Summary and forecasts for the connector industry

Global demand for connectors during 2020 is down only 2.2%, with the worst performers being the automotive sector and the Japanese market. The signs at the beginning of the year are positive and in 2021 the sector should grow, driven by China, by at least 7%.

65

by Ron Bishop |

Historically, the worst year in the connector industry was 2009, a year marked by the housing crisis and financial sector meltdown, in which sales fell 21.8%. Predicting the full year 2020, logic would dictate that last year would likely result in another record decline in connector demand. At that point, a sales decline of 25% or more might have seemed like a reasonable assumption. But it didn't! The first quarter worldwide was down 3.1% and the second quarter was down 17.2%. The third quarter, on the other hand, saw demand stabilize, growing by 1.3% while the fourth quarter even grew by a healthy 10.2%. Global demand for connectors over the course of 2020 thus fell by only 2.2%. Were it not for the turmoil caused by the pandemic, the moderate drop in demand could be classified as a normal business cycle adjustment.

Regional and sectoral differences in the connector sector

The two largest geographic regions, China and the United States, performed better than the rest of the world. China was the first in but also the first out of the Covid-19 pandemic and ended 2020 with connector sales growth of 3.6%. The US also performed well, with a decline in connector sales limited to 2.8%, and mostly due to the slump seen in the automotive and transportation sectors. The global economy in 2020, which devastated the service sector, fortunately had a minimal impact on the electronics industries. Electronics-related companies, such as computers and peripherals, telecommunications and datacom, performed much better thanks in part to a global workforce that shifted to remote work and needed new ICT tools. In contrast, the automotive industry lost 7.0%, marking the largest decline in at least a decade, and the transportation industry dropped 3.0%, mainly due to the commercial aviation-related sector.

Positive start to the year

Business is good. Orders in January are up an incredible 18.0% over last January, sales are up 16.2% and the book-to-bill ratio at 1.11, signals a great start.

The two giants of connectivity, TE Connectivity e Amphenol, have both forecast double-digit growth in the first quarter of the year (TE +10.5% and Amphenol +15.5%). The World Bank predicts GDP growth in 2021 of 4.0% and the IMF forecasts GDP growth of 5.5%. The outlook is therefore good.

There are positive signs that 2021 will be a year of growth for the connector industry; interest rates are low and the Federal Reserve has signaled that there will be no increase in 2021; inflation is low, but there are signs of rising material prices (e.g., petroleum, gold, platinum, steel, etc.); connector sales in January were up 16.2% and book-to-bill is very high; the two largest connector companies expect double-digit sales growth in the first quarter; global GDP growth is low, but there are signs of rising material prices (e.g., petroleum, gold, platinum, steel, etc.).); connector sales in January were up 16.2 percent and book-to-bill is very high; the two largest connector companies are forecasting double-digit sales growth in the first quarter; global GDP growth is expected to be between four and five percent, although much of this growth will come from a rebound in the now-ravaged services sector, while GDP growth in electronics will be lower.

However, we believe that the first half of 2021 will be very strong, and will see even double-digit growth (mainly due to easy comparisons with the first half of 2020, which was heavily impacted by the pandemic), while the second half of 2021 may result in a slight decline in demand. For now, we classify our forecast as conservative and believe there is good potential for market growth in excess of 7.0%.

connectors Bishop final and forecast


You might also be interested in:

Connectors: How do you find the right supplier for your needs?

Connectors: the evolution of the market from 2009 to 2019

Previous articleSpecial-Ind signs pan-European distribution agreement with AJ's Power Source
Next articleSteliau Technology with Special-Ind markets e-peas PMICs

LEAVE A COMMENT

Please enter your comment!
Please enter your name here