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European component distribution sees strong Q2 growth

Market news |
By Nick Flaherty

The European distribution market saw strong growth in the second quarter of 2022 according to market group DMASS with a rise of 33.4% in semiconductors and 19.6% in interconnect, passive and electromechanical components. 

Allocation and shortages continue, but supply is returning in selected areas and the risk assessment for the future of the market is becoming more difficult, it says.

“Coming from an extremely good Q2/21, it is no surprise that the growth rates in the last quarter have been lower than at the beginning of the year,” said Hermann Reiter, chairman of DMASS. “That said, an overall growth of 28.5% is excellent, and order books as well as backlog are still strong. The complete stop of business with Russia has had some impact, so that a 1:1 comparison is not quite possible. In a nutshell, we are happy with the numbers, but not with the fact that we could not satisfy the full demand of our customers. When the situation will finally normalise is hard to say as it depends on too many intrinsic and macro-economic factors.”

Semiconductor distribution sales, as reported by members, grew by 33.4% to €3.09bn. IP&E (Interconnect, Passive and Electromechanical) components grew by 19.6% to €1.51bn. In total, the components distribution market grew by 28.5% to €4.60bn.

This comes as semiconductor analysts predict significantly slower growth in coming quarters. This can reflect the longer lead time of making semiconductors while distribution data reflects parts already in the supply chain.

“While we hope the overall supply situation gets better, some structural shortages will remain beyond 2022, as we keep hearing from the market,” said Reiter. ”What is more worrying, are the mid-term outlook and the massive challenges on the economy: Russian attack on Ukraine, energy crisis, inflation, economic slowdown globally, climate crisis – the multiplication of these may lead to very difficult market conditions. Even for an industry like ours that for many decades has benefitted from over-proportional growth, due to the pervasive and innovative power of our technologies. The next quarter will definitely show which direction the market will go for some time to come. Nevertheless, long-term we are optimistic for the electronics industry to continue to make a difference.”

Semiconductors remained the driving force in Q2’s growth. From a regional view, except for some smaller countries or regions, growth of semiconductors was over-proportional (except UK and Turkey). Germany grew by 38% to €852m, Italy by 39% to €297m, France by 43.4% to €215m and the UK by 26% to €212m.

Eastern and Northern Europe ended almost in lockstep with 36.8% and 37.1% growth (to €559m and €248m respectively). Russian sales came to an almost complete halt, as most Western organisations have shut down their operations there.

From a product perspective, the growth rates were distributed much wider, from 6% for Optoelectronics to 74% in Programmable Logic, reflecting the need to replace functions when parts are not available.

While specialties like Flash-Memories, Other Logic (ASSPs) and Programmable Logic saw strong growth Opto, Power, Discretes ended up with way below-average growth. Analog and MOS Micro as the biggest product groups came in slightly below average, but still at over 30%. Analog grew by 31.3% to €870m, MOS Micro by 30.4% to €603m, Power by 18.5% to €345m, Memories by 63.7% to €351m, Opto by 6% to €238m, Other Logic by 71.4% to €186m, Programmable Logic by 74.4% to €198m, Discretes by 21.6% to €174m and Sensors (incl. Actuators) by 32.8% to €90m.

Interconnect, Passive and Electromechanical (IP&E) components grew in Q2/22 at a slower pace than Semiconductors, suggesting a faster return to normal. The €1.51bn (+19.6%) split saw Germany up 25.4% to €393m, Italy up 20.1% to €170m, France up 17.4% to €135m, UK up 18.4 to €143m and Eastern Europe up 21.2% to €199m.

Electromechanical products, including Interconnect, represented the biggest product group, with €808m (+19.8%), followed by Passives with €616m (+18.6%) and Power Supplies with €87m (+25.5%).

www.dmass.com

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