Component supply rebounds in Q2

The electronic component industry’s demand rut may have bottomed out, according to the results of a recent poll of industry experts.

A poll taken this month of electronic component industry experts shows growing optimism among respondents, with an improved outlook on demand for Q2 2019.

The Survey Says…

The Technology Partners Consultants’ monthly survey, which polled 11,600 supply chain managers worldwide, reported that 29 percent of respondents expect a stronger Q2. This marked an improvement from March’s 23 percent optimism over Q2 growth.

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To reinforce the welling optimism taking place among supply chain experts, 28 percent of respondents expect weaker quarter-over-quarter growth from Q1 to Q2—a decline from last month’s 33 percent.

Cancellation expectations worsened with April’s survey, but TPC noted that a turnaround may soon be on the horizon. Since February, cancellation expectations have precipitously risen among survey respondents, mirroring a multi-month November 2016 to March 2017 spike. After the multi-month cancellation spike into March 2017, cancellations followed a declining trend for almost two years thereafter.

Not surprisingly, more supply chain managers see inventory growth declining in Q2 2019 as compared to Q1. This bucked the trend witnessed from Q4 2018 to Q1 2019, where almost double the current proportion of respondents thought inventory growth would improve quarter over quarter.

Market May Have Bottomed Out

“[W]e believe the industry is close to if not at a bottom,” the survey overview read. “However, inventories in some channels are still viewed as too high.”

MLCCs have seen supply shortfalls for almost two years now. Some industry experts even project more price increases this month as a result.

Despite the market turmoil heading into April, the survey found inventories and availability continuing to improve, with inventories growing “on most products.”

Overall, on a per-sector basis, the outlook for commercial and industrial electronic components went up in April, while automotive and consumer sectors were down. This coincides with the latest MLCC troubles seen across smart devices and high-tech automobiles.

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