It seems as if everybody in the electronics industry supply chain can't wait for 2001 to end. By most accounts it was the worst year in the history of the electronics industry.

Every link in the supply chain from chip manufacturers to contract manufacturers seem to have had a down year. Declining end equipment demand coupled with an overabundance of components resulted in high inventory levels that are still being worked off.

While everyone will be glad to see 2001 come to a close, the question is: Will 2002 be better? Most electronics industry executives are optimistic.

The Semiconductor Industry Association, whose members are chip companies, forecasts 6% growth for the chip industry in 2002 after sales declined 31% in 2001. However, some market researchers say chip market growth will be less. For instance IC Insights says semiconductor revenue will grow 1% in 2002 while Cahners In-Stat forecasts a 5.7% decline.

Why should electronics buyers care? More electronic components companies have cut back or ceased investment in new capacity. That's not a problem now because there is still an oversupply of parts. However, another year of declining sales will mean a continued lack of capacity investment. When demand picks up again, buyers will face severe shortages of a wide variety of components from flash memory to capacitors and the shortages will last.

jcarbone@cahners.com