By Mick Elliott, Editor at Electronic Specifier
This article originally appeared in the Jan/Feb issue of Procurement Pro.
Let it go. That is the only advice you can give the distribution sector after 2024, described by Anglia Components CEO Steve Rawlins as “disastrous.”
In North America, the Electronic Components Industry Association agreed.
Its Electronic Components Sales Trend (ECST) survey showed the second half was a very challenging sales environment for electronic components channel participants.
“A difficult year” was John Macmichael’s more measured response. The Managing Director of Solsta lifted the mood, by revealing incoming orders started to pick up in October last year, and the distributor’s Q4 was the highest for order intake in two years.
Marie-Pierre Ducharme, Vice President, EMEA Marketing & Business Development, Mouser Electronics concurred: “We are only a few weeks into 2025, and already we are seeing some sales growth.
“I’ll take anything I can get,” she laughs.
“For the first time in our history in Europe, sales declined two years in a row,” Ducharme reveals. “2024 sales were lower than 2023.”
Dan Ford, Vice President Sales, EMEA for Farnell, remarks: “After a prolonged up-cycle in 2023, the EMEA market has seen a downturn, lasting longer than most had probably expected. We saw this carrying into 2024, but there was an expectation for business to see a pick-up towards the latter end of 2024.
“Having said that, from a calendar year perspective, Q4 did show some positive signals for 2025. We’re not getting too bullish yet, but our bookto-bill for that quarter was positive when compared to previous quarters.
“It’s fair to say that there are a number of macroeconomic topics in play at the moment too that could make 2025 an unpredictable year. However, we are hoping for a stronger 2025 as the year progresses.
“Lead times have stabilised across industry, and we expect pricing to remain relatively stable, too. Our aim is to gain as much visibility into customer demand as possible, including lead times and hope pricing remains stable should the market turn.”
Both Ford and Ducharme lament the toils of the DACH (Germany, Austria and Switzerland) region. It’s 30% of our business in EMEA,” says Ducharme. “We need the German market to pick up.”
Comments Ford: “From a regional perspective, the biggest market in EMEA is DACH, which saw the largest increases during the allocation period, but have also seen some of the biggest decreases year-on-year. Some of the smaller regions, from a market perspective, have shown encouraging glimmers of increased activity, but they aren’t significant contributors to market swell.”
The overhanging problem for the industry has been the excess inventory.
“The OEMs and contract manufacturers had years’ worth of stock to burn off,” notes Solsta’s Macmichael. He detects a lower level of confidence in customers, and with inventory levels getting back to normal he says “there is a reluctance to overcommit.”
It’s an issue also recognised by Steve Rawlins at Anglia: “Customers are ordering hand to mouth, just what they need.”
Exacerbating the problem for some customers are the NCNR (noncancellable, non-refundable) terms applied by semiconductor manufacturers during the shortages. “Some distributors are continuing to impose those edicts,” adds Macmichael while noting that Solsta is not in that position.
Dan Ford’s summary is that the impact of the lockdown period is still flushing its way through the market. “COVID-19 initially caused a dramatic drop in production, soon followed by increased demand, which in turn increased production capacity and spurred investment from manufacturers,” he says. “This soon led to the market being flooded with excess inventory and customers backing off because they suddenly had far more product on their shelves than they required. But as we near the end of that unique cycle, customers should be moving back to a more regular buying pattern across all product segments. However, given the lessons learnt in recent years, the industry’s definition of ‘regular’ will be more cautious than it has been in the past. Customers are reluctant to commit for as long as they have in the past, but we hope everyone will be more or less back to their respective comfort levels soon.”
Remarkably, there is talk that if markets pick up there could be product shortages in the second half of 2025. “Definitely,” says Anglia’s Rawlins. “You read it here first. Suppliers and OEMS have run inventory levels to the bare minimum.”
Mouser’s Ducharme has heard similar chatter in the market from some suppliers.
Design-ins have offered some comfort to distributors. “Design activity has not slowed down, though the products being developed are slower getting to the marketplace,” asserts Macmichael.
Ducharme at Mouser is upbeat: “We acquired more new buyers than other regions, and we shipped more products into Europe.”
Spurring those efforts were a push with manufacturers to bring new product introductions to engineers’ notice, as well as targeted marketing campaigns focused on development tools and development kits.
“In fact, in 2024, sales of development kits were up on the previous year,” she reveals. “That’s a good sign that design activity is happening, and we have the products in our inventory to support it.”
“Farnell is doing a number of things to simulate the market, including continuing to develop and leverage its element14 platform,” says Ford. “With more than 800,000 users, the element14 platform helps users work through problems and refine their application designs in real-time. We are also carefully rationalising our roster of suppliers with a more strategic focus on partnerships and programmes designed to support product-to-market activity as quickly and as reasonably possible.”
The two sectors most visibly driving design activity are AI and medical.
“The big picture is AI, mostly designs around data centre development,” notes Ducharme, adding that IoT is also seeing design activity, alongside an active medical technology.
Solsta’s Macmichael confirms that impression: “Medical technology is dominant in our design pipeline from wearables to monitors in hospital.
He also sees promising portents for wireless connectivity in medical.”
All product sectors showed declines or at best remained flat in 2024. Semiconductors took the biggest hit. “Passives were slightly down in Europe,” says Ducharme. “Interconnect product sales were flat.”
Both sensors and interconnect were buoyed by Mouser’s increased presence in the automation and control sector. “We have lots of sensors in our portfolio,” notes Ducharme and the company has expanded its product portfolio in existing lines to support automation and control customers. “We have a good breadth of the smaller components and products that support automation and control customers, and we have signed new lines, some based in Europe, to enable more focus on automation and control.”
Ford says that MRO (maintenance, repair, and operations) is a key area for Farnell, and is one that he believes has significant untapped potential. “We are working hard in that area of the business and to build out a product portfolio and go-to market strategy,” he remarks. “Industrial automation remains a key focus in 2025, and the push towards increased automation is likely to see that grow going forwards. There are also other markets seeing growth, but these are being driven by macroeconomic and geopolitical circumstances and are not markets that we are strategically positioning ourselves to further develop.
“A key aspect of what Farnell will do is to leverage Avnet’s ‘Power of One’ initiative. This looks at how Farnell can take advantage of the strength and breadth of Avnet’s business to not only support Farnell customers but also look at how the wider Avnet business can enable Farnell to reach new customers. This elegant combination delivers a unique value proposition to the market and has already received a strong positive reaction from suppliers and customers.”
Solsta’s Macmichael is approaching 2025 with “cautious optimism. If all things align, we will see improvement in the market,” though he has concerns about measures in the UK, like the increase in national insurance contributions to knock confidence and hinder the ability to invest.
Solsta will also pursue its acquisition strategy. Last year Gateway Electronic Components joined the stable – “a very smooth integration,” remarks Macmichael. “We have two strings to our bow, organic growth, and we will always be acquisitive, we have been around for a long time and know companies’ strengths and what they can bring to Solsta.”
Anglia’s Steve Rawlins will be looking to fill the hole left by Analog Devices’ departure from his line card last year. “Plans and discussions are well advanced, with announcements likely later in 2025,” he reveals.
