German component distribution sees consolidation after three-year growth period

Despite ending the third quarter at a high sales level of €1.34 billion (a 1% decrease), the slowdown in bookings is evident. Orders have dropped by over 50% compared to the record year of 2022, with a book-to-bill ratio of 0.51.

Semiconductors maintained strong performance, with sales increasing by 5.7% to €953 million. However, the last four quarters' record sales have led to high customer inventories, resulting in an expected decrease in bookings. Other product areas, like passive components, have been consolidating for some time, experiencing a 13.7% decrease to €160 million in the third quarter. Electromechanics, including connectors, fell by 12.1% to €150 million, and power supplies dropped 14% to €40 million. Similar trends were observed in sensors, displays, and assemblies. The sales breakdown by component remained relatively stable: semiconductors at 71%, passives at 12%, electromechanics at 11%, power supplies at 3%, and others also at 3%.

FBDi Chairman Georg Steinberger commented: "The trend of the last quarter is continuing, the consolidation after almost three turbulent years is as expected as it is inevitable. Although a significant number of components is still difficult to obtain, general availability has improved significantly. We expect 2023 to end slightly positive for distribution overall. However, patience is required for 2024, as the turnaround in orders will depend not only on stock levels, but also on the situation in the end markets.”

On the current market situation, Steinberger stated: "Anyone speculating on falling prices at the moment could be disappointed, as manufacturers are facing high energy prices and financing costs, which they will certainly try to pass on to the market. Our expectation at the moment is that there will be more capacity reductions and postponements of production expansions. Personally, I think this is healthier as it would be irresponsible to return to the previous price fight behaviour in the supply chain.”

Steinberger and his FBDi colleagues believe that the future will be shaped by the ongoing electronification of all societal sectors. While some industries might currently be cautious due to economic conditions, the long-term demand for semiconductors and innovative component solutions is expected to remain high.

He added: "Even the general geopolitical situation – however critical at the moment – will not change this. But, our industry also needs to be more aware of its responsibilities and become much more active in the fight for sustainable business."