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European distribution market in decline
2 April 2008, News

The International Distribution of Electronics Association (IDEA) has released its European DTAM (distributor total available market) figures for the fourth quarter of 2007. According to Adam Fletcher, vice president of IDEA, DTAM declined further than the previous forecast of being a 'flat quarter': However, the book-to-bill ratio improved slightly in the quarter to 1,05:1, suggesting that the first quarter of 2008 is likely to return to growth.

"Q1 has historically been the leading growth quarter in Europe, however global economic forecasts suggest that overall economic activity is likely to decline, which may impact electronic component markets and restrict growth in 2008", Fletcher commented.

Total European distribution bookings (net sales orders entered) in Q4 2007 increased by 2,1% when compared to Q3 2007 but declined by 4,8% when compared to the same period in 2006. Sector specifically, compared to the previous quarter, bookings for semiconductors declined by 0,5%, increased by 3,8% for passives and increased by 5,8% for electro-mechanical and other components.

Total distribution billings (net sales invoiced less credits) in Q4 2007 declined by 5,2% when compared to Q3 2007 and declined by 7% when compared to the same period in 2006. Sector specific billings changes in Q4 2007 compared to the previous quarter were: semiconductors declined by 6%; passives declined by 4,7%; and electro-mechanical and other components declined by 2,9%.

For the 2007 year, semiconductor billings declined by 5,8%, with passives declining by 2,4%. IDEA believes that much of this decline was the result of continued average selling price (ASP) erosion whilst the number of units shipped remained stable. Electro-mechanical component billings increased by 3% over the same period.

"The ASP erosion in the semiconductor and passive component markets is mainly the result of intense competition between manufacturers who are attempting to maintain their market share in a declining market", said Adam Fletcher. "Interestingly, pricing in the electro-mechanical market is stable or increasing primarily due to the rising cost of raw materials, particularly precious metals."

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