Avnet’s strategic outlook on 2024's electronics industry trends

Avnet has witnessed myriad changes as part of the electronics industry’s evolution over its last 100+ years in business.

As a horizontally-integrated business, electronic component distribution is simultaneously experiencing positive and negative fluctuations in the many vertical markets it serves

Wider disruptions, such as the pandemic, the subsequent chip shortage, and now economic uncertainty, compress or exacerbate these fluctuations. The resulting trend will influence the short-term market conditions through 2024. We can summarise these conditions into three broad categories: macroeconomic, microeconomic, and technology.

Positive and long-lasting results of the recent endurances faced by the industry include stronger supply chains and logistics. Many OEMs were forced to revaluate and invest in their supply chains in response to uncertainties. At a macroeconomic level, those uncertainties still exist. Today, they take the form of economic instability.

The investments made by those OEMs may have been a response to immediate threats, but the benefits of investment remain. A strong supply chain can help OEMs endure uncertainty. Avnet also made those investments, making its supply chain services even stronger. Fortified business services will be essential to absorbing the disruptions we will experience at a macroeconomic level in 2024.

At a microeconomic level, Avnet is seeing greater engagement with OEM customers. Avnet’s third annual Avnet Insights survey revealed that improving relationships with distributors is the highest priority in OEM supply chain strategies. Just one year ago, improving relationships was only third highest on the strategy priority list.

This increased importance indicates that a good relationship with your distribution partners should form part of a long-term strategy. Rather than relying on the distribution channel during difficult times, OEMs are now partnering with distributors as a strategic imperative. This reflects the microeconomic landscape. More suppliers now rely heavily on the distribution channel to serve many of their customers.

Channel distribution is not a trend expected to reverse in the future. It is the direction of travel for the electronics industry, and it will only accelerate in 2024. Suppliers should lean into their distributor relationships to leverage benefits, passing them on to OEM customers.

There is little doubt that the technology landscape in 2024 will be dominated by artificial intelligence. This vast topic can seem overwhelming, particularly from the amount of investment it will require. Avnet is investing in AI at multiple levels: from improving its operations, to equipping its technical experts with the tools they need to help OEMs understand and leverage the potential of AI.

Throughout 2024, Avnet expects to see a large increase in new project starts that have AI at their core.

Anticipating the challenges of 2024, distributors should prepare to address them through ongoing investments in technology and relationships, aiming to maintain a resilient position for the company, its suppliers, and its customers in the year ahead.