What will matter most in 2021? Resiliency

With 2020 in the rear-view mirror and optimism rising, Avnet Americas’ president, Tony Roybal looks at the latest market trends, potential bumps in the road and other market intelligence.

After a year of doing business during the pandemic, our industry’s typical seasonal and cyclical trends have shifted in ways we’ve never seen before. An uncertain operating environment is now the norm, so at Avnet we’re staying extremely nimble, just as we’ve done during other massive waves of change throughout our 100-year history. We did then, as we are doing now, rising to the challenge during difficult times by staying focused and resilient, clearly demonstrating our solutions value and reinforcing the critical role of the supply chain.

Analyst consensus is that there will be eight to ten per cent growth in the components market in 2021. It’s not surprising to see that the sectors integral to working, living, playing or learning remotely, such as consumer electronics, are spiking faster. This includes: smart wearables that can connect people no matter where they are; digital set-top boxes for more home entertainment; video game consoles; and the enabling products providing the information and bandwidth to make it all work seamlessly. Also, areas related to fighting the pandemic remain strong including technology supporting testing, vaccines, hand sanitizing and personal protective equipment.

In Avnet’s more traditional areas, like transportation, defense and industrial, we’re seeing even stronger momentum as those industries have now adjusted to operating during a pandemic. In particular, transportation is seeing growth in electric vehicles, hybrids, advanced driver assistance systems, information clusters and infrastructure. Also, communication remains a strong market as the worldwide hunger for bandwidth and the adoption of 5G technology continues.

The good news is that demand is increasing faster than expected, but that has driven constraints across a number of components and extended some lead times. There are piece part shortages and we’re seeing an impact on assembly and test capacity. In addition, we’re seeing some wafer constraints, previously limited to MCUs, power and protection products, expand to more categories.

Navigating these environments is one of Avnet’s specialties. Our teams are working closely with customers to manage forecasts, extend order horizons and mitigate supply chain risk. We continue to tightly manage our backlog and invest in the inventory and SKUs that our customers value most.

While the environment will continue to be challenging, it’s an exciting time to be part of the electronics industry supply chain because opportunities are abundant, especially during times of change. For a century, Avnet has adapted to wave after wave of change to remain firmly, and objectively, at the center of the technology and solutions value chain. As technology continues to evolve we are focused on remaining vigilant and resilient to help our customers and suppliers around the world continue to meet market demands. That is what made us successful for the past 100-years and will enable us to best equip our suppliers, customers and our company to succeed in the future.