A strong fourth quarter re-energised the 2016 European semiconductor distribution sector. After a quiet summer the industry was back in growth mode with an unusually strong Q4. According to DMASS, the quarter ended with 1.79bn Euro in sales, 5.8% higher than Q4/2015. The full year ended at sales of 7.4bn Euro, which represents an increase of 3.8% over 2015.
Georg Steinberger, chairman of DMASS commented: “Yes, there were also slight technical effects at work in Q4, like a few more working days. However 80% of the growth of almost 6% seems organic, an encouraging sign for 2017, as we are looking at strong bookings. What is still of concern is the fact that the overall semiconductor market does not really grow and that the pressure on the distribution channel remains unprecedented. Higher growth has definitely been prevented by price and margin pressure.”
Regionally, the major economies trailed the positive trend in Q4. The growth drivers were predominantly countries in Eastern Europe, Israel, Russia, Turkey and Rest of EMEA, while Germany, the UK and France grew slightly below average. Nordic, Benelux and Italy even went backwards. Germany grew by 3.1% to 533m Euro, Italy shrunk by 1.7% to 147m Euro, the UK and Ireland climbed 4.3% to 135m Euro and France by 4% to 128m Euro. The Nordic countries plummeted 14.6% to 151m Euro, while at the same time Eastern Europe sales rocketed 16.7% to 281m Euro.
Observed Steinberger: “There isn’t a lot of news in the regional development, except maybe the increased shift from Northern Europe to the East and the fact that Russia seems to have overcome somehow the effects of the sanctions. With the German economy being in full swing, it is strange that the growth in high-tech products like semiconductors is rather moderate. However, on an annual basis, Germany stayed at the DMASS average, so warning signs may not really be applicable. We are pretty sure that other growth regions and countries as mentioned above experienced currency gains as they mainly invoice in US Dollars.”
Product-wise, digital marched to the tune with MOS Micro, Programmable Logic and Other Digital Logic leading the way by double-digit increases of revenue. MOS Micro grew by over 13.2%, mainly driven by Microprocessors (non PC) and high-End MCUs, to 395m Euro, Program Analog Products able Logic sales accelerated 17.2% to 137m Euro and Other Logic by 15.7% to 100m Euro. Other products standing out as double-digit growth areas were Fibre-Optics, Other Opto, DRAMs and NAND-Flash. Analogue Products , by far the biggest product group in distribution, grew by a mere 3% to 516m Euro.
“The danger with products would be to look at quarterly results too seriously, as you can see with above numbers,” concluded Georg Steinberger. “ What grows double-digit in one quarter, could be still trailing the market on an annual basis, like Logic in general. And again, it is quite apparent that some areas of strong growth in the recent path, which seem to have lost steam – like Power, Low-End-MCUs and Analogue – are linked tightly to the German market. It remains to be seen if that is a trend or just an occurrence that will disappear in 2017. The only thing clear to us is that 2017 will become a very interesting year, with many changes of structure and policy becoming effective over the next quarters.”