German distribution market plummets 35% in Q4

The German component distribution market fell a dramatic 35% in the fourth quarter of 2024, according to trade group FBDi.

Incoming orders are not providing any stimulus and the outlook remains subdued until mid-2025 says the group.

• Europe vulnerable in chip downturn

Turnover for the quarter was €704, the lowest since 2020, leading to €3.464bn for 2024, down 36%. This has been reflected in recent results from semiconductor companies such as Silicon Labs, Texas Instruments and STMicroelectronics as well as Intel.

The biggest losses were suffered by semiconductors, which lost 41% of the previous year’s turnover over the year as a whole, ending up at €2.192bn. The trend was slightly more positive for connectors and passives (IP&E) at €1.12bn, down 25%. Electromechanics fell 15.8% while Power Supplies fell 20.0%.

“We have survived the challenging year 2024 and are wondering what 2025 will bring,” said Andreas Falke, managing director at FBDi, which last week lost its chair, Georg Steinburger.

“Economics is psychology and ‘now it’s getting psychological’. Concerns about geopolitics and the rise of populists are holding back the economy, and customers remain cautious. What is needed now is courage and innovation at all levels to turn hope and expectation into desire and growth. 2025 – especially for Germany – will be the year of setting the course in society, economy and politics”.

“Europe needs to strategically reposition itself to avoid being left behind. Our capabilities are undisputed, but our advantage is not relevant in the new growth areas. We must embrace innovation more enthusiastically, otherwise the future will continue to overtake us.”

He points to an increase in incoming orders in distribution, which rose by 24% year-on-year to €639m in the fourth quarter of 2024 and, at 0.91, still resulted in the highest book-to-bill ratio in 2024 but is still not into growth. The trend raises hopes for the second half of 2025.

“The global market is clearly dividing into blocs in the electronic components industry. Unfortunately, Europe is weakening and continues to lose global market share to the US and China. The exploding AI market there is not reflected in Europe. The December WSTS forecast for 2024 predicts growth of +39% (!) for the US electronics market, +18% for Asia Pac and -7% for Europe,” said Falke.

“The trend in bookings, albeit at a low level, gives rise to positive expectations for the second half of the year, but the overall economic situation and the rise in protectionism are not helping economic growth. Overall, we expect a stabilisation at the level of 2024.”