Mark Burr-Lonnon and Jeff Newell of Mouser Electronics take a look back on what has been an eventful first half of 2020 for the European electronics industry... to say the least!
The coronavirus pandemic has had a considerable impact on the electronics industry. Semiconductor growth was already under the microscope as we entered 2020, with industry pundits forecasting a decline in volume shipments during Q4, 2019. However, overall the electronics industry is in good shape at the moment. There are some significant trends such as 5G deployment, the continued march of IIoT, and automotive technology advancements that keep the need for electronics components high.
Component shortages, particularly with passive components such as MLCC capacitors, have become the norm for the industry now, but nothing prepared us for the roller-coaster ride that has become 2020. As the 2019 festive season faded away, 2020 looked set to be a good year for the electronics industry, although the jury is still out as we rocket through the year. The Chinese New Year celebration shut down always influences industry supply and is a useful seasonal indicator. However, the timeliness of the Chinese festivities and the beginning of the COVID-19 shut down across Asia meant that the industry did not bounce back immediately.
Mouser saw a sudden spike in component sales as its European and American customers latched on to what was happening in China. Within a couple of months, the whole situation had reversed as China, and other Asian countries started to rebound as Europe and the Americas entered lockdown. Within that relatively short period, Mouser’s revenues in China declined by 40%, only to recover and then increase by 20%, and the upward trend continues.
The next three months, as we move through the summer into the autumn in Europe, will be critical for the industry. Production facilities are starting up across the region, and staff are returning to work. From Mouser’s perspective, as an electronics distributor, a significant proportion of revenue comes from OEMs, so an increase in their orders is encouraging. Small to medium electronics manufacturing companies are another major customer group for Mouser, so again, these customer groups are good indicators of market health.
The trends are changing
The trends we thought would dominate 2020 have changed from what we expected. Some have fallen away, new ones have risen sharply, while some continue as predicted, albeit somewhat dampened.
With most motor manufacturers launching new electric vehicle models, and many adopting new wide-bandgap semiconductor power conversion technologies within their vehicles, the automotive market outlook looked positive. Unfortunately, the automotive industry has experienced a significant decline in new vehicle sales due to COVID-19. According to research by the Guardian newspaper, UK car sales in April 2020 plunged to levels not seen since 1946, with only 4,321 new cars registered.
Unsurprisingly, the demand for components used in medical equipment such as ventilators has multiplied almost overnight. The need for associated components has risen too - sensors, passive components, displays, microcontrollers, and interconnect products have all increased. The likelihood of a second wave of infection is keeping the demand for medical parts high. As we emerge from lockdown, it’s Mouser’s belief that demand for medical devices will continue to grow as offices, shops, restaurants, and other public spaces seek simple diagnostic medical devices such as infrared temperature sensors to monitor customers.
Another positive trend that Mouser has observed is that new product design and innovation continues. Hardware engineers and embedded developers are now working at home, continuing to innovate and keep product developments on-track. Mouser customer teams and suppliers have adapted to this changing world too. Now supplier meetings with customers take place using Google Hangouts, Zoom, and other conference platforms.
Customer engineering teams have direct access to supplier technical experts; calls are productive, focused, and engaging. Customer engineering groups interact in the same way, with tasks agreed, and engineers left to focus on their actions without interruptions. If time in the lab is required, it is usually achieved quickly and efficiently with minimum office interaction. Engineers are finding a way to continue development in what might become a new working norm for many.
The home-based design and innovation efforts are not limited to existing products and familiar consumer electronics brands. Mouser belief in this comes from its close working relationships with suppliers, from the technical subject matter experts up to the CEO. One CEO recently commented they see a pent-up tidal wave of innovation that could be unleashed on the electronics industry as lockdown conditions are lifted.
Europe moving forward
Nobody knows how the next three or so months will shape up. We’re a long way from a post-COVID world, so anything could happen.
Mouser are still shipping orders to automotive customers, but the volumes indicate these are more for design activity than for production. It will be some time before the company see a return to pre-COVID levels. Vehicle manufacturing will recommence at some stage now that car showrooms are starting to reopen. Still, it may be a while before the supply chain is sufficiently strong enough to commence volume production.
Southern European countries such as France, Spain, and Italy would traditionally be taking their long summer holidays in the coming months, but now that they are starting to emerge from lockdown, there is some uncertainty as to whether they decide to continue with the seasonal vacations or not. To get our national economies moving again, staff need to return to work. Until that starts to happen, most consumers will feel apprehensive about spending money on things like new cars. Staycations may also become the norm with the hard-hit travel and hospitality sector, resulting in a much more extended recovery period.
The deployment of 5G will continue to drive production volumes in the short term, and Mouser is seeing strong demand for RF power transistors, RF filters, and specialist RF interconnect product lines. One aspect of the acceleration of innovation across the industry is thanks to suppliers making it easier for engineers to get acquainted with new product offerings. Development tools continue to be a popular item on Mouser.com, with demand for everything from wireless SoC, wide-bandgap power transistors, and sensor evaluation kits and reference designs.
Conclusion
2020 is a roller-coaster year for the electronics industry in Europe. Overall, the industry is in much better shape than the unfortunate sectors of transportation and travel. The next few months will determine how the electronics market ends up by December and will shape the outlook for 2021.
With the continued design and innovation occurring across Europe, the early indications suggest we’re in for an exciting time.