201305.pdf 43279KB May 08 2013 11:07:04 PM

Special SectionUlysses and theSirens: Distributorseye consumer businesslongingly but warilyBy Brian FullerIn a world that lives by the quarter, 2012was quite a ride for distributors. In short,it could have been worse, but it sure couldhave been better.It was another year of go-go quartersfollowed by abrupt pauses. That led tosome interesting numbers on the annual Top 25Distributors survey, but little ranking change (seecomplete chart, page S-18).Topping the list of the world’s biggest electronicsdistributors were Avnet and Arrow, respectively,followed by WPG Holdings, Future Electronics,and WT Microelectronics. (WT wasn’t included inthe 2010 or 2011 top-distributors lists.)Three of the top five (Avnet, Arrow, and Future)are western companies that saw revenues dipin 2012 anywhere from 4% to 6%.Electrocomponents plc, Digi-Key Corp,Rutronik Electronics, and Mouser Electronics allfell one spot in the rankings from 2011 to 2012,while Premier Farnell fell two (from No. 6 to No. 8).Stability, slow growthThat stability in ranking and, largely, in revenue,reflects the theme for distribution in 2012: essentiallyflat (−1.1%) at about $78 billion in an overallsemiconductor market of about $300 billion. Thatfollowed a torrid 2011, where the top four distributorsenjoyed double-digit sales growth.Like gazing into the bottom of a teacup, someexecutives look at the numbers and see traditionalchallenges magnified.“I’m not sure the challenges have changed a lot,”said Glenn Smith, CEO of Mouser, who celebratedhis 40th anniversary at the company this spring.“The pressures are still there. We’ve got to have anefficient business. We’ve got to pull cost out of thesupply chain. [The] challenge is we’re all doing itglobally, and the complexities are increasing.”But for other western distributors, the numbersreflect what could be a significant shift in businessmix that has wide-ranging consequences for thechannel. In short, the global adoption of and passionfor mobile electronics such as smartphonesand tablets are threatening the traditional distributionmodel.Harley Feldberg, president of Avnet ElectronicsMarketing Global, puts it into perspective:“Two phenomena collided in the September andDecember quarters. Somewhere near 100% of thegrowth that has occurred in the electronic componentsupply chain is coming from select industriesand select customers,” he said in an interview.Feldberg added that in a very short amount oftime, tablets, phones, and other wireless mobiledevices have experienced white-hot global demand.That’s driving business for distributors, butit’s largely high-volume, low-margin business.Brian FullerS-4 Top 25 Global Distributors May 2013