Sager Electronics’ SVP marketing, Faris Aruri, emphasizes industry is at the end of a five-year cycle of bust, boom and correction, and is nearing a return to normalcy.
This time last year, many of us had similar expectations for 2024 as we now have for 2025. We believed that after the pandemic-induced global supply chain disruptions, followed by massive economic stimulus that fueled demand, shortages, long lead times and inflation, the industry would settle after two years of unsustainable (>20 per cent) growth. We anticipated the 2023 leveling period, after which the electronic components industry would resume its expansion in 2024. However, industry still faces an over stocked pipeline, with excess inventory yet to be fully burned off. The question remains: how much longer will this take?
This time, however, I believe we will see that turnaround. While we are currently dealing with weak end-customer demand and production schedules, I’m confident that by early 2025, the innovation-driven electronic components sector will gain momentum. With industrial growth providing two to three per cent support amid easing interest rates, we can expect the electronic component industry to start with flat or modest growth in Q1 2025, building to mid-single-digit growth as the year progresses.
Although it’s taken longer than anticipated, the mid- to long-term outlook remains unchanged. We are at the end of a five-year cycle of bust, boom and correction, and we’re nearing a return to normalcy. While we don’t have a long-term issue with demand or consumption, the channel glut created during this period took longer to clear. Now it has, we’ll see healthier and more sustainable growth ahead.