At embedded world 2026, DigiKey set out a clear message: the electronics market is not just recovering – it is accelerating. In conversation with Mike Slater, Vice President of Global Business Development, the company outlined strong performance in 2025 and growing confidence for the year ahead, underpinned by rising demand, increased engineering activity, and strategic investment across its operations.
Strong growth and a shifting market
For DigiKey, 2025 marked a return to form. The distributor recorded double-digit growth across all three major regions – Europe, North America, and Asia-Pacific – with Europe emerging as the standout performer. This is particularly notable given the region’s recent economic headwinds, suggesting a meaningful shift in market dynamics.
Slater attributes this rebound to a combination of factors. One of the most significant has been the correction of excess inventory that had built up across the supply chain in previous years. As that imbalance has eased, demand has begun to normalise and, in many cases, strengthen. At the same time, key sectors such as industrial have regained momentum after a prolonged slowdown.
Importantly, this recovery has not plateaued. DigiKey has seen conditions improve further in early 2026, reinforcing the sense that the market is entering a new growth phase. “The market’s been heating up,” Slater notes, reflecting a broader industry sentiment echoed across the show floor at embedded world.
Engineering activity on the rise
One of the clearest indicators of this renewed momentum is the surge in engineering and development activity. DigiKey has observed strong growth in customers purchasing evaluation boards and low-quantity components – typically associated with early-stage design work.
This trend points to a healthy innovation pipeline across multiple industries. Engineers are not only resuming paused projects but also initiating new designs, suggesting confidence in future demand. DigiKey’s strategy has been to support this activity by offering a wide selection of products and ensuring rapid availability of newly released components.
Following a slower period during and immediately after the COVID-19 pandemic, suppliers are once again bringing a steady stream of new products to market. DigiKey has committed to stocking these products from day one, enabling engineers to access the latest technologies without delay. This approach has been instrumental in attracting new customers and expanding its global user base.
AI, data centres, and the ripple effect
While artificial intelligence and data centres continue to dominate industry headlines, Slater is keen to highlight their broader impact. Rather than viewing these sectors in isolation, he points to the ecosystem that surrounds them.
The rapid expansion of AI infrastructure is driving demand not only for high-performance semiconductors but also for a wide range of supporting technologies. Cooling systems, power management, connectivity solutions, and IoT devices all play a critical role in enabling modern data centres. As a result, growth is spilling over into adjacent markets – particularly within the industrial sector.
This “halo effect” is creating opportunities across DigiKey’s portfolio. Industrial, medical, aerospace, and defence applications are all experiencing increased demand, fuelled in part by the need to support or integrate with AI-driven systems. It is a reminder that while AI may be the headline story, its influence extends far beyond a single vertical.
Supply chain pressures return
However, with renewed demand comes familiar challenges. Slater confirms that lead times are beginning to extend once again across most product categories, reversing the improvements seen in 2024 and early 2025. At the same time, price increases are becoming more common, reflecting tightening supply conditions.
DigiKey has taken a proactive approach to these developments. Anticipating a market upturn, the company invested heavily in inventory throughout 2025, positioning itself to support customers as demand rises. This strategy is designed to mitigate the impact of longer lead times and ensure continuity of supply.
Transparency is another key pillar of DigiKey’s response. The company provides real-time lead time information on its website, allowing customers to plan their procurement strategies more effectively. By keeping this data up to date, DigiKey aims to reduce uncertainty and help engineers and buyers stay ahead of potential disruptions.
Technology trends and product demand
From a product perspective, growth has been relatively balanced across categories, including semiconductors, interconnects, and passive components. However, 2026 is beginning to show a shift, with semiconductors currently outpacing other segments.
This is perhaps unsurprising given the central role semiconductors play in enabling AI, data centres, and advanced industrial systems. Nevertheless, the fact that all product categories are experiencing positive momentum underscores the breadth of the market recovery.
DigiKey is also continuing to expand its presence in automation and control – a segment it has been developing for around a decade. This area was the company’s fastest-growing business in 2025, reflecting increasing demand for efficiency and automation in manufacturing and industrial environments.
The scope of this segment has evolved significantly. What began primarily as a maintenance, repair, and operations (MRO) offering now encompasses a wide range of products and services, including test equipment and complete automation solutions. As companies look to optimise their operations, DigiKey sees significant long-term potential in this space.
E-commerce and digital innovation
E-commerce remains at the core of DigiKey’s business model. The majority of its transactions takes place via its online platform, which continues to be refined to meet customer expectations for speed, accessibility, and ease of use.
Artificial intelligence is playing an increasingly important role in this evolution. DigiKey is leveraging AI both externally and internally – enhancing product search and discovery on its website, improving customer service capabilities, and supporting more accurate demand forecasting.
These applications are designed to augment the company’s global workforce, enabling faster decision-making and a more responsive customer experience. As the complexity of electronic design continues to grow, such tools are becoming essential in helping engineers find the right components quickly and efficiently.
Logistics, marketplace, and infrastructure investment
Beyond its core distribution business, DigiKey is also investing in new ways to serve its customers. Its marketplace platform has seen significant growth, expanding the range of available products – particularly in categories such as large or bulky automation equipment.
This platform enables more flexible fulfilment options, including direct shipping from suppliers to customers, which can reduce costs and improve delivery times. It also supports DigiKey’s goal of offering one of the broadest product selections in the industry.
At the same time, the company continues to invest in its physical infrastructure. Its expanded warehouse in Thief River Falls, Minnesota serves as a central hub for global operations. Increased automation within the facility is helping to improve efficiency and scalability as demand grows.
A sustainable approach
Sustainability is another area of focus. DigiKey’s centralised distribution model – shipping from a single primary warehouse – reduces the need for multiple shipments and helps minimise environmental impact. Its e-commerce-driven approach also limits the need for extensive travel by sales teams.
In addition, the company works closely with logistics partners to optimise shipping efficiency, including consolidating shipments and streamlining global distribution routes. While not always the most visible aspect of the business, these efforts contribute to a more sustainable supply chain.
Looking ahead
As DigiKey looks to the remainder of 2026, the outlook is decidedly positive. The company is benefiting from a combination of market recovery, technological innovation, and strategic investment. With strong demand across multiple sectors, rising engineering activity, and a growing customer base, the foundations for continued growth are firmly in place.
For Slater, the message is clear: DigiKey is ready. By investing in inventory, digital capabilities, and infrastructure, the company is positioning itself not just to respond to market demand but to lead in an increasingly dynamic and interconnected electronics ecosystem.
