Press Release Q2 2005

European Semiconductor Distribution Market (DMASS) declines in second quarter  

European semiconductor distribution remains flat to slightly negative. Compared to record Q2/2004, the second quarter 2005 declined by 6,6%. Eastern Europe market shows positive signs. 

London, August 10, 2005 - The first half of 2005 showed signs of weakness for the European semiconductor distribution. Against a record first half in 2004, which was mainly driven by inventory increase in the industry, 2005 seemed to have returned to a normal cyclicality, in which the usually weaker 2^nd quarter declined by 6,59% over record Q2/2004, according to DMASS. Semiconductor distribution sales, as reported by the industry body, from April to June 2005, closed at 1,153 Billion Euro. The first half of 2005 resulted in 2,34 Billion Euro semiconductor components sales by DMASS members, which is 4,5% lower than the first half of 2004.

DMASS Chairman Gary Nevison stated: "The signs of slowdown that we experienced in the first quarter, continued in the latest reporting period. 2005 seems to become a transition year, driven by a slow market and some uncertainties, which the EU-Directives RoHS and WEEE impose on the industry. But we all are long enough in the industry to understand that components are a cyclical business." 

Regionally, the countries with a positive development were Czech Republic (14,2%), Russia (13,8%), Israel (5,5%) and Austria (1,8%). All of the Western European countries declined between 3,5% (Italy) and 25,3% (Sweden). Germany (342 Million Euro) and Italy (166 Million Euro) managed to maintain their positions as the leading markets, followed by UK (138 Million Euro) and France (116 Million Euro). With combined revenues of ~100 Million Euro each, both Scandinavia and Eastern Europe represent increasingly strong sales regions for distribution.

Gary Nevison: "The regional picture shows the usual signs of seasonal swings but has in total not really changed a lot for several quarters. Germany, Italy, UK and France continue to represent two thirds of the European market. The only significant ongoing trend is that Eastern Europe starts to challenge Scandinavia as the next largest market region after the big four. Some Western European markets slowly but steadily turn into design-only regions."

Product-wise, the first half of 2005 is not backwards comparable due to a reclassification of some major product areas - Analog, MOS Micro and Other Logic have been affected by those changes quite dramatically. Unaffected by changes, LEDs and DSPs could maintain a healthy growth, with cumulative 6-month growth rates of 17% and 7,4%. Power MOSFETs did slightly better year-over-year and also sequentially. All other product areas were either flat, in decline or affected by changes and therefore not comparable.

Gary Nevison: "The total components market in Europe will stay flat in 2005, and distribution is no exception here. However, we are convinced that breadth of service & support as well as the broad presence will help distribution to further improve its position as the predominant source of semiconductor technology for many, if not most of the European customers."

About DMASS

DMASS (Distributors' and Manufacturers' Association of Semiconductor Specialists), a European non-profit organisation, is the only industry body that collates detailed semiconductor distribution market data on a quarterly basis by country and product groups such as microcontrollers, flash memories, analog components and many more. DMASS figures are collected and consolidated by Data Dynamics Ltd.

DMASS, founded in 1989, provides its members with a reliable statistical tool to evaluate their relative mass-market performance. The organisation currently consists of 32 active members and represents between 70% and 80% of the total European distribution market, depending on the regions. To continuously increase its European market coverage, DMASS welcomes new membership applications from distributors and semiconductor manufacturers.