May 16,
2007
What’s
New in Component Demand?
This
is part two of a two-part article looking at demand trends in the electronic
components industry.
According
to broad-line distributors such as Avnet Inc. in Phoenix, A.Z., and Arrow
Electronics Inc. in Melville, N.Y., component demand remains strong. Some
industry experts have suggested component suppliers are reporting weakness in
demand, but Skip Streber, VP of Global Supplier Marketing at Arrow disagrees.
“Everything you read in the press says the supplier community has reported a
sequential downturn in demand in the last quarter, but the demand from
customers is fine,” says Streber. “Things are strong in the digital computer
space, in handhelds and in display drivers. Both the core industrial customer
base and the economy are strong in North America.”
Streber
looks at a number of measurements that indicate the strength of component
demand. He sees three areas to watch that will indicate the strength of the
component market. Two of these indicators have long been used to take the
temperature of demand. The third includes emerging technology. “There are two
traditional bellwethers. The first is high-performance analog,” says Streber.
“And the customers are driving the positive results, especially on the power
management side. He also notes that converters, and interface devices are
continuing to hold up. “Analog is strong across every sector,” says Streber.
“The interface between the analog world and the digital world – that’s strong.”
The
second traditional bellwether Streber examines is the demand for discrete
components. “Another area that grew year-on-year is the discrete area,” says
Streber. When demand weakens on discretes, it tends to dampen the cycle.” For
discretes, he sees positive news.
To
get a deeper view of demand, Streber looks at new components coming on to the
market. Though the new parts and technology begin small, he notes they indicate
the strength of the future market. “The third bellwether is emerging
technology. It’s relatively small now, but the high-bright LED (light-emitting
diode) market is important,” says Streber. “The issues this technology solves
include how well it works in combination with other lighting solutions, its low
power, its brightness and its price.”
Streber
sees strength in the LEDs ability to take the place of existing lighting. “You
see a trend that traditional lights are being replaced by LED, and this is happening
from consumer to medical to industrial, as well as backlighting for TVs,” says
Streber. “The total market is small, but it bears watching over time.”
As
for future demand, Streber sees healthy growth that will come as individual
markets blend. “Looking to the future, we talk about the convergence of
computers, consumer electronics and communications,” says Streber. “Look at the
typical home. How many transistor elements are in every home now? This
pervasiveness is an insurance policy on future growth.”
In
other market trends, Streber sees a change in the nature of suppliers. While
suppliers used to produce a wide range of components that involved a variety of
technology, he now sees growing specialization among component suppliers. “What
you’re seeing now is that suppliers in general are no longer jacks-of-all
trades and masters of none,” says Streber. “Now they focus on a few things and
do them very well.”
He
also sees changes in the components market due to the move toward lead-free
parts. As component suppliers introduce lead-free versions of their parts, many
are shutting down their production of leaded components. “They are
discontinuing their leaded versions. The supplier community took the move to
lead-free components very seriously and many suppliers have quietly gone to a
totally lead-free solution,” says Streber. “Some offer both, but they are
weaning themselves off the lead. In the long-term, it’s an environmentally
concerned world.”
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