While the world economy is in freefall with the COVID-19 pandemic, with mass unemployment and trade plummeting, the global passive and interconnecting electronic components market is expected to continue growing thanks to demand from the developing world and the rise of 5G infrastructure.
Grand View Research has released forecasts for the passive and interconnecting electronic components market, predicting a compound annual growth rate of 5.3% from 2020 to 2027 with a slowdown from 2020 to 2021 due to COVID-19.
The future is by no means certain and we do not know exactly how badly the world economy will be impacted by the coronavirus outbreak. We do however have models that tell us demand will increase for electronics over time. This spells good news for components manufacturers and the wider electronics industry.
Changes in market demand
As the world economy is adversely impacted by the coronavirus outbreak, demand for electronic components in many verticals will slow. This can be traced back to the reality that in times of uncertainty, consumers are warier of spending money. Less demand for products means a slowdown in production and demand.
However, regardless of the world economy, some regions do have stimulus. The United Kingdom, Japan, China, South Korea and the US are rolling out 5G network infrastructure and this will stimulate the electronics market. Smartphones, tablets, drones and other devices that rely on networking will be key beneficiaries.
So, it isn’t by any means doom and gloom for the global passive and interconnecting electronic components market. Growth is predicted from 2020 to 2027 and the COVID-19 outbreak will only slow down this growth temporarily.
How component sourcing has changed
In response to a fall in demand for products, passive and interconnecting electronic component production has slowed. In addition, a lot of stock hasn’t been used and is sitting in storage until such a time it is needed.
Prior to COVID-19, it was easy to think of component production as being in a state of perpetual motion for it was always present. Demand has fallen but that doesn’t mean it has ceased. Passive and interconnecting electronic components are still being sourced, albeit in smaller batches and more carefully than ever.
Another behaviour we have witnessed is component hoarding. OEMs are unsure of their partner’s manufacturing capabilities in the face of COVID-19. So, they are hoarding components to ensure they can scale up demand when the time is right. This is considered normal behaviour without a global pandemic, but we are seeing more extreme examples as a means to protect manufacturing output. Ultimately, this means there are less components to go around, which drives up the cost of certain components.
How we can help you with sourcing
The future may be uncertain but good preparation will help you through it. As your electronic component distribution partner, we can source components for you with access to all major manufacturers. We can source legacy, obsolete, state-of-the-art and short production run components at prices that suit your margin. Visit our website or click here to use access our component search and enquire with us. We are here to help you with your electronic component needs.