Already weak demand at the end of 2019 and general economic uncertainties set the stage for a weak start to 2020, on which the unexpected impact of the Covid-19 pandemic was grafted.
Against this backdrop, the European electronic components market and, consequently, chip distributors, have not found the spark to trigger a growth trend. According to estimates by Dmassthe association of semiconductor suppliers in Europe, sales in the European semiconductor distribution market reached €2.19 billion, down 11.7% on the same quarter last year.
Georg Steinberger, President of Dmass, commented: 'Forecasts are always difficult and at this time they are even moreso. It was clear to us that the first quarter of 2020 could not be a record quarter, but we thought it could be the end of a downward cycle. Covid-19 has not only threatened the health of people around the world, it has created a situation where economies will suffer for a long time. The halt in production in many countries and the slowdown in industrial production in others is hitting the electronics industry hardest, with the biggest impact coming in the next few quarters. Among the consequences of the Coronavirus is the distortion of visibility in the supply chain; this makes it difficult to predict what the industry might need in the coming quarters."
Nordic countries the most critical area according to Dmass data
Geographically, the results in Q1 2020 are quite diverse. While France, the UK, Nordic and Benelux showed above-average declines, Germany held its own and Eastern Europe performed well. UK distribution sales stood at EUR 129 million (-19.4%), Germany at EUR 646 million (-11.8%), France at EUR 140 million (-17.7%), Italy at EUR 203 million (-6.5%), Nordic at EUR 154 million (-38%) and Eastern Europe at EUR 389 million (-4%). Georg Steinberger: "Germany remains average, Eastern Europe gains ground, Southern Europe surprisingly holds its own and the rest is struggling. 2020 is still to be played out, and there could also be surprising effects. Moreover, we should not forget that some Dtams have been transformed into direct activities by producers, which is strongly visible in the Nordic numbers."
Commodities lose
In terms of products, the positive news is that some product areas (programmable logic, opto, microcontrollers and advanced logic) were not as badly affected, while others (discrete, analogue, memory and standard logic) suffered more. Analogue ICs, the dominant category, fell by 12.2% to €647m, Micro by 9.9% to €427m, power devices by 10.3% to €247m, opto by 6.3% to €202m, memories by 18.2% to €186m, programmable logic by 6.2% to €155m, advanced logic by 8.6% to €119m and discrete by 24.9% to €114m. Georg Steinberger: "The only possible indication in light of the first quarter figures is a slight trend where commodities are struggling more than more complex products, which are holding up better. It is also significant that microcontrollers performed better than microprocessors or DSPs.
Towards sustainable innovation
As for 2020, Steinberger puts a damper on his previous optimism: 'At the beginning of the crisis, it was the production stoppages in Asia that caused concern, now it is the other end of the supply chain: the customers and their uncertainties. The loss of visibility on both the customer and supplier side will undoubtedly bring a number of difficulties. As governments try to save the economy, it would be useful for us to look at the much-needed innovation in public infrastructure for a more sustainable base, which in turn could lead to growth in the entire digital industry."
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