The first quarter is traditionally a slow period for the electronics industry and this one is no exception. End equipment shipments are weak, so component demand is sluggish, and there is downward pressure on prices. In fact, for the coming quarter, buyers anticipate additional price declines in 23 out of 50 component categories tracked by PURCHASING Magazine.

Buyers can expect price stabilization late in the second half when end equipment demand begins to recover. Suppliers say inventory levels have been reduced and production of some components has been cut back so supply will come into balance with demand later in the year.

But, while prices for many parts may stabilize, they won't rise dramatically until very late this year or early in 2003 because end equipment demand, while expected to improve in 2002, is not expected to skyrocket. It would take a huge increase in demand for either computers, networking equipment or cell phones for any serious price increases and/or shortages to occur this year. That scenario isn't likely according to analysts and suppliers. Computer and cell phone shipments are expected to see growth in 2002, perhaps in the single-digit range. Meantime, networking equipment shipments, are expected to decline in 2002 for a second consecutive year. For more details, see story starting on page 35.