European semiconductor distribution starts flat

Georg Steinberger, Chairman of DMASS, said: “While 2020 certainly was influenced by the COVID-19 pandemic and Brexit anxieties, these factors seem to have disappeared completely from the current market development. Now, it is all about components shortage and strategic dependencies on Asian production. Booking levels are crazy and availability has become a revenue-limiting factor for distribution and their customers. The sequential growth indicates the direction the rest of the year might take.”

At a country or region level, the market situation varies significantly and does not show any clear direction. While Eastern Europe, UK, Italy, Switzerland, Nordic and Benelux showed positive development, Germany, France, Iberia, Israel and Russia declined in the low to high single-digits. Germany ended with a decrease of 8.7% and €594m. France declined by 5.9% to €135m, while the UK increased by 8.7% to €143m. Italy went up by three percent to €212m. Eastern Europe continued to grow in a stable way by 3.2% to €398m and the Nordic region by 4.9% to €164m.

Steinberger added: “Q1 is not really a great trend indicator, considering the major sequential swing and the giant semiconductor shortage, accompanied by significant price increases. As it stands, the current constraints may last well into the later part of 2021, if not beyond.”

Evaluation at a product group level is similarly difficult, and can be summarised in one word: disparity. While for example Discretes, Power and Sensors grew nicely, Opto, Analogue and MOS Micro declined slightly and Programmable Logic, Other Logic and Standard Logic tanked. Ranked by size, Analog components declined by -3.8% to €627m and MOS Micro by -0.7% to €430m. Power grew by 6.8% to €266m, Opto stayed flat with -0.3% to €205m and Memories grew by 1.2% to €191m. Discretes grew by 14.6% to €130m and overtook Programmable Logic, which decreased by 20.5% to €124m. Other Logic recorded a decrease of 13.7% at €105m and finally Sensors increased by 15.7% to €64m.

Steinberger continued: “Funnily enough, some standard products like Discrete and Power did much better in Q1 than Logic in general or Analog, quite the opposite of last year. However, with a market in turmoil (or boost mode, depending from which perspective you view it) the situation will change during the course of the year. And, as the sequential growth shows, the limiting factor in the coming months may be availability rather than demand.

“What 2021 will bring is more of what we have seen for a few months, which is over-the-top bookings, price increases, shortage and a reconciliation of procurement strategies to longer-term ordering. The furore with which politics are now trying to tackle the dependency of Europe on Asia when it comes to semiconductor production shows the strategic significance of this technology for many sectors of the European industry. It can be expected that the shift in awareness will not have any short-term impact on supply.”