The electronics sector is fundamentally strong and it may need to be if the worst fears of meltdown in eth global economy come to fruition.
As we enter 2012, electronics markets are expected to have a tough few months.
Latest predictions for the component market from distributor association ECSN are for a worrying shrinking of the electronics market in the first six months of the year, before things start to improve.
ECSN suggests that the component distribution market in the UK and Ireland will shrink by 5% next year to total £1.12bn.
According to ECSN members, the distribution market will grow by just over 4% this year.
“We expect Q1 to be the nadir,” said Adam Fletcher, chairman of ECSN/Afdec.
According to ECSN, there is still evidence of excessive inventory in the supply chain which is hitting bookings.
While in passive components much of the excessive inventory has been removed, the situation with semiconductors is still difficult.
ECSN expects it to take until mid-Q2 next year before the inventory situation for chips has normalised.
After modest growth in 2011, this must be a concern. But the important message for me is that the fundamentals remain strong.
The UK market is more resilient to the storms of the global economy than it was even five years ago.
The manufacturing sector is smaller, but leaner and far more competitive.
There are even growth markets in aerospace and defence, but also security systems, M2M wireless and renewable energy.
And the automotive activity amongst tier 2 suppliers has not declined in this country as much as might have been expected.