|Component Sales Forecast: Stable as She Goes |
Several research firms describe the electronics market environment as “stable” entering the all-important calendar Q4. Lead times, for example, have leveled out, according to LevaData and the ECIA, and demand shows no sign of abating. However, logistics experts continue to point to seemingly endless backups at international seaports and retailers are bracing for holiday shipping delays.
Stable, of course, is a relative term. LevaData estimates average component lead times are 22 weeks with some component categories leveling out; ECIA reports lead time pressures are beginning to ease.
The ECIA reports its electronic component sales-trend (ECST) index remains above 100, the line of demarcation between growth and contraction. The average growth expectations for components ranged between 120.0 and 127.0 between September and the October, according to Dale Ford, chief analyst for ECIA. Expectations for end-market growth ranged between 111.4 and 115.4 for the same period. At its height, the ECIA’s component sales index was 157.7.
While the ECST shows a significant difference in variability/volatility between various component sub-categories and end-markets, the overall picture of a more stable growth profile is encouraging for supply chain participants working to manage in a very challenging environment, said Ford.
Electronics Component Shortage: A Tale of Two Decades
In 2001, there was so much excess component inventory in the supply chain that more than $13 billion worth of semiconductors alone was written down or off by component makers, distributors and customers. People still wince at the memory.
In 2021, there’s such a severe shortage of semiconductors that the automotive industry is set to lose more than $100 billion in sales because it can’t get chips. “Desperation” is a term that’s been kicked around.
For two decades the electronics supply chain has been minimizing the level of inventory in its pipeline via just-in-time (JIT), build-to-order (BTO) and lean. The goal is delivering the “right amount” of components to manufacturing lines just as they are needed. These parameters are determined by end-customers, largely OEMs and EMS providers.
Forecasting in the electronics industry is notoriously bad.
“The first time I get an accurate customer forecast will be the only time I get an accurate customer forecast,” one chip maker recently said. When demand for electronics skyrocketed at the beginning of the year, no one was prepared. The current chip shortage is expected to last well into 2022.