IDEAnewsletter Nov2011

News
November 2011
II - CEDA, Executive Meeting takes place in Xian, China IV - Q3 2011, the market has clearly slowed across Europe! VI - The South African market, an overview VII - Dear original equipment manufacturer VII - Solid State Lighting market (forecast) VIII - Strong september drives 3Q11 Connector Industry growth FORTRONIC
electronics f o r u m
Year XXII n 3 - 2011
federatIon
INTERNATIoNAl DISTRIBUTIoN oF ElECTRoNICS ASSoCIATIoN
IDEA
Down in the (Bookings) Delta

by Georg Steinberger Chairman DMASS & President FBDi
www.fbdi.de
Adam Fletcher Chairman of IDEA Just to remind readers. If you would like to have theoriginal graphics used in this article just email to the IDEA secretary at segreteria@ideaelectronics.com The IDEA statistics are taken from actual bookings and billings returns made by a substantial percentage of the electronic component distributors in Europe, including all the major distribution groups. Their sales represent Circa 70% of the total European distribution market so the trends shown are truly representative.
o doubt, the last 2 years were quite eventful for the European components industry and specifically distribution.
X - Forecasting 2012: reasons to be cheerful

enjoy
the electronic community
XII - Building on Fortronic success! ASSOCIATIONS
Associazione Nazionale Fornitori Elettronica
2009 started with the market jumping into an abyss, created by the finance market disaster of 2008/2009, only to be followed in 2010 by the steepest upturn in recent history, with 53% growth of the semiconductor distribution market in Europe for that year. So, the expectations for 2011 at the beginning of the year were cautiously optimistic. What followed was a bullish growth until May 2011, supported by allocation fears after the Japanese earthquake.
International Distribution of Electronics Association
ADEC - South Africa

Association of Distributors of Electronic Components
ARDEC - Russia
INTERNATIONAL ELECTRONICS SUPPLIERS
Autonomous Register of Distributors of Electronic Components
ASSODEL - Italy CEDA - China
Associazione Nazionale Fornitori Elettronica China Electronics Distributor Alliance
industry segments like industrial automation and the automotive sector expanded their inventories over-proportionally
In the first half of 2011, the industry grew again into double figures, 23% to be exact, for the semiconductor distribution industry (IP&E not far behind). But it seems that specifically distribution-associated industry segments like industrial automation and the automotive sector expanded their inventories overproportionally, just to find out that the ramifications of the Japanese natural disaster were much smaller than expected. Now half the market has too much inventory
Distribution-associated
ECAANZ - Australia
Electronic Components Association Australia and New Zealand
ECSN - United Kingdom ELCINA - India
Electronic Components Supply Network Electronic Industries Association of India
Consorzio di attivit e servizi per Associazioni e gruppi dimprese
and has therefore naturally stepped on the brakes regarding new orders. The conclusion is that a huge portion of the current slowdown is an inventory correction that should end by the end of calendar year 2011, and that in 2012 we can look forward to another round of at least moderate growth. But what about the other part of the slow-down? The consumer and the world economy at large? As we have seen in the last crisis, the components market has arrived in the real world. With 2/3 of the total market value consumed by consumer-type products (phones, computers, tablets, game consoles etc.), it is clear that it is not the investment goods cycles that are driving the market behaviour but the consumers, who act on different principles, with this effect: cycles are much shorter and much more dependent on the overall market economics. What current factors are there which could influence both directly and indirectly the components market? The Euro crisis, global economic slowdown, fears of inflation (Europe, US, China), natural disasters (first Japan, then Thailand), the US debt, an overheated growth in the last 18 months. It reads like the plot for the perfect storm. But how much of these will really take effect? Not even the experts can tell, but taking lessons from 2009, at least that much is clear when no one knows what is coming, there will be more caution going forward - which adds to the inventory correction (it is not quite clear where else excess inventory sits beside customers; it could be that
www.ideaelectronics.com
FBDI - Germany
Fachverband der Bauelemente Distribution
FEDELEC - Tunisia SE - Sweden
Tunisian Federation of Electric and Electronic Industries The Swedish Electronics Trade Associations
JEpIA - Japan
Japan Electronic Products Importers Association
NEDA - United States SpDEI - France

MAY 2011
National Electronic Distributors Association Syndicat Professionnel de la Distribution en Electronique Industrielle
Fornitori Elettronica
News
components suppliers build a Work-inProgress inventory as well, which explains the still relatively high utilisation rate of wafer fabs).
one big and to date incalculable factor is the European automotive industry, accounting for a huge portion of the European (even worse: German) components consumption. Chasing one record after the next for some time, specifically in China, the expectations for 2012 purportedly have become very moderate which could lead to a steep drop in orders (factoring in the high inventory levels of components). Italy, France and Germany will not like this scenario... Clearly, the market demand does not vanish overnight. Therefore the exaggerated slowdown in bookings will ease out soon, but a decline in demand Consorzio will inevitably lead to a slower recovery di attivit e servizi of the bookings at a lower level. per Associazioni In other e gruppi dimprese years 2010 words, the two record and 2011 (mainly due to the strong first half) will stand for some time. Already, looking at the situation in Western Europe, more production is leaving offshore (specifically big customers). The exceptions are Germany and its Eastern neighbours, who in the meantime account for over 50% of the distribution market, and growing. Here, the production base remains stable; however, the market is extremely competitive.
say minus 20%) the distribution market will grow at least single-digit in 2011, setting a new record year. 2012 then has to deal with such a high comparison basis. As the first half of 2011 billed record results, you can calculate for yourself what most probably will happen from January to June 2012. What are the key messages going forward? Europe is a mature electronics market that most certainly will face various challenges, endogenous and exogenous. The competitive strength in various industry segments is enormous but specifically Western Europe has lost its manufacturing edge and is down to its bare bones. Design yes, design influence yes, but local manufacturing declining, market outlook very moderate. Also to be factored in - the electronics industry in Europe has difficulties in finding employees in the younger generations. What is not eroded by the cost cutters, who continue to deprive Europe of meaningful manufacturing structures, will be left with a workforce in the late 40s, early 50s, with very few successors in sight. The current challenges of the industry are a mere reflection of what is going on in society in general. No miracles are waiting to happen to change this. What has been lost does not come back, and new ideas need to lead to new business that can be competitively manufactured here. The remaining world market leaders that Europe have are not the big conglomerates but the innovative small and medium sized companies that coincidentally are distribution customers. And new world market leaders from Europe will come from there as well. The distribution industry has to find ways to help this business growth with technology, engineering support, marketing, services and, yes, also supply chain services that we provide better than anyone. However, the seeds need to come from someone else - Governments, innovators, pioneers, and entrepreneurs.
CEDA, Executive Meeting takes place in Xian, China

by Amy Wang CEDA
www.cedachina.org
hina Electronics Distributor Alliance (CEDA) has successfully completed the CEDA West China Meeting in Xian, the capital city of Shaanxi province. This meeting focused on helping CEDA members to explore West Chinas market demand and to develop the correct emerging market strategies for West China. CEDA executives networked with Shaanxi province and Xian municipal government officials, top electronics manufacturers and research institutes to discuss collaboration in the electronics supply chain. It took place at the China Electronic (Xian) Fair, the largest franchise electronics technology show in China. CEDA executives from Arrow Asia, Avnet, WPG, Future Electronics, Mouser, TTI, RS Components, Comtech, SZCEAC, Honestar, AsiaCom, Mornsun, lierda, Zetron, letdo attended the meeting. Invited by CEDA to meet industry supply chain giants included leaders of Shaaxin provinces Industry and Information Technology Bureau, Xian CEC High Tech Park, Xian International Harbour Service and Shaanxi Electronics Institution. Also invited were top local electronics manufacturers, including Xian Industry Automation and Control System Company, Shaanxi Power Fan Company, Shaanxi Electronics Technology research institutes, Xian Power Electronics Technology research institutes, Xian No.205 research institute, Xian Jiaotong University Kai-Yuan Group, and Xian Feiyu Electric Company. Chen Wen Hai, Vice President of the China Electronic Appliance Corporation (CEAC), explained to CEDA executives how technology companies address their marketing strategies and gave a
presentation at CEF Xian. They visited CEDA members booths including TTI/ Mouser, Comtech, CE-Power, letdo, Taiyo Yuden and Sunlord Inc. Lou Qing Jian, Vice Governor of Shaanxi Province, addressed his opening speech at CEF Xian and noted that the Chinese electronics industrys restructuring and relocation is bringing huge opportunities to state-run companies and research institutes, driving technological innovation in defense, industry and civil product development. He encourages the technical collaboration of suppliers and manufacturers to use complimentary resources and develop west Chinas supply chain together. Electronics component distribution has seen fast and diversified development in China which enables China to become truly part of the worldwide electronics supply chain. The Ministry of Industry and Information Technology values electronics technology distribution service sector and supports CEDA development, said Chen. Mi Ji Rong, Bureau Chief of the Shaanxi Province Industry and Information Technology and Software Sector, attended the CEDA dinner and introduced key industry figures of Shaanxi province. Shaanxi reached RMB 75 billion (US$ 12 billion) revenue from electronics sales last year, contributed to by 400+ major state-run top electronics manufacturers and research institutes. Shaanxi has strong resources and capacities in technical innovation and high-end manufacturing activities. Photonic and Internet industry are rapidly developing in the provinces. Huawei Technology and ZTE Corp have built research centers in Xian. IC and component design and manufacturing are also strengths of the province that can
When no one knows

what is coming, there will be more caution going forward
Going forward, neither GDP nor the total components market, nor the distribution market expectations are overly optimistic. Market research in the components business like Electronic Outlook expect 2011 to be negative already (-0.8% globally, -3.8% for Europe). This is not going to happen for the distribution sector, at least not for the semiconductor part. Even under the worst circumstances in Q4/2011 (lets
II
News
amy Wang addressing the Ceda meeting
This CEDA meeting reached the following agreements:
About CEDA
CEDA is a non-profit organization that delivers service to electronics component distributors and related parties with full support from INTERNATIONAL ELECTRONICS SUPPLIERS international counter-parties and the Chinese government.
1 All funding members are CEDA board

members;
2 The meeting appointed Michael liu

as secretary general of CEDA and secretary office to be sited in CNT Networks/China outlook Consulting;
back up CEDA members businesses. Xian CEC Industry Park can provide the best facilities and services to CEDA members to set up business hubs and develop the West China market, said Lin Bin, VP of Xian CEC Industry Park, a subsidiary of China Electronic Corporation, also a mother company of CEAC. CEDA is developing strategies to leverage local resources for CEDA members. Mark Burr-Lonnon, VP of Mouser, spoke on behalf of exhibitors and TTI/Mouser. West China is important to the electronics industry. I hope its new product development activities can be developed as well as Europe and North America. Mouser, a CEDA member, rolled out a large exhibition booth at CEF Xian in a strategical move to the west China market.
office is to be sited in CNT Networks and CoC and Michael liu, PhD is elected the first secretary general of CEDA. CEDA has been fully supported by ECIA/ NEDA (Electronic Component Industry Association/National Electronic Distribution Association), and IDEA (International Distribution of Electronics Association). They opened resources to help CEDAs development, said Amy Wang, VP of COC and CNT Networks, addressing thanks to the international counter-parties that helped CEDAs development. CEDA is representing franchised distributors in China with the mission of enhancing executive networking, protecting distributors benefits, establishing distribution business regulations, sharing market intelligence, driving electronics component supply chain development, and promoting new values of the franchised distribution service model. When the Chinese government drives production-service chain development in the nation, CEDA will ensure that incentives for electronics component distribution operations are transferred from the technology service chain, trading service chain, logistic service chain and financial service chain. We thank Shaanxi province and Xian municipality government, for support in hosting the CEDA West Meeting and bringing in executive networking opportunities to seek new business collaboration, liu said. CEDA will bring in an effective supply chain service to west China and drive West China-made components to world market.
3 During the start-up period, CEDA

will adopt a flat structure including a Chairman and Executive Board Members to best use members resources.
About China Electronic Fair

China Electronics Fair (CEF) was founded in 1964, and is endorsed by both the Ministry of Industry and Information Technology and the Ministry of Commerce. CEF runs three locations annually, Shenzhen in April, Shanghai in November and West China/in August (rotating between Chengdu and Xian) It hosts 150,000 key visitors annually.
4 The secretary general will ensure job

descriptions are produces along with recommendations for Chairman and executive board members, and revise the CEDA Article for board members;
5 New CEDA members will be recruited

by the secretary and details sent to executive board members to approve every month. The approval is carried out using an electronics/online tool to be developed by CNT Networks at www.cedachina.org;
About Cntronics.com
Cntronics.com is an interactive online platform for engineers to Consorzio better design circuits, select the di attivit e and deliver right componentsservizi timely application solutions. It helps per Associazioni engineers to design circuitry that e gruppi dimprese enables better IC performance.
6 To develop mostly distributor

membership. Component suppliers already among the members will remain;
fully supported by ECIA and IDEA

We organized the CEDA West China Meeting during CEF Xian time so that executives can observe technical and market trends at CEF, and promote franchise and catalog service at one stop, said Michael Liu, PhD, CEO of CNT Networks. CEDA arranged executive meetings to network with the members of local top electronics manufacturers and research institutes during the show period. The meeting also discussed and agreed the CEDA mission, organization structure and articles proposed by the preparatory office CEAC, CNT Networks and China outlook Consulting (CoC). The meeting also agreed that the alliances secretary
CEDA has been
7 Mouser and TTI to have two separate

seats in the board;
About 52solution.com
52solution.com is a specialized solution centers-based website that provides system architect needed technical resources for R&D engineers. It helps engineers to learn the solutions in hot apps, share experiences, and improve efficiency through webinars, tech videos, tech articles, literature download, sample request, and online forums,etc.
8 The secretary to follow up Shenzhen

customers and seek solutions (Dec 31, 2011);
9 The secretary to follow up ECIA to

understand authorized distributor inventory online listing system and get input of CEDA (Dec 31, 2011);
10 The secretary to propose a customer

credit referral framework of CEDA members to share credit experiences (Dec 31, 2011);
About China Outlook Consulting

China Outlook Consulting enables business executives of international semiconductor and component supplier/distributors to develop better business strategies for the Chinese market through the China eoutlook newsletter and customer research services.
11 The secretary to propose a CEDA

brandname promotion plan for the board (Dec 31, 2011);
12 China DTAM and distribution statistical

work will be not be part of the 2011 plan. It will be re-discussed when the CEDA organization is in place.
III
News
Q3 2011 - the market has clearly slowed further across Europe!

Q3 2011 TOTAL COMpONENTS YTD BOOKINGS TREND
Graphic T5
by Gary Kibblewhite
t is difficult at the moment to find and market researcher or statistician that is showing bullish figures for the World markets. Even the Chinese manufacturing sector has slowed despite the underlying Chinese GDP still Consorzio growing at over e9% pa. This is di attivit servizi reflected in our industry inputs per Associazioni e gruppi dimprese which show a sharp slow-down in electronic component orders and sales across Europe in Q3. Graphic T6 below, this shows the growth/decline in quarterly sales for each country compared with the same quarter last year. Now it is only Nordic and France that are still showing a marginal billings
Just to remind readers. If you would like to have the original graphics used in this article just email to the IDEA secretary at segreteria@ideaelectronics.com The IDEA statistics are taken from actual bookings and billings returns made by a substantial percentage of the electronic component distributors in Europe, including all the major distribution groups. Their sales represent Circa 70% of the total European distribution market so the trends shown are truly representative.
FORTRONIC
enjoy
growth and all other regions have already experienced a decline. However, we mustnt forget that Q3 is always a bad quarter!! Secondly Graphic T5 shows that cumulative ytd bookings for most of Europe have continued to drop when compared with last year with all regions dropping from between 1.5% (UK) to 18.2% (Nordic).
Source: eurostat
year. This is not good news for future manufacturing output. The latest European Industrial production figures released by Eurostat on the 12th october are for August 2011 and show that,
compared with August 2010, industrial production increased by 4.3%.
ECONOMIC BACKGROUND
Eurostat shows that The euro area seasonally-adjusted unemployment rate was up to 10.2% in September 2011 compared with 10.1% in August 2011 and 8% in September last
Graphic T6
ELECTRONIC COMpONENT SALES IN Q3: OVERVIEW

Total components Graphic T1 shows that, on a quarterly basis, total billings were 2% down on the same quarter last year and 11% down on Q2. For the second quarter running
We mustnt forget
that Q3 is always a bad quarter
France are still showing a marginal billings growth
Only Nordic and
Q3 2011 TOTAL COMpONENTS TENDENTIAL INDEX BY COUNTRY (Q/QY-1)
Q3 2011 TOTAL COMpONENTS BOOKING, BILLING & BOOK:BILL RATIO Graphic T1
FORTRONIC
FORTRONIC
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enjoy
IV
INTERNATIONAL ELECTRONICS SUPPLIERS INTERNATIONAL ELECTRONICS SUPPLIERS
News
Q3 2011 SEMICONDUCTOR BOOKING, BILLING & BOOK:BILL RATIO Graphic T5 Q3 2011 TOTAL COMpONENTS BOOKING TREND Graphic T2
FORTRONIC
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FORTRONIC
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the book:bill ratio is below 1:1. It looks like we are going to see the trend we experienced in 2009 happening again!
billings still run above the 2009 level

Total bookings and
Q3 2011 TOTAL COMpONENTS BILLING TREND
Graphic T3
QUARTERLY SALES BY pRODUCT FAMILY

Each quarter we look at both booking and billing trends by both product and by market. Firstly product. Breaking the product total into the main
elements, initially the largest: Semiconductors. Graphic S1 shows that, post minor adjustments to show actual figures for Italy, we now have had three negative book:bill ratio quarters running. Whilst total bookings and billings still run above the 2009
Graphic P1
FORTRONIC
Consorzio di attivit e servizi per Associazioni enjoy e gruppi dimprese the electronic community
Q3 2011 pASSIVE BOOKING, BILLING & BOOK:BILL RATIO
FORTRONIC
For the 2nd quarter

running the total components book:bill ratio is below 1:1
to be a poor Q4 billings number.

enjoy
QUARTERLY SALES AND ORDERS BY GEOGRApHIC REGION

Graphic T3 shows that only the Nordic region showed a small growth over the prior quarter but all other regions showed a decline over both the same quarter last year and the immediately prior quarter. To add to the misery, graphics T2 below covers bookings trends comparing current quarter with the last quarter ( Q/Q-1) and the same quarter last year ( Q/QYHelvetica Neue (T1) ). All regions are showing a negative.
Q3 2011 E.MECHANICAL BOOKING, BILLING & BOOK:BILL RATIO
Graphic E1
FORTRONIC
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Consorzio di attivit e servizi per Associazioni e gruppi dimprese Associazione Nazionale Fornitori Elettronica
level the bookings weakness looks like it is going to lead to a poor year end. Passive Components Graphic P1 covering Passives shows a second quarter of negative book:bill ratios with total European bookings and billings about the same as Q3 2009. Electromechanical components Even emech & other components showed a decline in book:bill ratio this quarter leading to what is likely
News
The South African market, an overview

correlated with SAs growth of 8.1%. The more interesting analysis is to look what is happening currently in the US and Europe in order to speculate what we can expect in South Africa during 2012. During 2011, US and European financial turbulence followed hard on the heels of the massive earthquake in Japan, causing imbalances in semiconductor supply and demand. The International Distribution of Electronics Association (IDEA) has indicated that there is a billings growth of between 8% and 12% for Q2 2011 compared to Q2 2010 for European countries. Their statistics indicate that the European growth rate is on a sharp decline. Analysts further forecast that global semiconductor sales will grow a slower 5% in 2012. The global semiconductor industry in 2012 could be impacted by a number of macroeconomic issues, including high unemployment in the U.S., the ongoing debt crisis, the odds of a double-dip U.S. recession in the United States and Japan, and the fear of inflation in China, India, and Brazil. From a pure correlation perspective, we can expect that the growth rate of 8.1% of components sales in South Africa may decline to 4% towards the end of 2012. However, we need to look at the South African industry to refine this correlation. Electronic products such as smart phones, media tablets, mobile PCs, set top boxes, lCD TVs, wired networks, industrial automation, and automotive infotainment will be the major driver of electronics sales worldwide. However, the South African industry is very weak in most of these areas. There are major projects on the horizon which may stimulate the growth of the SA electronics industry in the coming two years. The Digital Terrestrial Television switchover project and Smart
by Kobus Botes ADEC Chairman Technical Marketing Manager Arrow Altech Distribution (Pty) Ltd.
Metering are probably the two most important factors which may stimulate the electronics industry in the medium term. At this stage, nothing is however certain and government and state owned enterprises such as Eskom will play a major role in the outcome of this growth. Risks that we should be cautious of is the replacement of locally manufacturer products with complete imported products or kits. High risk areas are automotive related products, Set Top boxes and electricity meters. Many of these products are currently being exported and it will be a loss for the South African economy if R&D and manufacturing is reduced. The electronics industry needs to work closer with government to protect and grow these industries. The South African electronics industry has always been very innovative and new ideas should be applied towards local R&D and manufacturing of global trends such as energy efficient products. lED lighting is a good example of some good innovation which is currently taking place in South Africa. From an ADEC perspective, it is critical that component distributors need to ensure that they continue to add adequate value into the supply chain which will make it attractive for manufacturers to deal through credible
distribution channels. ADEC has become an important industry organization to ensure that the electronics industry is protected within South Africa. ADEC has also strong representation at the South African Electronics Industry Federation (SAEIF) which is working closely with the Department of Trade and Industry to protect and grow the electronics industry.
he last 4 years have been a rollercoaster ride for the South African electronics industry. South African import statistics (see attached graph) has shown that South Africa experienced a significant decline in imports of electronic components in 2009 Consorzio due to the 2008 global financial crisis. di attivit e servizi During 2010Associazioni recovered per the SA economy and electronic imports were on the e gruppi dimprese increase again. In terms of component sales, this recovery only realized towards the second half of 2010 and continued into 2011.
for electronic components sales for the 12 month period ending June 2011 was 8.1%
one of the initiatives where ADEC is very much involved in is to review current import duties in order to promote local manufacturing. We have observed an alarming trend in recent months where key R&D and manufacturing companies are in process of downscaling their workforce with the intend to import complete manufactured products. Such activities will not only affect imports of electronic components negatively, but it will also reduce jobs and affect the economy negatively. The outlook for 2012 is cautious optimistic, but all industry players including government needs to work together to ensure that growth is sustainable in the long term.
Year on year growth
The Digital Terrestrial

Television switchover project and Smart Metering are probably the two most important factors
According to ADEC statistics, the year on year growth for electronic components sales for the 12 month period ending June 2011 was 8.1%. The SA electronics industry do not only lag global trends by about 12 months, but these trends are also dampened significantly, which is welcomed in a recessionary period. In order to determine how the SA electronics industry is doing compared to global markets we should be looking slightly back into global trends. Sales growth of global semiconductors surged by around 32% in 2010 which can be
VI
News
Dear Original Equipment Manufacturer

Is your inventory an accident, a way to address supply chain (in)efficiency or a conscious decision to support your supply chain strategy?
by Pascal Fernandez Vice president SPDEI and VP Avnet Velocity
www.spdei.fr
SSL Market (forecast!)

by Franco Musiari Technical Director, Assodel
www.assodel.it
and by Silvio Baronchelli President of IDEA

of the solid state lighting market is easy job. Grasping the picturenot ana definitive Firstly because there isnt source of reliable information that can capture the global lighting market and secondly because there is a rapid proliferation of new comers. Not to forget that this type of reports typically have a purchase fee that is prohibitive and when they become accessible they are usually out of date... A new report There is a new report released by McKinsey & Company and commissioned by Osram: Lighting the Way: Perspectives on the Global Lighting Market. The report takes a broad view of the lighting industry with particular reference to LED market share. The information have been generated through a survey developed in June 2011 with interviews of lighting professionals and consumers in the USA, Germany, Japan, China, Russia, Brazil, and India. Feedback was collected from more than 650 respondents representing the design sector and more than 1,000 respondents representing lighting products consumers. The report brings an overview of the global lighting market, an evaluation of the impact of LED technology on lighting and an examination of LED penetration. the LeD Lighting mArket According to the report, the global lighting market will reach a revenue level of approximately 110 billion by 2020. Population increases, urbanization and government regulations that favours energy efficiency measures are indicated as the key drivers for this growth. Currently LED technology is too expensive to be competitive and able to conquer a wide application base but the expectation that the LED costs will decrease at a rate of 30 percent per annum will accelerate the adoption of such a technology.
hen it comes to inventory strategy, you can feel blood pressure rising across exec teams. Its understandable as it is accepting that the world is analogue, that consumer behaviour does not follow five year plans and in a way answering Edward Lorenzs question at the American Association for the Advancement of Science conference: Predictability: Does the Flap of a Butterflys Wings in Brazil Set off a Tornado in Texas?. Accepting the concept of a necessary inventory is accepting friction in mechanical processes, and its a safer landing in the real world. once you embrace the idea you need to take a deep breath and get prepared for many sleepless nights. Inventory protects against uncertainties, but also delays the understanding and impact of problems! For the lean manufacturers, the greatest manifestation of waste can be found in unneeded quantities of raw materials, work in progress and finished goods (Daniel L. Gardner - 2004 - Business & Economics). The first thing to do is reach out to your upstream and downstream partners and lay down the foundation of your inventory strategy. Inventory should be seen as the fuel, or better, the oxygen of the supply chain. Its everyones problem and as it reflects the need to address unpredictable consumer
needs, the overall liability should reside with the original Equipment Manufacturer who ultimately decides on his product marketing strategy. Some of the key questions to answer: What inventory strategy for what product? Storing finished goods, raw materials, or both? Who is accountable for the inventory level? How is the information made available? Where is the transfer of risk and title happening? Is material liability clearly documented? Is the inventory pricing update clearly owned and defined? Vendor Managed Inventory is a way to mitigate risk and position inventory buffers at strategic points in the supply chain. As in our global economy supply chains compete more than companies, it should also encourage supply chain team-mates to collaborate, agree strategy and metrics, and share information, risk and reward. Distributors are uniquely positioned to deploy VMI services for oEMs and their associated contract manufacturers. They have the ability to mitigate material liability with their wide customer base and rebalance inventory between the various oEM production sites. Inventory is a very powerful and dangerous asset... as much as is needed and as little as possible!
The graph shows that in 2010 the SSL market was worth 7 billion with a 10% market share. The picture is going to change drastically by 2016 when the market is forecasted to reach 40 billion after a Compound Annual Growth Rate of 34% clearly showing the above mentioned acceleration. At this point in time the SSL market should grasp approximately 41% of the total lighting market. Got at that point the acceleration will slow and from 2016 to 2020 the McKinsey report suggests that the CAGR will drop at the 13% level. This means that in 2020 the SSL market should account for 64 billion with 59% of the total market.
Consorzio the key mArket segments Its clear,di attivit ethe graph, that looking to servizi per taking in consideration the report is Associazioni the threeemain sectors of the lighting gruppi dimprese market: general lighting, automotive lighting and backlighting.
General lighting, which accounts for 75% of the total lighting market, is the main market area for the coming growth and the one that will see the greatest transformation due to LEDs. In particular the applications in architectural lighting are viewed as an area of early adoption because of the incorporation of color control and, as McKinsey reports, will see an 85% market share by 2020.
Led Lighting Market By Sector (eur billions)
VII
News
EID NEwS
DISTRIBUTION
Eric Schuck has been named president of Arrow Europe, Middle East and Africa (EMEA). In this role, Mr. Schuck will lead the electronic components products and services business for the EMA region, reporting directly to Peter Kong, president of Arrow Global Components.
Strong September Drives 3Q11 Connector Industry Growth

by Ron Bishop Bishop & Associates
www.bishopinc.com
CONNECTOR INDUSTRY BOOK-TO-BILL RATIO
Figure 1
Avnet Memec announced its transformation into a vertically aligned and customer focused business has allowed it to double its major account base from 400 to over 1000 and triple its monthly sales in just five years. Following the severe flash flooding in Thailand, the closure of many businesses in the region has the potential to impact the electronics supply chain. Element14 has created a dedicated online space at Thailand Flooding which will act as a central repository for the electronics industry on the situation, while additionally being a conduit for information flow at this difficult time Consorzio Farnell attivit e servizi new di has launched an all dedicated maintenance and production per Associazioni catalogue, featuring products from over e gruppi dimprese 300 of the worlds leading manufacturers. Comprising over 500 pages, the new catalogue brings together many products ranging from connectors, cables, and batteries to test and measurement equipment, soldering products and relays. Premier Farnell also announces a global franchise distribution agreement with Fox Electronics, a specialist in the design and supply of frequency controllers. Mouser Electronics has signed a global distribution agreement with ultra-low-power RF specialist Nordic Semiconductor, with Toumaz, a supplier in low cost, ultralow energy wireless telemetry technologies and with Segger which deliver embedded development tools to design engineers worldwide. Mouser Electronics also announces the launch of its second medical applications product Knowledge Center (pKC) training site devoted to medical therapies. Mouser also announces that it is an authorized global distributor for the complete portfolio of National products from Texas Instruments (TI). RS Components has won the logistics and Distribution operations award at the European Supply Chain Excellence Awards 2011. This award recognises organisations in Europe that demonstrate excellence in their supply chain operations.
Source: Electronics Industry Digest
eptember 2011 bookings increased +16% over September 2010. YTD bookings are up +5.1%. Sequentially, orders increased +3.2% from August 2011. 3Q11 bookings were up +6.9% year-over-year. September billings increased +16% from September 2010, and +9.9% year-to-date. Sequentially, sales increased +7.4% from August 2011. 3Q11 billings were up +9.1% yearover-year. The September BTB ratio was 0.92, 3Q11 was 0.95, and year-to-date is 0.99. The following charts show the industry BTB since october 2009.
months of year-over-year increases in monthly billings. order demand increased in September 2011, but continued sales growth will be difficult to achieve in 4Q11 because of softness in world economies.
industry has achieved two outstanding years since the horrific business conditions in 2009
The connector
Regional performance
The following tables show September 2011 bookings and billings performance by geographic region. Year-to-date bookings have slowed to single-digit growth in North America, Europe, Asia Pacific, and RoW. September year-to-date bookings turned positive for China at 1.1%. Japan has improved to -2.4%. Year-to-date billings show doubledigit growth in Europe and RoW. Year-to-date billings are single digits in all other regions. Year-to-date
especially September, was much stronger than we expected

The September book-to-bill of 0.92 is, however, the fourth consecutive month with a book-to-bill ratio less than 1.0. The following tables show the recent billings history of the connector industry. We have achieved 23 consecutive
The third quarter,
billings in Japan turned positive to 1% for the first time since March 2011.
3Q11 Sales performance

The connector industry shipped $12,857 million in 3Q11, up 9.1% over 3Q10. This set a new industry record for sales in a quarter. The third quarter, especially September, was much stronger than we expected. The automotive and transportation sectors were particularly strong. Telecommunications (mobile devices and mobile networks) and computer sectors had good performances in the quarter. Military and industrial
YEAR-TO-YEAR AND CUMULATIVE BILLINGS pERCENTAGE CHANGE 2009/2010/2011
Table 1
SEpTEMBER 2011 BOOKINGS Table 2
VIII
News
were market laggers. In spite of much publicized economic woes, European connector sales were outstanding. Much of Europes connector growth is due to a strong automotive market. North America connector sales through September 2011 have grown faster than Chinas (7.9% vs. 6.8%). It has been over a decade since that has occurred. European connector sales are up an incredible 16.5% through September. The connector industry has achieved two outstanding years since the horrific business conditions in 2009. The following table shows how the industry has performed over the past eleven quarters and our estimate for 4Q11. We estimate that 4Q11 will decline -5.3% sequentially, but still achieve +3.8% growth year-over-year.
YEAR-TO-DATE BOOKINGS BY REGION Figure 2
We estimate that
4Q11 will decline -5.3% sequentially, but still achieve +3.8% growth year-over-year
accordingly. The connector industry book-to-bill ratio has been below 1.0 for four consecutive months, with September resulting in a very poor BTB ratio of 0.92. With orders slowing earlier in the quarter and heavy shipments in September, the industry backlog is shrinking. We are experiencing slowing demand for electronic products. However, we believe the key word is slowing. We do not believe there is a large decline in demand ahead of us. For example, U.S. GDP growth of 2.5% in the third quarter is an encouraging trend that lessens the probability of a double-dip recession. Here is how we see the next few quarters: 4Q11 - Sequential decline in sales from 4Q11 in the 5% range. Year-over-year growth from 4Q10 of around 4%. 1Q12 - Tough comparisons to 1Q11. Continued slowing of demand and the Chinese New Year result in sequential and year-over-year declines in the midsingle-digits. 2Q12 - Sequential improvement in sales, but a decline in year-over-year results. 3Q11 + 4Q11 - Gradual improvement in sales with both quarters achieving sequential and year-over-year growth. The outlook for 2012 is modest growth in the 4% to 6% range.
Outlook 4Q11 and full year 2012

Semiconductor demand has slowed and the past two months have resulted in a year-over-year sales
decline. This is not a positive sign for future connector sales because connector sales closely track the performance of semiconductors. Electronic distributors are reporting mid-single-digit growth in components and have slowed their orders to component manufacturers
Figure 3
CONNECTOR INDUSTRY SALES BY QUARTER
CONNECTOR INDUSTRY QUARTERLY SALES YOY % CHANGE
Table 3
IX
News
Forecasting 2012: Reasons to Be Cheerful

by Adam Fletcher Chairman of IDEA and ECSN
www.ecsn-uk.org
electronic components markets are on track to achieve a growth of approximately 7% in 2011, consolidating on what was a phenomenal 26% growth in 2010, whilst the 2011 UK GDP growth is forecast at 2% an improvement over the minimal growth in 2010.
The outlook for employment in the electronics industry is not really is not as bad as the problems in the overall economy may suggest says Adam Fletcher - Chairman at the Electronic Components Supply Network. As many organisations enter the final stages of their 2012 business planning cycle Fletcher justifies his optimism by reviewing key data and information sources, but he also shares his concerns that this will continue to be a low job creation recovery at best, which is likely to remain an ongoing problem for many developed economies...
Why is this?
hen plotted on a logarithmic scale graph the global electronic components sales revenue now Consorzio closely tracks global GDP. Today it di attivit e servizi generally appears on the positive per Associazioni side of e gruppi dimprese because the growth curve of the pervasive and increasing use of electronics in daily life but his was not always the case. As little as a decade ago the typical global cycles, driven largely by advancement in semiconductor process technologies, were periods of very high growth followed by a collapse followed by a slow advance towards the next recovery.
Its very hard to justify using hard data but anecdotal evidence suggests that the wide breadth of UK based system integrators in the aerospace, automotive medical and industrial markets are actually enjoying significantly more success in international markets than they are being given credit for. Statistical information provided by ecsn members indicates that there has also been an increase in the sales from the UK of electronic components, both directly by customers to their subsidiaries or sub-contractors and by UK based distributors
employment in the electronics industry is not really is not as bad as the problems in the overall economy may suggest
The outlook for
also enables them to wield much greater influence over suppliers, pricing and availability.
So What Is Likely To Happen in 2012?

A wide cross section of electronic components industry leaders remains sceptical about the local and global economic prospects. A very unscientific poll of over 150 US executives last week revealed that the overwhelming majority believe that were in the midst of a W shaped economic situation i.e. a further short period of decline possibly long enough to be technically classified as a recession, or at best case l shaped i.e. a period of little growth or decline. This outcome reflected a similar poll carried out with the
in support of their customers in Eastern Europe and China. The same statistical information enables me to estimate that this trade has been growing steadily over the last decade and may now account for 5% to 7% of the UK electronic components sales revenue. According to UK oEM customers the primary reason for this activity is to gain control over the electronic components used in the board assembly process to maintain quality standards, but it
The UK electronic components markets are on track to achieve a growth of approximately 7% in 2011, consolidating on what was a phenomenal 26% growth in 2010
This pattern however does not appear to be followed by the UK electronic components markets and GDP growth. The UK
News
same group in 2009, despite the fact that a very obvious V shaped recovery was taking place. Their past experience suggests that these industry executives should realise that the recovery almost always overshoots, declines and then normalises. The dropped tennis ball analogy is often used by economists when describing a recession: A tennis ball will always bounce back up again; its only the timing thats unknown. But in the current and very uncertain economic times others have likened the global economy to dropping a flat football; on hitting the ground it bounces back, but not much! The challenge for everybody is to pump more air into the ball so that it bounces back fully... negative. This is particularly true if visibility of customer demand in the supply network also becomes obscured. In the electronic components industry we have also had to cope with the impact of the East Japan Earthquake and Tsunami and now serious flooding in Thailand...
now run rolling 12 month forecasts based on multiple possible outcome scenarios, only firming up their plans for one or two quarters at a time based on the evolving outcome
Customer visibility cloudy but trends still Visible
Fortunately the levels of visibility in the electronic components supply network, whilst not perfect remain reasonably good and when linked to fast communication and accurate analysis of the information, provide the basis for good business planning. In 2010 the available capacity in the electronic components markets did in some areas overshoot demand as the whole industry attempted to grab some market share. This over capacity has, or is in the process of, been withdrawn and as a result lead-times for most commodity parts will return to 4-to-6 weeks (although there are some specific product categories that are likely to remain on extended lead-times). For many UK businesses, particularly those in the electronics
Many organisations
market it remains very difficult to forecast 12 months activity with any accuracy. Unfortunately, forecasting remains a critical business planning area and one against which many organisations choose to make important operating decisions. The organisations who enjoy most success are probably those who have made a very significant investment in their business planning process, fully involving their partners up and down the supply network - its rarely luck! Many organisations now run rolling 12 month forecasts based on multiple possible outcome scenarios, only firming up their plans for one or two quarters at a time based on the evolving outcome. on behalf of our members ecsn is now engaging with a wide range of organisations in the UK electronic components supply network to try and accurately forecast the outcome by quarter in 2012. This process will be complete by the end of November when ecsn
shares the information widely across the electronics industry via the media to provide some assistance in the planning process and industry bench-marking for all. Whilst not wanting to pre-judge the Consorzio ecsn members forecast outcome di attivit e servizi and assuming that there are no per Associazioni further e gruppi dimprese major natural or unforeseen economic disasters, I would be very surprised if our forecast does not reflect low single digit growth for the UK and Eire electronic components markets in 2012. The 2012 outlook for those individuals and organisations in the UK and Eire electronic markets remains bright. Todays latest and greatest new products are already being redesigned with increased functionality. Hows that for a great reason to be cheerful?
Significant drags
There are a numbers of significant drags on UK economic activity; historically low levels of activity in the housing market, lower consumer spending as debt is paid off, stubbornly high unemployment rates and the turbulence created by the Euro region currency and debt crisis, to name just a few. These drags are being reflected in lower than normal consumer confidence levels,which has now spread to industrial markets with primary indices like the Industrial Purchasing Managers Index and CBI Industry Confidence Surveys dropping below unity. These surveys whilst very useful indicators do sometimes become a self-fulfilling prophecy as they have the effect of ensuring consumers and industrialists become more
Additional information about The Electronic Components Supply Network and Afdec may be found at the following website: www.ecsn-uk.org with regular industry updates available to all on the Breaking News pages.
XI
News
Building on Fortronic success!

ollowing the successful launch of Fortronic in the INTERNATIONAL ELECTRONICS SUPPLIERS UK in 2011 a further three events are planned to take place at the Williams F1 Conference Centre near oxford. Each event includes both workshops & technical seminars and is free to attendees. The first event in 2012 is scheduled to cover lED & lighting design which will take place on Tuesday the 17th April 2012 (exact date & precise topics for this event may change slightly) at the Williams Conference Centre. The content will cover lED colour/heat selection, Thermal management, Driver electronics, optics, light measurement & planning, Street, building, signage & theatre, light shaping (diffuser) & software control & automation The second event will be on Tuesday 26th June 2012 at the Williams Conference Centre and will cover RF & Wireless to include RF & Wireless telemetering, Wireless sensor technologies, Antenna design, large low-power wireless networks, Short & longwave wireless technologies. The third event will be on Tuesday October 23rd 2012 (exact date & precise topics for this event may change slightly) at the Williams conference centre and cover Power & power management. Including Digital control, Power efficiency, Control techniques, Power modules, Power management, & Power technology innovation. All three events will follow the proven Fortronic format For further information on programme content and sponsorship packages please contact: Chris Osborn Fortronic UK Director +44 (0)7824444612 or email chris@ motiv8uk.com Further information can be found at www.fortronicuk.com
Fortronic
The Fortronic Technical Forum concept has been proven over 5 years of events in Italy and is supported by IDEA, an International association founded in 1987 with the express intent to spread good practice within the global electronic component industry. The Fortronic Technical Forums have been extended Internationally in 2010 to Turkey & Tunisia and in June 2011 the first event was held in the UK. Why Fortronic Forum 1. QUaLItY Fortronic guarantees the quality of the contents of the conferences and the organization of the whole event. 2. teCHnICaL dIreCtor An expert of the sector who coordinates the conferences and the speakers. 3. SHare WItH US A program of cooperation with the sponsors of the event to plan, promote, communicate, verify the promotion of the event. 4. edUCatIonaL A training seminar to transfer design competences to the attending technicians.
Fortronic design engineering workshops for the UK
Three more
IDEA
SUppORT Consorzio
di attivit e servizi per Associazioni e gruppi dimprese
For the last 20 years the IDEA News has been supported by the Trade Associations across the World but increasing costs have led us to offering a single sponsorship for each of our issues. The IDEA Newsletter will therefore be Sponsored in future and thisIssue with sponsorship from Bishop & Associates shows the format we are using The sponsor will have their name as a sponsor shown together with their company logo. They will also have either one two-column or two single-column adverts per issue. Just to remind you, the IDEA News is circulated to over 4.000 named individuals in over 3.000 electronics companies in 10 major countries across the World. Sponsorship costs for 2012 are: 1 issue: 1.200 (1.050 or $1.700) 2 issues: 1.100 (970 or $1.600) per issue 4 issues: 1.000 (880 or $1.400) per issue
For more information contact segreteria@ideaelectronics.com
IDEA NEwSLETTER
INTERNATIONAL DISTRIBUTION OF ELECTRONICS ASSOCIATION Editor in ChiEf: Gary Kibblewhite Editors: Adam fletcher (UK); robin Gray (UsA); silvio Baronchelli and franco Musiari (italy); Lena norder (svezia); Wolfram Ziehfuss (Germany); Amy Wang (China); PUBLishEr: silvio Baronchelli
intErnAtionAL ProMotion BY: ConsortiUM ELEttriMPEX
PUBLishEd BY: tecnoimprese scarl - Via C. flaminio, 19 - 20134 Milan - italy
PrintEd BY: servizi tipografici Carlo Colombo - rome
XIV

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News

Year XXII n 3 - 2011

INTERNATIoNAl DISTRIBUTIoN oF ElECTRoNICS ASSoCIATIoN

Down in the (Bookings) Delta

X - Forecasting 2012: reasons to be cheerful

the electronic community

XII - Building on Fortronic success! ASSOCIATIONS

Associazione Nazionale Fornitori Elettronica

International Distribution of Electronics Association

ADEC - South Africa

INTERNATIONAL ELECTRONICS SUPPLIERS

Autonomous Register of Distributors of Electronic Components

ASSODEL - Italy CEDA - China

Associazione Nazionale Fornitori Elettronica China Electronics Distributor Alliance

Electronic Components Association Australia and New Zealand

ECSN - United Kingdom ELCINA - India

Electronic Components Supply Network Electronic Industries Association of India

Consorzio di attivit e servizi per Associazioni e gruppi dimprese

Fachverband der Bauelemente Distribution

FEDELEC - Tunisia SE - Sweden

Japan Electronic Products Importers Association

NEDA - United States SpDEI - France

National Electronic Distributors Association Syndicat Professionnel de la Distribution en Electronique Industrielle

CEDA, Executive Meeting takes place in Xian, China

When no one knows

This CEDA meeting reached the following agreements:

1 All funding members are CEDA board

2 The meeting appointed Michael liu

3 During the start-up period, CEDA

About China Electronic Fair

4 The secretary general will ensure job

5 New CEDA members will be recruited

6 To develop mostly distributor

fully supported by ECIA and IDEA

CEDA has been

7 Mouser and TTI to have two separate

8 The secretary to follow up Shenzhen

9 The secretary to follow up ECIA to

10 The secretary to propose a customer

About China Outlook Consulting

11 The secretary to propose a CEDA

12 China DTAM and distribution statistical

INTERNATIONAL ELECTRONICS SUPPLIERS

Q3 2011 - the market has clearly slowed further across Europe!

the electronic community

Associazione Nazionale Fornitori Elettronica

International Distribution of Electronics Association

INTERNATIONAL ELECTRONICS SUPPLIERS

Consorzio di attivit e servizi per Associazioni e gruppi dimprese

compared with August 2010, industrial production increased by 4.3%.

ELECTRONIC COMpONENT SALES IN Q3: OVERVIEW

France are still showing a marginal billings growth

Only Nordic and

Q3 2011 TOTAL COMpONENTS TENDENTIAL INDEX BY COUNTRY (Q/QY-1)

Q3 2011 TOTAL COMpONENTS BOOKING, BILLING & BOOK:BILL RATIO Graphic T1

the electronic community

the electronic community

Associazione Nazionale Fornitori Elettronica

Associazione Nazionale Fornitori Elettronica

International Distribution of Electronics Association

International Distribution of Electronics Association

INTERNATIONAL ELECTRONICS SUPPLIERS