The component market remains weak because demand for electronic end-equipment remains fragile, according to parts buyers surveyed recently by PURCHASING. Latest purchasing plans indicate strategies described by some as "treading water", since a dramatic high-tech business upturn has yet to commence.

Overall, business conditions improved slightly in January from a very weak December for electronics-consuming industries. Exactly half of the buyers surveyed say end-market sales were either the same or improved from December. That compares with 45% who saw stable-to-improving business conditions in December. However, only 31% of component buyers planned to maintain or boost buying in the coming three months while another 31% said they would continue to cut buys and 37% planned to hold parts order volumes steady.

The magazine's survey shows that semiconductor-buying activity was higher or stable compared to the previous month for 58% of buyers surveyed down slightly from 63% in December. Reason: "General business conditions are still poor," says a planner buyer at a circuit board manufacturer in Florida. "People say an upturn may not be far off, but it isn't happening yet. In fact, our company's long-range business forecast remains flat."

The purchasing manager for a manufacturer of precision metal parts and printed circuits for high-tech customers says the company's "telecommunications business has suffered greatly and there is little hope of a rally any time soon." What's more he says the company's medical electronics business is flat to down, so he has no immediate plans to boost his parts buys. This PM also plans to keep a lid on in-house inventories of components and other production materials.

These plans mesh with the overall survey, where 95% of buyers at electronics-consuming firms were either maintaining or reducing their materials inventories in January, compared to 88% in December. "Inventories still are too high for in-house needs," says the purchasing agent for a precision machining concern in upstate New York that supports producers of telecommunications products. "After a short uptick last quarter, orders from customers in the telecommunications sector have dropped again."

Asian chipmakers have reported a slight increase in orders for first quarter deliveries, but that isn't the case in North America. "Electronic components, especially DRAM (dynamic random access memory) chips, are more available now from producers and distributors than at any time in recent memory," says a materials manager for a medical electronics company in Pennsylvania.

However, there are reports of tighter West Coast and Southwest supplies of some upper-end chips, especially SDRAMS (synchronous dynamic random access memory chips). "There is a lack of availability for quick deliveries of SDRAMS these days," says the purchasing manager for a California firm that makes high-density memory products for commercial, industrial and military customers. He also notes "delivery leadtimes for passives are longer than expected, based on the current market." There are also some problems obtaining connectors quickly from distributors, according to buyers at plants making microwave cable assemblies and components in Arizona and California, and consumer electronics manufacturing plants in the upper Midwest. However, the shortages all relate to supplier-specific connectors and not the connector market in general.