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INSIGHTS

Industrial Ethernet infrastructure component sales to recover in 2017: IHS

Industrial Ethernet infrastructure component sales to recover in 2017: IHS
After a lull in the industrial Ethernet infrastructure components market last year, it is ready to bounce back as demands pick up, according to a research study recently released by IHS Markit.

After a lull in the industrial Ethernet infrastructure components market last year, it is ready to bounce back as demands pick up, according to a research study recently released by IHS Markit.

According to the study, the market for industrial Ethernet infrastructure components, which include gateways, unmanaged/managed switches, routers, wireless access points, and connectors/cable sets, has for years enjoyed sound revenue growth driven by the increasing adoption of Ethernet as the industrial protocol of choice. However, things took a rocky turn starting in 2015. The report estimated that the world revenue growth from 2014 to 2015 was a healthy 10.1 percent but forecasts this will fall to 4.5 percent from 2015 to 2016.

According to IHS Markit, there were two main reasons for this. “One being the knock-on effect of the lull in investment caused by the oil price crash in late 2014 and 2015. New production facilities and refurbishment programs were reviewed at that time and suppliers, including distributors, have been living off their stock for the business that was about,” the study said.

The other reason for the sluggishness in sales had to do with decreasing business confidence, caused primarily by a growing sense of instability in Europe and the presidential election in the U.S., according to the report. “Factors affecting business confidence in the European Union includes the United Kingdom referendum voting to leave the union. The consequences of taking this action are not clear, which has caused uncertainty in some market sectors,” it said. “Other factors include the mass immigration from the Middle East and Africa; and the stability of the euro.”

However, the report notes the horizon looks brighter for 2017 and beyond, on prospects that business will return to a more normal growth pattern from 2017 on, assuming there are no further major world economic upsets. “Germany’s strong manufacturing base and the impetus and publicity behind Industry 4.0 and the industrial Internet of things (IIoT) continue to be a stabilizing factor,” IHS Markit said. “We believe that the lull in component sales is temporary and the revenue growth rates of the past will return.”



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