Distributors grapple with conflicting supply chain signals
Supply chain complexities have increased throughout the electronics industry, creating opportunities for distributors to help customers navigate the tortuous terrains facing them. After nearly two years of severely constrained supply conditions, electronic manufacturers are finally reporting improvements in the delivery of some components, shortening lead times and reduced pressure on average selling prices across the industry. The situation remains fluid and uneven, though, and restoring the procurement environment to a state of balance is still months away, according to industry executives. Clearly, conditions are still not optimal in the electronics manufacturing business, or even in the larger global economy where…
Distribution: record sales ahead of downturn
Purchase commitments made by OEM customers during the period of product shortages will keep distribution sales and profits high through the rest of the year despite signs of a market slowdown. Electronic component distributors will be among the brightest stars of the high-tech world during this reporting season with sales and profits expected to barrel through estimates on a spike in demand for their services over the last year. A review of analysts’ forecasts confirms publicly traded distributors will individually report double-digit revenue increases for the second quarter and even the entire year. Distributors typically perform well during times of…
Specialist distributors expect another strong year for sales
Component demand remains healthy, prices are increasing and some component lead times are still long. Specialist electronics distributors are cautiously optimistic that strong component demand will continue through the year and sales growth will rise to high single-digit or double-digit levels this year. Some specialist distributors express concern that electronics buyers scheduled orders last year for 2022 because of long lead times for crucial semiconductors and other components and that purchase orders would weaken this year. But lead times are still long for many parts and buyers may end up scheduling orders for 2023 later this year. Greg Peloquin, executive…
Distributors see rising sales from auto industry
The auto industry is facing continuing chip shortages and many tier 1-4 automotive suppliers are turning to distributors for parts and services. Distributors report that sales to tier 1-4 automotive suppliers have grown significantly over the last two years as many semiconductors and other components needed by the automotive industry have been in short supply. While chip shortages have contributed to distribution sales growth, it is not the only reason distributor business in the automotive segment has grown robustly. Distributors note that electronic content in vehicles continues to increase as automakers design in more sophisticated advanced driver assistance systems, which…
North American distribution sales growth will slow in 2022
However, while component demand won’t be as strong as 2021, distributors say high single-digit to double-digit growth is possible. Some distributors reported more than 40 per cent sales growth in North America in 2021 because of surging component demand, higher prices and double-ordering of some parts by buyers fearful that their companies production lines would shut down because of a lack of components. Distributors expect sales growth will continue in 2022 but acknowledge that growth will not be as robust as last year. Some predict mid-to-high single-digit growth, while others say double-digit growth is possible because durable demand and tighter-than-normal…
Distributors expand warehouse facilities, enhance web capabilities
Electronics distributors are enlarging distribution facilities or building new ones to attract new customers and better serve existing ones. Many electronics distributors are adding warehouse space, investing in automation equipment and enhancing their website capabilities to make it easier for buyers and engineers to find and purchase components. While there are allocations or long lead times for a wide range of semiconductors, passives and connectors, distributors say shortages won’t last forever. The extra warehouse capacity will be needed as more electronics is used in more products. Many distributors are expanding existing warehouse facilities and equipping facilities with a range of…