be flat, according to the monthly index from the Electronic Components, Assemblies and Materials Association (ECA; Arlington, VA; www.ec-central.org).

FEBRUARY 26--Electronic-component orders were up slightly in January 2002 compared to December 2001, but the 12-month moving average appears to be flat, according to the monthly index from the Electronic Components, Assemblies and Materials Association (ECA; Arlington, VA;www.ec-central.org), a sector of the Electronic Industries Alliance (EIA), comprising more than 2100 members that represent 80% of the $550 billion US electronics industry. "The index shows significant growth in January 2002 compared to the average week in 2001, but you need to consider what kind of year 2001 was," says Bob Willis, ECA president. "Numbers for February should provide a more-realistic two-month view and could indicate trends for the first half of 2002."

Industry leaders are having a difficult time visualizing where the electronic components market is heading. The health of the industry was given mixed reviews by nearly two-dozen upper-level executives from electronic-component manufacturers gathered at the recent EIA Leadership Forum in Phoenix, AZ. The prevailing opinion is that growth will begin sometime in the second half of 2002.

A key topic of discussion was the inventory problems that plagued the industry in 2001, whether the situation has stabilized, and how to control it in the future. Executives believe that the increasing role of EMS has added additional complexity to the channel and contributes to oversupply conditions that are still resonating in the supply chain. According to Dennis Zogbi of Paumanok Publications, EMS is expected to account for up to 30% of high-tech production by 2005, with much of their purchasing coming from local sources. This means that many electronic-component manufacturers will need to have local distribution capabilities in the Asian marketplace within the next few years.

The consensus is that unit growth for electronic components will occur in 2002, possibly in the late first or early second quarter. Total unit growth for capacitors and resistors will approach 30 percent in 2002, according to Zogbi. But, pricing pressures that continue to push down the average selling price will limit any real dollar growth in the first half. Zogbi forecasts only a 5% overall revenue growth in 2002 for capacitors and resistors.

Forum participants believe that the best prospects to drive industry growth are servers, laptops, PDAs, storage, and wireless handsets in the business arena; digital cameras and game consoles in personal electronics; mapping, GPS, dynamic control, and active suspension in automotive; and myriad products in defense, depending on stimulus from the federal government.

More in Cameras & Accessories