European distribution market continues slowdown

The European component distribution market fell by 30.2% to €3.64bn according to the latest figures from analyst DMASS Europe.

The corrections in the European components markets continued during the summer quarter, compensating for earlier growth and dealing with excess inventory and low orders. The market for semiconductors went down by 38% to €2.27bn, while interconnect, passives & Electromechanical (IP&E) fell 12.3% to €1.37bn.

“2024 continues to be a challenging year. The correction we are experiencing after the recent shortage is no surprise, but the decrease is deeper than expected,” said Hermann Reiter, chairman of DMASS. “The positive news is that IP&E components seem to have the worst behind them and showed a manageable slowdown. Semiconductors, however, are still in a steep decline due to high customer inventories and little dynamic in new business,” he said.

“With low order books, the outlook for 2025 could be better, especially since the major drivers – Automotive, Industrial and export – all show weaknesses beyond a cyclical downturn. Nevertheless, we are convinced that long-term, electronic components will play a major role in industry transformation and the distribution industry will be pivotal to realize it,” he said.

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“What is required to realize the huge innovation potential of our industry is a focus on the real challenges in our economy, the biggest of which are the structural changes in industries and the lack of skilled workforce. Innovation needs innovators and entrepreneurs, young people, who we must encourage to get engaged in technology. Distribution is an excellent career opportunity for people who love versatility, flexibility and fast decision-making,” he said.

The fall in semiconductor distribution in Europe saw the lowest sales value since Q1/2021. Worst among the big countries was Germany with a fall of nearly 50%. Notably better were only the UK and Iberia.

The weakest sales were in Programmable Logic, MOS Micro and Other Logic (ASSPs) with a drop of over 40%. Only Optoelectronics seemed to do much better than average with a 20% fall.

In IP&E, the worst seems to be behind the distribution market says DMASS. The slowdown continued at a much lower rate, with only -12.3% to 1.37 billion Euro. Only Germany, Austria and Turkey still showed an over-proportionally steep decline.

“CoVID 19 caused a major disruption that will still be felt in 2025. However, looking at the bigger picture, our industry’s compound growth rate from 2019 to 2024 was positive and will continue to stabilize over the coming years,” said Reiter.