Electronics Production | May 29, 2009

European Semiconductor distribution in steep decline

The steepest decline of semiconductor distribution revenue since the Internet bubble burst in 2001/2002 with no region or technology spared defined the first quarter of 2009.
Q1/2009 ended with consolidated sales of DMASS members through distribution of 992 Million €, the lowest quarterly result since Q4/2003. Compared to Q1/2008 this represents a decline of 26.3%. Georg Steinberger, Chairman of DMASS, 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.”

All regions were affected almost equally. Instead of winners, the market had from a regional perspective at best some “luckier losers”: Of the bigger countries only France declined less than 20% (-17.3%) to 91 Million € compared to Q1/2008, though due to acquisitions an accurate historical comparison cannot be made. The UK declined by 24.6% to 86 Million €, Germany 27.2% to 329 Million €. The biggest hit was dealt to the Italian market with a decline of 34.3% to 116 Million €. The Eastern European economies ran into over-proportional trouble with a decline of 29% to 93 Million €, falling in total size behind Nordic (94 Million €), which only declined by 23.4%.

Georg 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.

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. 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.”

Note: DMASS only reports industrial semiconductor sales, defined as all semiconductors, excluding the PC channel.


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