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© begemot 30 dreamstime.com Analysis | August 27, 2015

DMASS: Industry continues on double-digit growth path

Dollar swing against Euro drives growth across Europe. Germany trails. Russian market loses due to sanctions. Commodities weak, design products up.
2015 proves to be a very dynamic year for the European semiconductor distribution industry. After a strong double-digit start in Q1, the second quarter continued the upward trend. According to DMASS (Distributors’ and Manufacturers’ Association of Semiconductor Specialists), semiconductor distribution sales in Q2/CY15 grew by 16% to 1.86 Billion Euro, another record quarter in the history of DMASS.

A significant part of the increase is again coming from a Euro/US-Dollar swing – a 20% lower Euro drove price increases, accumulated exchange rate effect of other currencies versus the Euro and a higher valuation of transaction performed in US Dollars.

Georg Steinberger, chairman of DMASS, commented: “Although 16% sounds like a healthy increase, we have to keep in mind that not all of it comes from higher demand or organic growth opportunities, but from financial effects. We will see this effect weaken over the course of the year. Halfway through 2015, it seems clear that European distribution will enjoy a double-digit growth across the entire year, provided no massive macro effect will drive the second half into the corner. It remains to be seen how the European export is affected by the weakening of the Chinese expansion.”

Regionally, all countries or major regions except Germany and Russia enjoyed the continued upswing, led by Israel (48%), Turkey (33%) the Nordic Region (31%) and Eastern Europe (29.5%) The major regions meandered around the average growth: UK grew by 17% to 153 Million Euro, France by 18.3% to 145 Million Euro, Italy by 13.6% to 183 Million Euro, Nordic by 31% to 185 Million and Eastern Europe by over 29% to 238 Million Euro. Germany, by far the largest region, only reported a 5.9% growth to 546 Million Euro. Russia was the only country to report negative numbers, all due to embargo situation.

Georg Steinberger: “We have seen the currency effects playing out differently throughout the regions, with Italy and Germany obviously affected most by the weaker Euro. This will most probably balance out toward the end of 2015, when the difference between Euro and Dollar will become less of an issue.”

On the product side, there was a clear trend towards more complex components and lower growth of many commodity products (although also distorted by the currency swing): With 41%, Other Logic grew fastest to nearly 100 Million Euro, followed by Programmable Logic (26% to 150 Million Euro). Memories grew 16.3% to 143 Million Euro, Discretes by 17.1% to 105 Million Euro, Sensors by 17.6% to 41 Million Euro, Analog by 15.3% to 543 Million Euro and Optoelectronics by 15% to 191 Million Euro. Below the quarter average: MOS Micro (13.9% to 384 Million Euro), Standard Logic (8.7% to 32 Million Euro) and Power (5.3% to 171 Million Euro).

Georg Steinberger: “In a nutshell, there is a clear difference between high end products and most of the commodities. While standard products lacked in dynamics, the higher end logic, programmable products and MOS Micro products certainly thrived. When the currency effects subside towards the end of 2015, we may again see meaningful organic growth numbers at product level.”

DMASS has started to report on Passive Components, Electromechanical Components and Power Supplies as well, to complete the distribution market picture. Due to the early stages of the reporting, numbers will only be shared among the reporting members. Steinberger: “We still work on DMASS IPE coverage and memberships (distributors and suppliers). It took us 25 years with semiconductors to become the default on distribution reporting, so it may take a while to get there with IPE products.”

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