Press Release Q3 2005

European Semiconductor Distribution Market (DMASS) stays weak  

In the 3^rd quarter, the European semiconductor distribution market showed continued signs of weakness. Compared to Q3/2004, the quarter ending September 2005 declined by 7,8%.

London, November 23, 2005 - 2005 appears to be a quiet if not weak year for the European semiconductor distribution. According to DMASS, the third quarter of 2005 declined by 7,8% versus the comparable quarter of 2004. Semiconductor distribution sales from July to September, as reported by the industry body, were 1,093 Billion Euro. The first nine months of 2005 resulted in 3,44 Billion Euro semiconductor components sales by DMASS members, which is 5,4% lower than the first three quarters of 2004. However, the demise of Eurodis during the summer makes it difficult to compare numbers, since Eurodis' submission of numbers is missing in Q3.

Georg Steinberger, newly appointed Chairman of DMASS, stated: "The signs of slowdown continued in this reporting period. 2005 was driven by uncertainties and weak demand and certainly will be recorded as a transition year. It was interesting to see that the decline encompassed all regions and product areas, with very few exceptions. However, the quarter is not directly comparable since Eurodis, one of our members, did not report anymore, due to known reasons. The precise impact is difficult to quantify." 

Regionally, the only countries remaining with a positive development were Hungary, (10%), Czech Republic (7%) and Russia (6%). While Spain (-1,4%), Germany (-2,1%), Israel (-2,6%) and Italy (-6,1%) fared better than average, other major countries showed double-digit declines: France (-11,8%), UK (-12,2%), Switzerland (-10,7%) and Sweden (-16,7%). Germany remained the major single market (343 Million Euro), followed by the UK (138 Million Euro), Italy (131 Million Euro) and France (105 Million Euro). As in previous quarters, with combined revenues of ~100 Million Euro each, both Scandinavia and Eastern Europe represent increasingly strong sales regions for distribution.

Georg Steinberger: "Considering the summer impact, Spain and Italy remained surprisingly strong during Q3. And Germany, representing almost 30% of the European total, came out relatively healthy as well. All other major countries mentioned above have been very weak, seasonally as well as structurally. It is still to be seen if business migration to Eastern Europe or Asia has bottomed out or will continue."

Of the major categories, MOS Logic (-1,4%), MOS Micro (-1,8%) and Opto (-2,8%) remained relatively well, while Analog (-8,6%), Discrete (-9,6%), Programmable Logic (-13,4%) and Memories (-19,1%) failed expectations. The detailed product groups can only be looked at with caution due to reporting changes and reclassifications of major product areas at the beginning of 2005. However, it is safe to say that at least LEDs and DSPs as two clean and also promising groups showed continuous signs of growth, with 25% respectively 5%.

Georg Steinberger: "The total components market in Europe will stay flat in 2005, and distribution is no exception here. The cyclicality of the business, however, suggests that in 2006 the market can bounce back nicely. Regardless of this, distribution continues to increase its role for the market place. Breadth of service & support as well as the broad presence will strengthen its position as the predominant source of semiconductor technology for many 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 31 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.