Active electronic component demand is soaring. The market is expected to grow by a compound annual growth rate of 4.8% during 2021-2026, fuelled by new technologies and faster and more globally available internet connectivity.
What’s driving it?
An explosion of new products with AI and IoT support and tailwinds like 5G are fuelling demand for active components.
Semiconductor devices, optoelectronic devices and display technologies are significant applications. Examples include smart home appliances, virtual reality headsets, connected medical devices and electronic ordering systems.
Here’s a non-exhaustive list of active components in high demand:
- Integrated circuits
- Digital and analogue circuits
- Batteries and power supplies
- Vacuum tubes
- CRT / LCD / VFD / TFT / LED displays
The increasing trends of the Internet of Things (IoT), automation, artificial intelligence, machine learning and virtual/augmented reality are expected to fuel demand for active electronic components for years to come.
Challenges lie ahead
This growing demand is not without its challenges. How will manufacturers get a hold of active electronic components if there isn’t enough to go around? Will geopolitical tensions affect supply? How will COVID-19 play a role in the future?
COVID-19 can create supply chain and market disruption and have a financial impact on firms and financial markets. If the virus persists in causing global disruption, this is likely to cause a shortage of active components in the future.
The US and China’s trade war in 2020 affected chip supplies around the world. Geopolitical tensions remain a risk in the future. Who knows if certain brands will be banned? It’s important that manufacturers stay in the loop to avoid supply chain problems.
The world is advancing at a rapid rate and electronics components manufacturers are struggling to keep up. While investment in new factories is ongoing, demand may exceed manufacturing capacity, causing a shortage of components.
Inflation is making everything more expensive. Add wildly fluctuating exchange rates and increasing demand for active components and you have the perfect recipe for price increases. This could cause a bidding war.
Active components and the future
The future is filled with more technology than you can imagine. Everything will be connected, including your car to your smartphone and your TV speakers to your smart home assistant (e.g. Alexa). Anything electronic can have a chip these days and you can bet innovators will find a way to make everything smart and connected.
With the active electronic components market predicted to increase in value significantly over the next five years, it is essential that companies have a reliable way to source the active components they need.
This is not a matter of beating the competition but a matter of staying operational amid impending shortages. The current chip shortage is a prime example of what can happen if a perfect storm of industry issues occurs.
If you need to source active electronic components, we can help. Email us if you have any questions or call us on 01904 415 415 for a chat with our team.
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