European Semiconductor Distribution (DMASS) reduces Decline in Second Quarter 2008

EMEA semiconductor distribution sales declined 3.6% in Q2/2008 compared to Q2/2007. Cyclical slowdown narrows. Soft Dollar and price erosion still hurt industry.

London, August 9, 2008 – As the downturn of the European components market started in Q2 2007, the last quarter (Q2/2008) compared against a soft period. This explains that Q2 2008 ended better than expected. According to DMASS (Distributors’ and Manufacturers’ Association of Semiconductor Specialists), the semiconductor distributor and manufacturer members achieved quarterly distribution revenues of 1.34 Billion Euro in Q2/2008, which represents a decline of “only” 3.6%. Sequentially (against Q1/2008), sales were down by 3.3%.

Ian Bass, Chairman of DMASS, commented on the second quarter data: “As stated in our previous comment, the cycle of the semiconductor distribution market in Europe seems to ease out over the course of the year. The decline in Q2 was considerably lower than in Q1. Unless something unexpected happens – like a sinking demand in volumes – the cycle should continue to flatten out. On a cumulative basis, the first six months of 2008 so far brought a decline of 5.8%. Let’s be optimistic that our specialised manufacturing base in Europe holds up and the price pressure, driven by the weak dollar, reduces during the year.”

The regional differences showed a similar pattern to previous quarters – Germany and Eastern Europe doing significantly better than the rest, most countries in a mid-single-digit decline and some countries in a steep fall. Of the bigger sales regions, Germany stayed flat with -0.5% (437 Million Euro). Italy (174 Million Euro), France (111 Million Euro), Nordic, Iberia and Switzerland ended with a relatively soft decline between -3.51% (Iberia) and -5.2% (Switzerland). Benelux again recorded a decline in the -14% to -15% range, while the UK dropped 16.3% to 116 Million Euro. Eastern Europe continued to grow by double digits (11%) to 170 Million Euro. Russia and the emerging countries (Baltic stats et al) drove the growth with 23% and 24.9% respectively.

Ian Bass: “The pattern seems to have crystallised over time, with Germany and Eastern Europe continuously holding the top ranks. Italy and Nordic seem to maintain their levels and positions, while specifically the UK still shows extreme weakness, at least from a market perspective. Nevertheless, the UK continues to be a major design region with more influence over electronics decision-making than the market might suggest.”

By product, the picture in Q2/2008 also looked quite different. A double-digit weakness seems to have befallen the logic sector (Programmable Logic, Standard Logic, and Other Logic ), while Discretes, Analog and MOS Micro, who together represent 70% of the DMASS Total, ended between -0.2% and -2.1% down compared to Q2/2007. For individual products, positive growth figures were recorded for IGBTs (34.4%), DSPs (11.4%), Other Discretes (10.4%), MPUs (9.1%), RF (8.7%) and DRAMs (7.7%).  The losers were Programmable Memories (Flash, EPROM and EEPROM), LED Displays, Couplers and Other Power products.

Ian Bass concluded: “As stated in previous reports, the downturn on products in most cases was not driven by a lack of demand but by continued price erosion and a weak dollar. We hope that the impact of the slowdown of the European economy on our export-oriented electronics industry of high specialisation remains small. Ecological pressure and high fuel prices might make some manufacturers rethink their strategies and might bring their manufacturing back to Europe.”

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 33 active members and represents between 80% and 85% 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.