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The electronics sector & Covid 19

Despite challenging economic conditions, the damaging effects of Brexit and a global pandemic, the electronics design and manufacture market has seen strong and consistent growth over the past few years. Outperforming the rest of the manufacturing sector, our sector has remained robust despite the signs seen across the UK economy of an overall slump.

This could be because there are no real ‘market leaders’ in our sector, allowing smaller companies more of a fighting chance at market share.

We commissioned some research into the Electronic manufacturing sector, and we’d like to share some of the results with you.

 

The electronics sector

The future looks bright for the electronics manufacturing sector, with predicted growth rates of around 8.5% between 2020 and 2027. This growth is set to be driven by a demand for the likes of printed circuit boards, sub-assembly manufacture and the functional testing offered by contract manufacturers.

The sector overcame a significant downturn in fortune during the early 2000s, after facing increased competition from lower-cost manufacturing in Asia. The bounce back came around 2017 with increased turnover of around 4.4% and 12.4% in 2018.

BitBox is part of the Electech market – a fragmented sector comprised of highly innovative SMEs, many of which focus on specific technologies and applications. Enjoying an almost 5% share of the UK manufacturing market, the majority of Electech companies employ fewer than 50 employees. We’ve found the greatest opportunities for growth revolve around six key areas:

  • Medical device technology
  • 5G
  • VR and augmented reality
  • Energy efficient electronics
  • IoT
  • Smart domestic devices

 

Electronic design

According to the PCB Design Software Market Report, growth in the electronic design market will see a Compound Annual Growth Rate (CAGR) of 12.9% before 2026. It highlighted the need to ease the design process and growing complexity of circuits as well as seeing a growth in the end-user industries.

 

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Opportunities in the ED market

While the electronic design market is hugely competitive, there are four key areas in which the Electech market has identified opportunities for growth:

  • Smart devices which require the design and manufacture of components
  • Digital medicines are an area of huge growth
  • Opportunities for growth in export markets in relatively untapped areas such as Asia
  • 5G – rolling out across the UK’s main cities

In addition, when asked which areas were expected to grow in the coming years, 21% of UK electronic design companies suggested electronic vehicles would see the largest growth. This was followed by 14% reporting the Internet of Things (IoT) and 9% expecting growth from Artificial Intelligence (AI).

Almost half of ED companies (48%) highlighted a diverse range of industries from cleantech to oceanography and the remaining 8% was equally split between medical and 3D printing.

At BitBox we’re unsurprised by the interest in IoT due to its intrinsic link to so many of the key growth sectors. We’ll see IoT connected to smart cities, intelligent buildings and consumer electronics, with the overall sector growth set to explode in the run up to 2024.

When it comes to product life cycle longevity, we were surprised by the results given the ongoing issue of obsolescence and the speed at which technological innovation is occurring. Almost half of companies said their products’ lifecycles were over 10 years, 10% said 5-10 years and only 16% put the life cycles at two years or less.

 

Challenges facing the market

When asked about the challenges faced by ED companies in the UK, the results were evenly spread:

  • International politics – 20%
  • Finding new business – 20%
  • Resourcing / Workforce skillset – 18%
  • Project lead times / project competition – 18%
  • Obsolescence – 17%
  • Other – 8%

Brexit, project lead times and component obsolescence were the overriding themes in the months before Covid 19.

 

Covid 19’s impact

While it’s widely agreed that the Covid 19 pandemic will have a negative impact across the UK economy, electronics manufacturing seems set to see a lesser negative hit than the rest of the manufacturing sector.

It’s estimated that the electronics sector will suffer a 4% reduction in growth due to Covid which, when compared to sectors like motor vehicles, mechanical and textiles (up to 35% decrease), is relatively low.

The key findings from our research regarding the Covid 19 outbreak can be summarised as follows:

  • It’s not all bad news. Many of our sector’s businesses have seen an increase in demand in recent months.
  • Continued productivity under changing circumstances has driven growth in certain areas, such as remote monitoring of electronic devices. Tracking and logistics are busier than ever, with some businesses like food packaging being barely able to keep up with demand.
  • AI has seen an upturn during the pandemic. With applications in medical research taking the fore during this time. AI provides solutions around the problems caused by the need to socially distance in the workplace.

 

BitBox’s response to the challenges

Chris Chaney, our sales manager, had this to say on BitBox’s response to the challenging times ahead:

“We took a long look at ourselves right at the start of lockdown and came up with a strategy to continue with our growth plans over the next several years, whilst ensuring our customers receive the best level of service and quality possible. We trialled independent and externally managed ‘customer care reviews’ with a select few customers which proved a roaring success. It gave us more of an insight into how our customers see BitBox, what we’re good at and, most importantly, where we can improve.”


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