SAN JOSE -- Bucking the general trend of channel reduction, Cypress Semiconductor Corp. here is expanding its existing franchise with Marshall Industries to Marshall's new parent, Avnet Inc.
Under the agreement, Avnet's operating group, Avnet Electronics Marketing, will be authorized in the U.S., as are Avnet Electronics Marketing's locations in Canada, Mexico, Puerto Rico and Brazil.
The expansion gives Cypress an extensive distribution network. In addition to Phoenix-based Avnet, Cypress has distribution agreements with Arrow Electronics, Future Electronics, Unique Technologies (a subsidiary of VEBA Electronics), and Bell Microproducts. Of these, Arrow, Future and VEBA carry the Cypress line in most parts of the world.
Cypress has moved aggressively to increase its distribution business over the last four years, and claims to have set records for distribution revenue in each of the past three quarters. Approximately one-third of the company's worldwide revenue is now derived from distribution.
"Historically, distribution was thought of as a channel for commodity-type products at smaller accounts. That is no longer the case," said Rich Parker, vice president of global distribution for Cypress. "Many large organizations use distribution channels for the value-added services and broad selection they provide.
"Additionally, we have seen strong growth in proprietary products through distribution. Today, over 33% of our distribution revenue comes from Cypress' proprietary offerings," Parker said.
The Avnet move will add 20 new franchise locations for Cypress and has the potential for global expansion.
Cypress does not anticipate any shelf sharing issues with rival Integrated Device Technology Inc., which is also carried by Avnet.
"There's been a change in the world of distribution since Motorola abolished its shelf-sharing practices," said Parker, referring to the company's recently discontinued practice of trying to regulate the number and makeup of competitors on its distributors' line cards. "It's hard to hold that line with a $6-billion-plus distributor."