Bleak House: Semiconductor Distribution Hits New Low

The latest set of figures covering the European semiconductor distribution sector could not be  bleaker. 

No region or technology escaped the brunt of the economic downturn in the first quarter of 2009, as sales declined 26.3 per cent to 992m Euro against the first quarter of 2008. This is the lowest quarterly result since the fourth quarter of 2003.

Georg Steinberger, Chairman of DMASS (Distributors and Manufacturers Association of Semiconductor Specialists), commented: “Customers in the European market reacted almost digitally to their own market downturns, ‘slamming on the brakes with both feet’ in ordering new products. While this kind of reaction might be understandable from a purely commercial viewpoint, the cumulative effect of capacity and inventory reduction at manufacturers and record lows of inventory levels in distribution could lead to a reversal of fortune and severe availability problems once the market returns.”

As DMASS grimly indicates, there were no winners only "lucky losers". Of the major markets, only France escaped with a decline of less than 20 per cent. Not that a 17.3 per cent reversal to 91m Euro is coming up smelling of roses.

The UK market was down 24.6per cent to 86m Euro while Germany fell 27.2 per cent to 329m Euro. Italy had a nightmare quarter. The market plummeted 34.3 per cent to 116m Euro. East Europe fared less well than usual clocking a 29 per cent fall to 93m Euro. The Nordic region didn't escape the gloom, declining 23.4 per cent to 94m Euro.

Said Steinberger: “It does not look as if any market really will be spared in 2009. Even Eastern Europe, for many years one of the constant growth drivers within DMASS, lost its edge, with

Russia

and

Czech

Republic

being the downturn leaders beyond the minus 40-percent-mark. Just as a somewhat positive side-note,

Norway

only declined by 4.9% and

Poland

by 13.1%.”

Product-wise, all major product groups went down in Q1/2009 compared to Q1/2008. Only Memories, Other Logic and Programmable Logic came in with less than 20% decline while Analog and MOS Micro Logic, by far the biggest product groups, declined by 25.2% and 29.4% respectively to 275 Million € and 221 Million € respectively. Among the biggest losers were Standard Logic (-34.8%) and Discretes (-31.8%). The only products that declined “only” single digit were LEDs, Flash Memories and DSP, none of which represents any specific positive trend.

A final comment from Georg Steinberger: “Looking at the products there is not a single area without negative news. Even with the above mentioned ‘winners’ LEDs, Flash and DSPs you can’t be sure if the next quarter won’t show the opposite."

He is however optimistic for the future. "I still believe that the fundamentals of the European electronics industry, which is highly specialised and export-oriented, are still right and that

Europe

will be back on track soon.”