© ams OSRAM
Analysis |

“It does not make sense to overreact with cost-cutting”

European Components Distribution (DMASS) starts 2024 in consolidation mode. The first quarter of a business year normally sets the mark for speculation on how the full year may turn out.

The European components distribution market, which enjoyed three years of significant growth, reported a decline of over 23% in 1Q24 – across all components and thus will face a few challenging quarters.

Consolidated distribution revenue of reporting members declined by 23,3% to EUR 4.58 billion. While semiconductors dropped by 26.5% to EUR 3 billion, IP&E (Interconnect, Passive and Electromechanical) components declined “only” by 16.3% to EUR 1.57 billion, according to data from DMASS Europe.

“This market consolidation was overdue for a while, everyone should have prepared to weather a few quarters of weak bookings and billings. It does not make sense to overreact with cost-cutting now, when there is a huge potential for recovery across all industry segments and technologies. Electronic components will remain the key technology for innovation and transformation for many years to come,” says Hermann Reiter, Chairman of DMASS Europe in a press release.

Semiconductor distribution sales in Europe shrank by 26.5% to EUR 3 billion. This is the first time that a first quarter was lower than the preceding Q4. Regionally, no country remained positive, with major differences between regions. The UK proved surprisingly resilient with a decline of only -15%.

Product-wise, only high-power LEDs and Microprocessors showed growth, all other product groups and categories declined between 4 and 37%.

In IP&E, the slowdown continued in Q1, 2024, but showed a very positive sequential upturn against Q4/2024. The IP&E distribution market declined by 16.3% to EUR 1.57 billion. The slowdown between the three major product groups differed significantly, with Passives under higher pressure than Emech and Power Supplies.

“It is becoming increasingly clear that the components market is much more complex than what you may see in global market predictions. For example, the AI hype is not happening everywhere and only involves a few component types. Our market, a.k.a. the mass market needs to full portfolio of leading-edge and mature technologies, involving many sources and manufacturers. For this complexity, distribution is the only reasonable and resilient answer,” Hermann Reiter concludes.

During this year's Evertiq Expo Kraków, Ewlina Bednarz Content Manager at Evertiq, will take the stage and present an overview of the biggest distributors of electronics components globally. Who ranks within the top-10 in terms of revenue? Which region dominates the ranking? Are there any Europeans among the giants?

Load more news
June 13 2024 1:49 pm V22.4.55-1