Distributors Embrace their Annus Ordinarius
After several years of tumult, marked by extreme uncertainties and demand-supply fluctuations, distributors are eager to welcome a year of unremarkable growth. Distribution is ready for humdrum. In fact, the entire market is looking ahead to what can be described as “ordinary times,” a season of lackluster demand-supply swings, tepid to low sales growth, lack of drama in supplier-customer relationships and the chance to step back, assess economic conditions and rebuild where necessary. It has been years since the electronic component distribution market has enjoyed the regular “buy and ship” conditions that are slowly emerging today. Instead, this decade started…
Will electronics manufacturing reshoring accelerate in 2025?
As reshoring gains steam in North America, distributors based in the region may expect a slight bounce despite continuing inventory excess concerns. Reshoring is back on the manufacturing menu for electronics OEMs, contract manufacturers and component suppliers based in North America and their foreign counterparts looking for cost-effective production solutions for the competitive region. Ahead of the installation of the new US administration, and in response to stiffening challenges making their products outside the region, manufacturers had begun exploring new manufacturing centers globally but are believed to be increasingly favoring centers in North America to be closer to the consuming…
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…