An economic recovery in the electronics industry, the transition of U.S. manufacturing to China, demand creation, and the lead-free initiative will highlight the discussions between distributors and components suppliers as they meet for their annual Electronic Distribution Show (EDS) this week in Las Vegas.
Other issues including supply chain solutions and supporting design engineers through online offerings, along with increased demand and stretching component lead times, will also be fodder for discussion.
After the worst downturn in the history of their industry, electronics distributors see a glimmer of hope with the return of backlogs and design activities. Key players agree that they are in the midst of a recovery, and saw signs of an uptick as early as third and fourth quarter 2003, though they remain cautious.
"The writing has been on the wall in terms of a more optimistic future in the last six to nine months with a significant upturn in quarter one," said Paul Tallentire, president of NewarkInOne (Chicago, Ill.)
The telecommunications industry is stable and shows signs of reinvestment, Tallentire said, and other sectors such as defense, medical and security are all doing well.
Key concerns that will be raised at distributor and supplier meetings at EDS, in addition to market demand and growth, include production capacity, component lead times and pricing issues. Companies on both sides recognize that supply chain management and logistics will be key to their success.
EDS kicked off this year's event with a revamped program at a new venue. Instead of a keynote address at the opening of the conference, a keynote panel of three distributors " Arrow, Avnet and Memec - will address these key concerns, and answer questions from both the panel moderator and audience.
Jan Salsgiver, corporate vice president of global strategy and operations for Arrow Electronics Inc. (Melville, N.Y.), and one of the panel members, said a key topic of interest is market conditions.
"We feel that we're in the midst of a recovery," Salsgiver said. "What we clearly see in N. America is good strength across the broad customer base, and for Arrow, it has been an important part of our strategy to be customer focused and to have as broad a customer base as possible," she said.
She said distributors and suppliers are also likely to discuss the transfer of business to Asia, demand creation and distribution's value proposition.
Although Arrow's growth in Asia is not dependent on business that transfers from other regions of the world, it's still a big issue for the industry and an important one for Arrow to participate in, Salsgiver said.
"We've invested a lot of technical resources, sales people, and supply chain resources. If the customer decides to outsource it's very important to us to ensure that we find a way to support that customer through the transition," she said.
To effectively support a customer, Salsgiver said a distributor needs to have a good relationship with the customer in both N. America and Asia, have supplier support in both regions, and have visibility in order to track the business.
"The suppliers want us to keep doing demand creation in N. America and in order for us to do that we need their support in Asia," she said.
Salsgiver won't be surprised if the panel discusses distribution's value proposition and competitive position in the industry. "As distribution has become more sophisticated at supply chain solutions and as end customers have more pressure to meet a faster time to market and get working capital off their own balance sheet, the role of distribution becomes bigger and more important."
Throughout the week, distributors will make announcements that will show how they will better deal with these issues. Symmetry Electronics (Hawthorne, Calif.), for example, will discuss its new business strategy in Asia. The distributor recently opened its first sales office in China.
"A big part of Symmetry's strategy is demand creation and helping our suppliers get product designed in. We want the ability to follow those designs in the event that they should go to Asia. We've formalized some partnerships in Asia and have opened a new office in China," said Darren O'Donnell, vice president of sales and marketing for Symmetry.
Other distributors will highlight how they plan to better support the engineering community. NewarkInOne, for example, will announce the formation of its new technical support group based in Chicago. Tallentire said the group of 20 engineers will help its customers find alternative parts, assist them with part obsolescence and help them find additional technical information.
Tallentire said the company's efforts over the next 12 to 18 months are to continue to improve its product and service offerings to the design engineer. Most recently, the catalog distributor added approximately 40,000 new products including semiconductors as well as passive and electromechanical devices to its online catalog. In addition, the distributor also became Taiyo Yuden's first distributor in the U.S.
Next on NewarkInOne's agenda is improved product search capabilities at its web site. Tallentire said this new search engine will offer design engineers the most flexible combination of searching criteria available in the industry.
Some distributors will discuss the expansion of their value-added offerings particularly for display products, and line card additions. For instance, Arrow OEM Computing Solutions recently installed a class 1000 clean room in its integration facility in Phoenix, Arizona. The distributor offers a number of design and integration services for LCDs including overlay bonding techniques.
Symmetry Electronics has also expanded its display solutions group. In March 2004, the distributor opened a state-of-the art LCD technology center in Irvine, Calif. and added several field application engineers (FAEs) and display specialists to its staff in various territories.
Optoelectronics manufacturer OPTEK Technology (Carrollton, Tex.) has announced that master distributor TRESCO will be added to its distribution network for its line of infrared LED and silicon detector components.
Master distributor TRESCO now offers OPTEK's complete line of infrared LED and silicon detector components for optoelectronics sensors to more than 2,400 industrial and MRO distributors.
New component launches
Many component manufacturers say they plan to discuss their growth strategies with their distributor partners, and expect that new product introductions will play a significant role in driving growth in 2004. Some plan to unveil new component offerings at EDS, while others will focus on recent product introductions.
For instance, TT electronics BI Technologies Electronic Components Division (Fullerton, Calif.), for example, will display its recently expanded family of termination networks with the addition of the DDR SDRAM (double data rate static random access memory) family of networks.
The DDR SDRAM networks are used for high-speed communications applications and utilize a ball grid array (BGA) connection to minimize electrical parasites. The DDR SDRAM termination networks feature 18-bit SSTL_2 termination sets and are designed to terminate SSTL_2 Class I and Class II systems in compliance with JEDEC Standard 8-9A. Typical pricing for DDR SDRAM termination networks is $0.40 each in volume quantities. Delivery is five weeks.
BI Technologies offers three different circuit configurations for the DDR SDRAM termination networks, along with custom networks that may include screened or chip capacitors.
IRC's Advanced Film Division (Corpus Christi, Tex.) will highlight its new SC3 series of surface-mount resistors that is capable of dissipating up to 3-watts at 70°C in a 1-watt package. Featuring solder terminations along the wide portion of the device and using thickfilm copper terminations to draw heat from the chip, it enables the resistors to carry higher current at a lower overall temperature, said the company.
The SC3 series features resistance values as low as 1Ω to 350Ω with tolerances down to ±1% and TCRs to ±100ppm/°C. Inductance is less than 3 nH. They are rated for operation from -55°C to 150°C. Typical pricing for the SC3 series resistors is approximately $0.25 in quantities of 10,000. Delivery is from stock to nine weeks.
Another important issue for component suppliers and distributors is the lead-free initiative being mandated by new environmental legislation. Jerry Czerwonka, director, quality assurance for Avnet Electronics Marketing America (Phoenix, Ariz.) will address this issue during a NEDA seminar.
"The major task of compliance to lead-free legislation [such as RoHS and WEEE] lies within the component manufacturers arena. Some business sectors such as defense and aerospace have exemptions from this legislation and storage, servers and storage array systems are exempt until 2010. This leaves distributors with providing components that will be lead-free and some that are not, in order to meet the needs of all of their customers," Czerwonka said.
"The distributors' task is not necessarily one of ensuring that their suppliers are compliant but one of clearly communicating to their customers what components are lead-free and which ones are not," Czerwonka said.
However, part numbering and labeling of the new lead-free components may become a problem if component manufacturers don't change or modify their part numbering scheme when changing to lead-free products, Czerwonka said.
NewarkInOne's Tallentire agrees that the supply chain for components over the next three to four years will be exceptionally complex for both the distributors and customers. This will happen as a result of some component suppliers keeping the same part numbers in some cases for the lead-free versions, or introducing new part numbers for the lead-free items and keeping the lead-containing items on their books, he said.
Call (631) 847-2000
Call (480) 643-2000
Call (714) 447-2757
IRC Advanced Film Division
Call (361) 992-7900
Call (800) 4-NEWARK
Call (972) 323-2200
Call (310) 536-6190
Call (800) 752-8708