Although the electronics market experienced a slump last year, the overall mood for this year and next was optimistic, Tim Carroll, Global Head of Digital Business at DigiKey told Procurement Pro in an exclusive interview at embedded world, as he revealed the company’s outlook, their aggressive supplier acquisition strategy, and how they are using AI to enhance their operations.
As reported by the Electronic Components Supply Network (ecsn) in December 2024, the decline and reduced demand in the electronics market can be attributed to a number of reasons, namely customer over-ordering, increasing geopolitical tensions, armed conflicts in the Middle East and the US/China trade war.
The outcome of these factors all together has created uncertainty, as manufacturers, distributors, and their customers are all keen to avoid overstocking, an “inventory hangover” issue that is hampering growth which will not return to the electronics market until it is resolved, according to ecsn.
In conversation with Carroll, he noted a “flat” market for DigiKey, notably in EMEA and the Americas, with some growth in Asia, observing lower revenue but higher design activity, as customers are buying fewer components for parts.
“There’s a lot of concern around whether it be tariffs, or recession, or new governments,” said Carroll. “In times of uncertainties, customers are holding back a little right now, but [the] design activity we see is strong right now.”
By making key investments in streamlining operations and in inventory, the company is seeking to gain a better understanding into what parts are selling well and what parts are perhaps slower to be sold. In doing so, this helps to mitigate the risks of over-stocking, which occurred after the pandemic when the market witnessed a boom in the purchasing of electronic devices.
“We added 3.8 million parts to digikey.com last year and so our biggest investments are in inventory right now, and we find that’s what drives customer accounts,” added Carroll.
455 new suppliers signed
Last year DigiKey announced signing 455 new suppliers, a reflection of what Carroll characterised as an “aggressive” approach to signing new suppliers, with expansion into new product categories such as automation and control.
“The buying experience for automation and control products, the way customers shop and the user experience that is expected, is different to the way people shop for electronic components,” he explained. “We’re doing a lot of work to make sure our websites [are] designed in a way that we’re not trying to sell automation and control products as if they’re semiconductor chips.”
DigiKey’s online platform Marketplace continues to represent the fastest growing part of their business, where users are able to peruse the products on offer, and it also works as a dropshipping programme that “allows a supplier of ours to take an order on DigiKey but ship it out of their warehouse to their customers in an uncertain tariff environment”, particularly valuable for an uncertain tariff environment.
The maturation of AI
Being present at embedded world 2025 provided an opportunity not only to learn more about how companies are using AI, but to witness the maturation of the technology.
“We’ve moved from experimenting with it to using it to solve everyday problems within DigiKey,” said Carroll.
The application of AI to improve their operations is an ongoing process, as Carroll spoke about “discovering new ways” to use AI.
“If you think about pricing … we have 17 million parts, and we’re trying to figure out the right price to sell them and it was based on a lot of different factors of how much inventory we have and how long the lead times are with suppliers,” explained Carroll. “We used to do that all by hand. Now we’ve built machine learning and AI tools that can give us a real-time pricing recommendation.”
Other ways in which DigiKey is utilising AI includes automating pulling in inventory and automatically matching a bank statement to a customer account.
Looking ahead, Carroll said he expected 2025 to be a “dynamic year”, with the investments they’ve made in technology, regional support, and inventory reflected in the company’s continued growth.
