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Electronics Production | February 22, 2008

European chip distribution down in 2007

After record 2006, market cycle treats European components distribution market softly. A mixed picture across regions and product segments with significant influence of Dollar weakness.

Catching one of the softer down cycles of the components market, the European components distribution experienced a decline of 6 percent in the fourth quarter of 2007 and 1.9 percent in the full year. According to DMASS (Distributors’ and Manufacturers’ Association of Semiconductor Specialists), the semiconductor distributor and manufacturer members achieved quarterly distribution revenues of 1.21 Billion Euro in Q4/2007 and of 5.37 Billion Euro in total 2007. Important to mention is that DMASS only reports industrial semiconductor sales, defined as all semiconductors, excluding the PC channel. Ian Bass, Chairman of DMASS, commented on the 2007 market data: “After the record year 2006, a cyclical slowdown was almost inevitable. I would call a decline of 1.9% percent a comparably soft landing. From our perspective, the slight downturn is not demand or volume driven - a clear indication of a strong manufacturing base in Europe - but strongly influenced by the weak US Dollar and the huge price difference between Europe and Asia, which leads to significant price pressure. Nevertheless, as an indication, DMASS grew in US-Dollars in 2007 by 6.6 percent.” Regionally, the picture is mixed. For the total year, the growth leaders among the regions were Eastern Europe (plus 15.9%) and Benelux (plus 15.5%), followed by Switzerland (plus 4.3%) and Germany (plus 0.2%). Eastern Europe, which is a conglomerate of countries defined in the DMASS structure, has established itself size-wise as the third-largest market (594 Million Euro in 2007), behind Germany (1.74 Billion Euro) and Italy (690 Million Euro). The UK and France, which experienced besides Israel the biggest drop, showed total 2007 revenue numbers of 515 Million Euro (-15.7%) and 455 Million Euro (-11.1%). The Nordic region was split between decline (Finland -10.6%, Denmark -2.8%) and single-digit growth (Sweden +4.1%, Norway +4%). Ian Bass: “While the continued growth in Eastern Europe is not surprising, the double-digit upswing in Benelux is. Germany so far held the floodgates and stayed marginally positive. For the entire year, the German market is now bigger than Italy, France and UK together.” From a product segment perspective, the situation was a bit different – there was no real winner during 2007, but three segments which suffered the most were Other Logic (-13.4%), Programmable Logic (-11.8%) and Memories (-8.3%). Discrete Components grew by 4.1%, Opto and Analog grew very marginally between 0.2% and 0.8%, and MOS Micro went down by 1.1%. By far the biggest product areas, Standard Analog (1.1 Billion Euro) and Microcontrollers (948 Million Euro) remained positive, with 2% respectively 3%. The highest growth rates occurred in IGBTs and Sensors, comparatively small product groups. The single largest fall was in Flash Memory (108 Million Euro), with a decline of 25.4% against a strong 2006. Ian Bass concluded: “From a product viewpoint, it is encouraging that typical distribution product areas like MCUs, Standard Analog, Power, Discrete and Lamps kept their growth momentum even in the downturn and did not lose much ground, except by price erosion.” Ian Bass renewed his belief that “Europe is doing much better than the numbers might suggest at the moment and it has huge opportunities to dominate some dynamic markets like industrial, automotive and increasingly environmental technology, globally. Europe is leading the development in those fields and will benefit from it in the next up cycle.”
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