Jon Baxter, Executive Director, Sales & Operations EMEA, Solsta reflects on the past 12 months and reveals his expectations for 2025.
What have been the challenges?
Looking back on 2024, the year has presented significant challenges and valuable learning experiences. While widespread optimism was that the market would recover in the second half of the year, reality has yet to live up to expectations.
According to DMASS Europe, ‘the European components distribution market contracted by 30.2% in the third quarter 2024, with consolidated sales of €3.64 billion. Again, IP&E (Interconnect, Passive and Electromechanical) components did far better and declined by “only” 12.3% to €1.37 billion, while semiconductors took another dive of 38% to €2.27 billion, the lowest revenue value since Q1/2021’.
The anticipated rebound, particularly in the UK and Europe, has not materialised as many had hoped. Despite a bullish outlook, the recovery has been slow and uneven, with ongoing geopolitical tensions and supply chain constraints further adding to the situation.
Longer lead times and restricted supply chains have resulted in overstocking, with customers not requiring products as quickly as anticipated. OEMs and CEMs are sitting on excess inventory, while distribution channels remain overstocked. Despite continued shipments from manufacturers, bookings have remained low. However, we will likely see a more robust recovery in 2025.
What has been a key success?
Our strategic priorities in 2024 have been to focus on the defence and aerospace sectors. These sectors continue to experience robust growth, driven by technological advancements and global geopolitical dynamics. Increased investment in advanced technology components and a strong emphasis on quality standardisation means growth in the right way. We have prioritised critical certifications like ISO 13485, AS9100, and AS9120 to demonstrate operational excellence and meet stringent industry requirements.
Strategic market expansion remains a priority across the board, with companies actively developing distribution networks and engaging directly with customers through industry events and targeted showcases. North American markets, in particular, are seeing significant investment, with companies establishing new distribution centres to enhance regional capabilities and market penetration.
Our personal milestones were the acquisition of Gateway Electronics, which has already proven to be a valuable addition to our portfolio, and the Engineering Design Show (EDS) 2024, where we had the opportunity to showcase our technology and capabilities at a flagship event. This direct engagement with customers early in the process allows Solsta and other businesses to position themselves as trusted partners and gain visibility in critical sectors.
What emerging trends do you see coming out in 2025?
As we look ahead to 2025, several emerging trends will significantly impact the electronics industry, and we are actively preparing to adapt to these shifts.
Connectivity will remain a dominant trend. The increasing interconnectivity of devices, systems and services will drive demand for innovative solutions such as sensors, remote monitoring and data analytics. Companies will need to embrace more connected ecosystems and provide guidance to customers on how to navigate newer services.
Another key trend is the continued growth of System-on-Modules (SOMs). These flexible, pre-certified solutions enable companies to bring products to market faster by bypassing lengthy regulatory processes. In our business, SOMs represent a significant opportunity, offering customers the ability to get products to market quicker and generate revenue sooner without the delays typically associated with certification and other regulatory hurdles. AI accelerator devices may also play a part in the SOM market growth.
Cost will be another significant factor, particularly in the aerospace sector – specifically satellites. The cost of launching and operating satellites has dramatically decreased over the last two decades, making it a much more competitive market. Lower-orbit satellite communication systems have a broader range of applications and are now more price-sensitive.
However, the electric vehicle (EV) market is experiencing a notable slowdown, driven by multiple factors. For example, government incentive schemes worldwide are expiring, and key financial advantages are disappearing. Charging infrastructure challenges and reduced financial incentives are contributing to consumer hesitancy, signalling a more cautious approach to electric vehicle transition in 2025 compared to previous optimistic projections.
What are your goals for 2025?
As we move into 2025, we have set ambitious goals to ensure continued growth and success.
Customer focus will be central to our strategy. We need to ensure that we are not just offering products but truly understanding our customers’ needs and providing the proper support to help them succeed. This means being more outward-looking by effectively deploying our resources to meet customer requirements or engaging directly with customers to understand their challenges and objectives better.
Our acquisitions of Willow and Gateway have significantly enhanced our portfolio. These acquisitions open new opportunities and markets for us, and we plan to use these new channels to better serve our customers. Willow brought us a much wider range of sensors and power solutions, and Gateway is a specialist distributor with expertise in ferrites, magnetic components, and solutions, including a range of own-brand machined ferrite products.
Geographically, we remain focused on expanding our presence in Europe and the US. Acquisitions continue to be part of our strategy, but we are also committed to building on our strong foundations in the UK and Europe.
