Analysis

Uncertainties keep European DMASS guessing

Slow demand, combined with general economic uncertainties, built a perfect basis for a weak beginning to 2020, only to be aggravated by the global pandemic a.k.a. COVID-19. Consequently, according to DMASS, the European electronic components market didn’t find the spark to get ignited for growth. Nor did distribution.

According to DMASS sales in the European Semiconductor Distribution Market fell by 11.7% to €2.19bn. 

Georg Steinberger, Chairman of DMASS, said: “Predictions are difficult, particularly about the future… while our expectation was clearly that Q1/2020 would not be a new record, we deemed it to be the end of the last down cycle. COVID-19 is not only assaulting the health of people around the world, it has created a situation where economies will suffer for some time.

“The shutdown in many countries and the slowdown of industrial production is affecting the electronics industry quite severely, with the biggest impact yet to come in the next quarters. What it also did was distort the visibility in the supply chain, which makes it hard to predict what the industry might need in the next few quarters.”

Country-wise, the results in Q1/20 are quite diverse. While France, UK, Nordic and Benelux show above average decline, Germany ended at average and Eastern Europe did much better. UK sales in semi distribution ended at €129m (-19.4%), Germany at €646m (-11.8%), France at €140m (-17.7%), Italy at €203m (-6.5%), Nordic at €154m (-38%) and Eastern Europe at €389m (-4%). Only a few countries showed positive numbers.

Steinberger said: “Same old, same old – Germany right at the average, Eastern Europe gaining more traction, Southern Europe surprisingly resilient and the rest struggling. We have yet to see how 2020 unfolds, as usual there could be surprising effects. Also, not to be forgotten should be the fact that some DTAM has been turned into direct business by manufacturers, strongly visible in the Nordic numbers.”

On the product side, the positive news is that some product areas (Programmable Logic, Opto, MCUs and Advanced Logic) were not as heavily affected as the others, while especially commodities (Discretes, Analog, Memories and Standard Logic) were impacted more. As the biggest product group, Analog ICs declined by 12.2% to €647m, MOS Micro by 9.9% to €427m, Power Discretes by 10.3% to €247m, Opto by 6.3% to €202m, Memories by 18.2% to €186m, Programmable Logic by 6.2% to €155m, Advanced Logic by 8.6% to €119m and finally, Discretes by 24.9% to €114m.

Steinberger added: “After one quarter, the only indication of a slight trend is that commodities have struggled more than complex products, which is no surprise in a downturn and can easily change. Notable may also be the fact that MCUs have done significantly better than Microprocessors or DSPs.”

As for 2020, Steinberger dampens his previous optimism: “At the beginning of the crisis, it was the disruption of production in Asia that was a concern, now it is the other end of the supply chain – the customers and their uncertainties in their end markets. The loss of visibility both from a customer side and at the supplier end will undoubtedly lead to a few quarters of head scratching.

“While governments jump to rescue the economy, it would be wise to look at the long-needed innovation of public infrastructures for a more sustainable basis, which in turn could drive a lot of growth for the digital industry.”

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