LONDON European components distribution made a poor start to 2008, with a 7.9 percent decline in sales in the first quarter compared to the same period last year, and the Euro to the dollar exchange rate having a major impact on the figures.
According to DMASS (Distributors' and Manufacturers' Association of Semiconductor Specialists), the semiconductor distributor and manufacturer members achieved quarterly distribution revenues of Euros 1.38 billion in the first quarter. Sequentially from the previous quarter, sales were up 12.3 percent.
DMASS only reports industrial semiconductor sales, defined as all semiconductors, excluding the PC channel.
Ian Bass, Chairman of the European association, said: "We expected a drop in Q1 as we were up against the all-time-high quarter of European semiconductor distribution. Unless something severe happens - like a sinking demand in volumes - the cycle should ease out over the course of the year."
Bass added DMASS members, who include all the major component suppliers and European distributors, remain confident that "the European market has a big manufacturing potential and therefore an upside specifically for distribution with its high focus on very innovative mid-size customers."
The first quarter looked quite similar in Western Europe and much more positive in Eastern Europe. Of the bigger sales regions, the steepest decline against last year's Q1 occurred in the U.K. which was down 22.1 percent to Euros 117 million.
Sales through the distribution channels in France were down 11.4 percent in Q1 compared with the same period last time, to Euros 114 million, while Italy declined to Euros 183 million, off by 9.8 percent.
Germany remains the biggest market on the Continent, and fell by "only" 7.2 percent to Euros 461 million, proving its resistance against the massive production transfer that has affected all of Western Europe. Benelux declined by 14 percent and the Iberian region by 11 percent. The Nordic region held up quite well, seeing a drop of 5.6 percent.
The winner was again Eastern Europe with a 10.5 percent increase in sales to Euros 162 million, led by Russia, Poland, Hungary and the Emerging Countries (Romania, Baltic States, and Ukraine).
Bass said the real concern is the continuing weakness in the U.K and France.
"While Italy and Germany recovered with +22 percent and +20 percent respectively against the Q4/2007 figure, the U.K. (and Ireland) only managed to exceed Q4/2007 by 2 percent, and France by 12 percent. However, from a design perspective, those countries continue to be strong."
All product categories saw a decline compared with the first quarter of last year, with discretes including power components faring best, down by only 3.2 percent to be worth Euros 241 million.
MOS Micro (Microprocessors, Controllers and DSPs) showed a 5.9 percent drop to be a market worth 3 Euros 322 million, while analogy components lost 6.7 percent, down to Euros 373 million.
Bass noted the downturn on products in most cases is not driven by a lack of demand but by a continued erosion of the average selling prices. "We fully expect the price pressure will soften during the year."
Two new members signed on during the fist quarter, distributor Anglia and component supplier Maxim Integrated Products.
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