IDEA highlights continued slowdown in components market

Announcing the Q4 2011 figures IDEA Chairman, Adam Fletcher, remarked that the European electronic components markets experienced the year’s greatest growth in Billings growth in Q1, probably as a result of the earthquake and tsunami in Japan, which prompted customers to increase their inventory levels.

According to Fletcher, “The electronic component market proved more robust than customers feared and supply overtook demand in Q2. Many customers have continued to steadily reduce their inventory in what they perceive as a deteriorating macroeconomic environment, which has led to a corresponding reduction in manufacturing capacity, a declining trend that we’re likely to see continued into Q1 2012”.

Total European Distribution Billings (net sales invoiced less credits) in Q4 2011 declined by (14%), when compared to the previous quarter and by (12%) compared to the same period in the previous year. Sector specific Billings changes in Q4 2011 compared to 2010 were: Semiconductors down by 15%; Passives fell by 12%;  and Electro-mechs and Other Components saw a decline of 2 per cent.

Total European Distribution Bookings (net sales orders entered) in Q4 2011 declined by 8.2% when compared to the previous quarter and by 23% when compared to the same period in the previous year. Sector specific Bookings changes in Q4 2011 compared to the same period 2010 were: Semiconductors declined by 29%; Passives declined by 24%; and Electro-mechs and Other Components saw a fall of 7%.

The overall European Book to Bill ratio improved in Q4 2011 to 0.93:1, a further improvement of 5 points compared to the previous quarter but as both Bookings and Billings are approximately 25% off their Q1 peak, the improvement might not be sustainable. However demand for electronic components in Asia remains positive and global demand is likely to improve in the second half of 2012, even in the current weak macroeconomic growth environment.

“Many customers continue to operate on minimal inventory”, continued Fletcher “but they must start to consider supply network risks more carefully and start to view inventory as an asset rather than a liability. Effective inventory management is key if the supply network is going to be able to support customers’ electronic components requirements when demand again overtakes supply, which it will!”

IDEA

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