Press Release Q4 2005

European Semiconductor Distribution Market (DMASS) surprises with strong Fourth Quarter  

A surprisingly strong 4^th quarter gives the European semiconductor distribution market a stable finish for 2005. An increase of 5,7% over Q4/2004 eases the total year decline to -2,9% (-5,4% after Q3/2005).

London, February 16, 2006 - An unusually strong sales growth in the traditionally weakest quarter helped the European semiconductor distribution industry to significantly reduce its decline of earlier quarters. According to DMASS (Distributors' and Manufacturers' Association of Semiconductor Specialists), the 4^th quarter of 2005 grew by 5,7% over Q4/2004 to semiconductor distribution sales of 1,13 Billion Euro. The full year ended with sales of 4,56 Billion Euro, 2,85% lower than in 2004. (Notably, Eurodis' submission is missing for 6 months. No reconciliation was possible. As of Q3/2005, Eurodis was not included as a DMASS member anymore.)

Georg Steinberger, Chairman of DMASS, stated: "The positive 4^th quarter saved 2005. Also taking into account the negative impact of Eurodis demise from the market, 2005 declined far less than the entire industry has anticipated. But nevertheless, 2005 was driven by uncertainties and weak demand and certainly will be recorded as a transition year. The outlook is not negative, though, with strong billings seen from the members, and a weak year to compare with (2005), 2006 will show at least a strong start. Whether it will be substantial growth or just corrective effects remains to be seen. But there are clear similarities to 2004." 

Regionally, only four countries/regions showed a sales decline at all - France with -11,6%, Benelux with -10,4%, Finland with -8,7% and Spain with -0,6%. All other countries grew between 1,8% (Italy) and 29,4% (Russia). Germany, the single biggest market grew 12,4% to 333 Million Euro, while Italy (144 M Euro) and the UK (140 M Euro) only went up by 1,8% and 2,1% respectively. As a major market, France (107 M Euro) lost its number 4 ranking to Scandinavia (115 Euro) and is closely followed by Eastern Europe (103 M Euro). For the total year, of all major sales regions only Germany, Italy and Eastern Europe remained positive. Shining star of all countries was Israel with an annual growth of 17%. Israel in the meantime claims a solid number 6 ranking in European semiconductor distribution. 

Georg Steinberger: "2005 in total was a good year only for Israel, Russia and Czech Republic, with double-digit growth in each of those countries. It was only a slightly positive year for Germany and Italy. But it was certainly disappointing for the other regions and countries. Considering the unseasonal growth in Q4 - by whichever reason it may have been driven - Europe still seems under pressure as electronics manufacturing region. Business migration to Asia and Eastern Europe is still a major threat, with no real answer from the industry."

Product-wise, the picture is extremely mixed. The only two product areas declining in Q4/05 were Memories (-14%) and Bipolar Logic (-8,5%), the rest grew between 3,1% (MOS Logic) and 17,4% (Programmable Logic). The biggest product category MOS Micro grew by 9,7%, the second biggest, Analog, by an average rate of 5,4%. The detailed product groups can only be looked at with caution due to reporting changes and reclassifications of major product areas at the beginning of 2005. With a plus of 13,6% respectively 26,9%, LEDs and DSPs - both unaffected by those changes - showed continuous signs of growth.

Georg Steinberger: "From all that we know of the total components market, semiconductor distribution in 2005 has held its ground and defended its market share. While bookings promise a better development in 2006, the cyclicality of the business suggests caution, as nobody knows if we are in a corrective mode that only lasts a few quarters or in a real upswing. Regardless of the outcome, distribution continues to increase its role for the market place. Breadth of service & support as well as the broad presence will strengthen its position as the predominant source of semiconductor technology for many European customers. There is no alternative route that offers a similar value proposition."

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 31 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.