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Assembly Contracts Quarterly Report
Q1 2018
Celebrating 28 years of excellence
 
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In this report we aim to inform our industry colleagues of any relevant news, component lead-time updates and market conditions that may affect the electronics industry as a whole and particularly, the making of your product.

I hope you find the following informative. Please feel free to get in touch if you have any questions or comments.
Component Lead-Time Increases - Severity Continues.
ACL SM LineThe New Year witnessed extensive Lead-Time increases and Constraints/Disruptions throughout the global supply chain, across numerous commodities.

Whilst the need to place orders out for say 12 months' supply has been an alien concept in recent years, having more product on hand is better than none at all. It is becoming clear that we all need to be risk averse!

We are still recommending to our clients that scheduled long-term call off orders are placed, for at least 12 months supply.

Posing the most serious issue are the Passives and the main manufacturers such as AVX, MURATA, WALSIN, VISHAY etc. Semiconductors are not much better.

Capacitor pricing that increased at the end of last quarter is not expected to return to the lower norm with leading supplier Murata releasing a caution that constraints on MLCCs and the subsequent price hikes (which have increased anywhere from 20% to 500%) will persist until at least early 2019. They also advised that any delivery dates provided are unlikely to be improved.

The main driver behind the shortfall lies with the increased demand for smartphones and IOTs along with the automotive sector shifting towards electronic controls. Though the demand is pushing towards increasing manufacturing this is focused more on the small-case-size parts to coincide with the move towards smaller case sized devices.

Low ESR caps from manufacturers such as Nichicon are starting to move their lead time out past 18 weeks.

Fixed resistor lead-times are increasing with some manufacturers, ROHM for example, not being able to commit to their delivery schedule. Yageo have stopped taking new orders in an attempt to fulfil their current backlog and Vishay & Panasonic lead times remain at 40+ weeks.

MELF and MINI MELFs are mostly on allocation with lead times being quoted, if at all, at over a year. We recommend that either we discuss immediately procuring any parts you need in bulk for future orders or you consider designing them out completely.

With no signs of relief on the horizon it is again crucial that long-term sales demand is forecast and scheduled in order to manage and reduce any further delays or price hikes.
The supply chain is continuously keeping us up to date with the market pressures. Please see our website for further comments; Click Here
Supply Chain & Manufacturing
Supply chain managementManufacturing PMI started the year with a forecast of 58.0 against previous of 58.2*.

Despite fears over slowing activity as concerns mount over Brexit and the value of the pound, factory output and total orders remained in positive territory at the start of the quarter. February saw a slight slip to 55.2, its second lowest reading since the June 2016 Brexit vote. Whilst this still indicates growth Markit said it suggests a "marked downshift" in the pace of growth so far this year. Some attribute this slow to the recovery in the eurozone starting to lose pace. March saw little change but the CBI confirmed that it remains well above the long-run average.


">*anything below 50 denotes contraction and above indicates expansion.
UK & Global Trends
ACL SM LineWith highs against USD and EUR following wage growth rises and inflation lowering, GBP had a mostly strong quarter. With optimism regarding Brexit negotiations and confidence in post-Brexit trade deals growing, the Pound was encouraged. Some losses were felt when the Manufacturing PMI in January was revised down from 56.2 to 55.3, despite this still being above the long-term average. These were recovered at the end of March with seven-week highs.

USD started the year with a three-month low as a result of doubts being cast over the Trump administrations ability to gain approval of the expansionary fiscal measures to boost growth and inflation from the Senate. These policies were a key driver behind early 2017 USD strength. This low resulted in the GBP/USD rate trading at a three-month high. USD suffered further losses as fears of a failure to reach a federal budget deal in January may have resulted in a US government shutdown. This marked the Greenbacks longest losing streak since May 2015. Some recoveries were made in Feb when the Fed left interest rates unchanged.

The EUR started the quarter better than USD reaching a three-year high mid-January. When the USD confirmed interest, rates are to be held the EUR was undermined.
Please find enclosed ACL's brochure together with a component pricing and lead time breakdown

With ACL, Manchester, as your partner you receive unsurpassed manufacturing quality, delivered on time every time by our IPC trained & experienced workforce.

We offer a 3-Year workmanship warranty as standard.

If you would like to discuss any manufacturing requirements please don't hesitate to get in touch with me.

Arthur Woode
Director
What our clients say about us...
" We think ACL's systems are second to none. Not one of our suppliers - ever, have been able to match up to your traceability etc. "
" I would like to take this opportunity to thank everyone at ACL for all the hard work and support you have provided over the past twelve months. It has been a pleasure dealing with you and long may it continue. "
" Developing our partnership with ACL has enabled us to significantly streamline our business and focus on our core competencies. "
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