Navigating the Electronic Components Market: Insights from FermionX
16-05-2024 | By Seb Springall
As we close in on mid-2024, it offers a moment to assess the landscape of the electronic components market from FermionX’s viewpoint. Industry forecasts often seem detached to us, so hopefully our first-hand experience provides a unique, ground-level perspective.
Market Performance Review
This year has certainly been interesting. There's been a noticeable increase in component availability—a welcome change for contract manufacturers like us at FermionX who’s service relies on on-time-delivery KPI’s. However, while the supply chain availability appears to have improved, the prices seem to have forgotten to follow suit. In a lighter vein, it appears that component prices have a certain 'stickiness' to them!
A printed circuit board assembly (PCBA) is fundamentally similar across various applications; the critical variable often boils down to the availability of specific components rather than the market itself. It is however important to note that the challenges are often shared across industries due to overlapping technology and component needs. For instance, ongoing issues in the automotive industry, which has faced delays and higher costs due to chip shortages, indirectly affect other sectors that utilise the same components.
Current Trends and Future Expectations
Looking ahead, the trajectory for the electronic components market appears to stabilise with a cautious uptick in optimism. Several key factors will influence this outlook:
Technological Advancements: Continuous innovation in IoT and AI is expected to drive demand for sophisticated electronic components. As these technologies become integral to various sectors, including smart cities and healthcare, their impact on the electronic components market will likely be substantial.
Supply Chain Adjustments: Recent challenges have prompted significant enhancements in supply chain management. Our long-standing relationships with trusted suppliers position us well to navigate these complexities, ensuring stability and efficiency in our operations.
Economic Factors: It’s not just about supply and demand. Currency fluctuations, geopolitical tensions, and economic policies also play significant roles in shaping the cost landscape of electronic components.
Looking Ahead: FermionX’s Outlook for Q3 and Q4
The first half of 2024 has been the most successful in our history, a testament to the resilience and adaptability of our operations and the industries we serve. Our customers, having utilised their excess stock, are now placing more orders. This surge, coupled with the improved availability of components, has allowed us to enhance our operational flexibility significantly.
Increased component availability means we can now support our customers in placing larger orders, which we can fulfil through staggered purchasing. This not only mitigates cash flow risks but also enables us to drop-ship directly to end users, adding a layer of service that was more challenging to maintain during tighter supply periods.
Due to this, the latter half of 2024 is already above target, with invariably many more orders to come. We expect this positive trend to continue, bolstered by our ability to meet increased demand and deliver on larger, more complex orders efficiently.
