Big gets bigger to meet market demand

Victoria Kickham is a freelance writer specializing in manufacturing, distribution and supply chain issues

Suppliers broaden reach, strengthen specialties to meet growing demand for communication/IoT solutions, By Victoria Kickham.

Explosive demand for communication capabilities in everything from factory equipment to consumer vehicles continues to fuel expansion fires at some of the industry’s largest distributors.

This summer’s acquisition of semiconductor distributor Symmetry Electronics by IP&E specialist TTI is one of the latest cases in point and underscores the growth occurring in the electronic components distribution market. Symmetry specializes in wireless, cellular, Bluetooth, embedded and video technology.

TTI’s senior vice president, Americas, Michael Knight, said: “We’re going to build out a semiconductor specialist that runs parallel to the IP&E specialist that is TTI. We think that the market is missing that.”

With no overlapping product lines, the two companies can support each other: similar to the way TTI works with its subsidiary Sager Power Systems. The plan is to offer the market a specialist in each area that has the support of a much larger organization behind it. TTI also is a sister company to catalog distributor Mouser Electronics. Adding a semiconductor specialist focused on communications and IoT aims to meet today’s growing demand for a wider range of electronic components solutions.

Knight added: “A core part of this is IoT. Customers are putting communication functions into everything they’re building: wireless, through the cloud, through the Internet. There’s a lot going on there.”

Tobey Gonnerman, executive vice president at independent electronic components distributor Fusion Worldwide agreed: “The expansion we’re seeing is an example of how the distribution space for electronic components continues to grow exponentially. For instance, the semiconductor market is on an upward path. The pace of technology, the evolution, continues to accelerate; it’s becoming a more and more digital world, so you’re seeing semiconductor demand and distribution needs across a wider range of customers and industries.”

Fusion is addressing growth via staffing, having implemented an aggressive hiring campaign over the last 12 to 18 months. Expanding with more offices is also on the agenda. Gonnerman added: “We will potentially open some new offices in strategic locations—but we will do that very carefully.”

Facility expansion is another route some suppliers are taking to address growing demand: and another example of how the big continue to get bigger. Minnesota-based global catalog house Digi-Key announced a $300 million facility expansion project earlier this year. The company will build a one million square-foot distribution center adjacent to its Thief River Falls headquarters. The project is expected to create more than 1,000 new jobs and generate nearly $200 million in additional revenue for the state of Minnesota once it’s up and running, according to Digi-Key.

TTI recently completed a new building project as well, unveiling a new multi-level distribution center in Fort Worth that should be fully operational by the end of the year. The company is working on an expansion to its main distribution center in Germany as well, which also should be complete this year. The projects follow a similar expansion to the company’s Asia distribution center last year.

Such investments require confidence and a long-term view of both the industry and your business, Knight and others agree.