The COVID 19 induced crisis continues to impact the UK electronics industry and some describe a “perfect storm” brewing that will prove challenging for the UK. As well as the pandemic, there’s Brexit to consider and the potential fallout from the current tensions between the US and China.
Figures released by the Office of Budget Responsibility (OBR), state the best the UK can hope for this year is GDP down by 10.6% and at worst a figure of 14.3%. Either way, ITSA Chairman, John Biggs, believes the fall in the UK’s GDP will be more than a staggering 10%. ITSA (Interconnect Technology Suppliers Association) represents many of the leading companies in the UK’s interconnection industry and is ideally placed to comment on how this key component sector sees the UK electronics industry halfway through a challenging 2020.
“As well as COVID 19, we seem to have put Brexit to one side with the possible consequences of a troublesome closure later this year. Then there’s the US trade war with China and the inevitable repercussions following the decision to remove Huawei from the UK’s 5G network,” said Biggs.
“Having said that, ITSA members only saw a 3% decrease in their revenues in the first half of 2020 compared to the same period in 2019, but, order intake was down by 16% with a UK Book to Bill of 0.69:1 and this will inevitably impact on the remainder of 2020 revenues.” Biggs adds.
There is a consensus amongst the members that 2020 will see a revenue decline of between 6%-12% while activity is expected to rebound by 8.7% in 2021 but remain below where it was prior to the pandemic for at least the next 3 years. Those members who report export business showed a much lower decline in orders of -3% and a Book top Bill of 0.93:1.
Some positive news
Despite the general negative impact on members UK business there are several markets which continue to be positive. Medical saw an increase of 102%, Communications up 45% (linked mainly to Data Centres capacity supporting more home working), and Mil/Aero where legacy projects continued.
Members distribution revenues dropped by 19% but all members reported a good increase in activity throughout June and into July.
However, despite all of the above all of ITSA’s members are feeling positive about the next 12 months and are mostly looking at business levels being flat in 2021 and perhaps not returning to 2019 levels until 2022/3.