Market conditions have changed dramatically over the last few days and weeks. We envisage this getting worse through 2017 and lasting into Q1 or even into Q2 2018.
The Rebound Group has seen a huge upturn in enquiries and resulting business as a result of shortages being experienced by electronic component users. Customers are reporting being let down on delivery by franchised distributors even on scheduled orders placed as long ago as 6 months.
This has been caused by a multitude of reasons which include manufacture consolidation, little investment in new production capacity due to little growth over the recent past, and specific upturn in demand due to certain market segments including automotive (electric cars), IoT, and mobiles (I-phone 8).
Afdec have reported that in the period from Jan 2012 to December 2016 (20 quarters), 12 quarters have been recorded as negative growth and only 2 quarters have registered more than 5% growth and one of these was Q4 2016 (compared to the same quarter of the previous year).
There is also an upturn in demand from China recording the strongest quarterly performance, in 18 months, in Q1 2017 as a result of a substantial increase in industrial activity.
The resultant increase in notification of obsolete parts, lead times, and prices has created a disruption in the stability hither to in pricing and delivery.
Rebound is seeing a 150% increase in shortage and obsolescence requirements now. Quite often when stock is located, it is then lost either because it has taken too long before a commitment is made, by the customer, to secure the inventory or because the part is in such demand that pricing is secondary for some other customers.
We recognize and respect that that due consideration needs to be given before an order for higher priced inventory can be placed, for example, commercial viability of the end product or CEMs may need their customers to underwrite the higher priced inventory.
We will always do our best to locate competitively priced inventory within our very strictly governed certifications that include AS9120, ISO13485 and SC21 Silver.
However, please bear in mind that the market conditions have significantly changed and the approach to it needs to be modified accordingly. We envisage it getting worse through this year and into next year.
Nevertheless, we remain committed to supporting you with our excellent service levels that we pride ourselves on, underpinned by our very disciplined Quality certifications which contribute significantly to our $150M business.