Press Release Q1 2005

European Semiconductor Distribution Market (DMASS) flattens out  

DMASS' 1^st quarter 2005 did not start as promising as Q1 last year - declines by 2,58 %. Sequentially (over Q4/2004), however, the industrial channel grew by over 10%. Outlook for 2005 is only cautiously optimistic. 

London, May 27, 2005 - 2005 appears to start very slowly for industrial semiconductor distribution. Against a bullish Q1/2004, it was almost impossible to grow. According to DMASS, semiconductor distribution sales from January to March 2005 declined by 2,58% to 1,185 Billion Euro, versus Q1/2004. However, sequentially the market grew by 10,8% versus the prior quarter.

DMASS Chairman Gary Nevison stated: "With the first quarter done and the second one half way through, it appears that 2005 could be relatively flat for industrial semiconductor distribution. The first half of 2004 has in hindsight not been representative for the industry cycle but seems to have been driven much more by inventory correction than we all expected. In a realistic comparison then, 2005 would not look too bad. Now we have to wait and see by how much the RoHS directive and its implications on the supply chain will influence order behaviour of customers and the supply situation at our suppliers."

Regionally, the only positive surprises were Israel, Poland, Italy and France, with growth rates between 28,3% (Israel) and 1,6% (France). Eastern Europe as a whole for the first time in years did not show a double-digit growth. Other big markets declined between 4,9% (Germany) and 13,9% (Nordic). With 175 Million Euro, Italy managed to establish its number two position as a market behind Germany (357 Million Euro). UK and France followed with 137 Million Euro respectively 124 Million Euro.

Gary Nevison: "The regional picture can only be reasonably analysed on an annual basis. It is, however, interesting to note the extremely strong growth in Israel, which indicates a healthy rebound after years of downturn. Also interesting from a market perspective is the weakness of Eastern Europe. Apart from Poland and the emerging countries, the cycle has caught up with the East."

Product-wise, the 1^st quarter does not allow a representative comparison because of reporting changes, due to a reclassification of some major product areas - Analog, MOS Micro and Other Logic have been affected by those changes quite dramatically. Unaffected by changes, DRAMs, LEDs and DSPs developed quite nicely, with growth rates between 16,4% and 4,85, respectively. Unusual growth happened in Microprocessors, with a surge of almost 50%. Due to the reporting changes, DMASS will during 2005 only report on sequential changes in the product categories.

Concludes Gary Nevison: "From all that we know of the total components market in Europe, it will stay relatively flat in 2005. However, we are cautiously optimistic that Distribution, although developing along the same lines in 2005, will strengthen its position within a broad scale of regions, customers and technologies. More than ever, distribution will remain a valuable concept to the great majority of the European customers."

About DMASS

DMASS (Distributors' and Manufacturers' Association of Semiconductor Specialists), a European non-profit organisation, is the only industry body that collates detailed semiconductor distribution market data on a quarterly basis by country and product groups such as microcontrollers, flash memories, analog components and many more. DMASS figures are collected and consolidated by Data Dynamics Ltd.

DMASS, founded in 1989, provides its members with a reliable statistical tool to evaluate their relative mass-market performance. The organisation currently consists of 32 active members and represents between 70% and 80% of the total European distribution market, depending on the regions. To continuously increase its European market coverage, DMASS welcomes new membership applications from distributors and semiconductor manufacturers.