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Electronics Production | November 10, 2008

European Chip market decline in third quarter

EMEA (Europe, Midle East and Africa) semiconductor distribution sales declined 8.2% in Q32008 compared to Q32007. Market slowdown re-fuelled by world finance crisis.
Soft hopes of the European semiconductor distribution for a trend change in the market narrowed in Q3/2008 when DMASS (Distributors’ and Manufacturers’ Association of Semiconductor Specialists), reported a decline of distribution revenues of 8.2% versus Q3 last year. The semiconductor distributor and manufacturer members achieved quarterly distribution revenues of 1.22 Billion Euro.

Luciano Sandrini, the new Chairman of DMASS, commented on the third quarter data: “While our hopes were high that the down cycle in our business would ease out over 2008, the third quarter proved us wrong. The unexpected happened – the world finance crisis took control over many markets, including the electronics business. Lack of customer confidence in future business is putting a brake on bookings and billings right now and could lead to further declines. As this is a global problem and not a European one, we expect the highly specialised European electronics industry to concentrate on their strengths and come out of the downturn more competitive.”

Regionally, the only positive news comes from Eastern Europe, which ended the quarter with a growth of 4.3%, mainly driven by Poland and Emerging Countries, who both grew by double digits. Germany and the Nordic countries did considerably better than the rest and contained the decline to 4.7% (419 Million €) respectively 2.8% (116 Million €). All other major regions reported double-digit revenue declines: Benelux -22.8%; Italy -17.6%; UK -15.8%; Iberia -12.5% and France -11.5%.

Luciano Sandrini: “Apart from some countries in Eastern Europe and to some extent Nordic and Germany, the re-fuelled downturn has hit every market. While the UK suffers from a currency weakness that makes the numbers look worse than they are, the other markets really experience a renewed slowdown in demand. We can only hope that this is a short term weakness, determined much more by lack of confidence than real lack of market demand as the order books of many customers in the industrial sector are still full.”

The product breakdown in Q3/2008 shows two camps and one exception: the product group Other Logic was the only one growing, although only by 1%. The first camp contains the product groups that declined the least: Discretes (-4.5%), Analog (-6.1%), Programmable Logic (-6.5%) and Optoelectronics (-7.8%). In the second camp all product groups declined by double digits: Memories (-10.5%), MOS Micro (-13.4%) and Standard Logic (-17.8%). For individual products, only IGBTs, Rectifiers, DRAMs and DSPs reported positive developments, with growth rates ranging from 1.5% to 15.9%.

Luciano Sandrini concluded: “The downturn was almost unanimous, driven by a combination of less demand and further price erosion. Everything that still was right a quarter ago now seems to be uncertain, exacerbated by the fear of a global recession. However, we still think that the fundamentals of the European electronics industry, which is highly specialised and export-oriented, are still right and will bring Europe back on track soon.”

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