Last year was a good year for distributors that specialise in semiconductors or derive a large percentage of their overall revenue from chip sales as total global semiconductor revenue increased 21.6 per cent in 2017, according to World Semiconductor Trade Statistics (WSTS).
Distributors are confident semiconductor demand will continue to be robust in 2018, although some acknowledge 20+ per cent sales growth in 2017 was an anomaly and driven in part by higher prices for memory ICs, which resulted in 60 per cent sales growth for DRAM, flash and other memory ICs
However, many distributors say that high single-digit growth is possible because of strong end customer demand. They also note that memory ICs weren’t the only semiconductors that posted healthy growth. For instance, in 2017 logic revenue increased 11.7 per cent; analog, 10.9 per cent; sensors, 16.2 per cent and discretes, 11.5 per cent, according to WSTS.
Similar growth is possible again in 2018 because of healthy overall global economic growth. Global GDP is expected to rise 3.9 per cent in 2018 while US GDP will be about 2.7 per cent, according to the forecast of the International Monetary Fund (IMF).
As a result, distributors are optimistic that demand for components, including semiconductors, will remain healthy in 2018. Semiconductor distributors will try to grow their chip sales not just by providing customers with the integrated circuits and discretes and the value-added and supply chain services for electronic systems already in production.
They will also assist customers in new product introduction efforts offering design support and expertise to midsize and small OEMs. In fact, many OEMs look to semiconductor distributors for design help, technical expertise and for recommendations concerning which chips and other components should be used in new designs.
“This is the core of what we do and is an exciting benefit of our specialty approach,” said David Beck, vice president of marketing for Symmetry Electronics. Symmetry is a specialised semiconductor company focused on wireless, IoT, and video technologies. “Wireless itself is more of a horizontal than a vertical, so we end up supporting a wide variety of applications in many different industries,” he said.
Wanted: Early NPI involvement
Symmetry gets involved very early in new product development efforts to help customers with their “system architecture decisions,” said Beck. The distributor provides in-depth technical support throughout the design cycle. For instance, OEM customers often ask Symmetry for recommendations of the latest available technologies to meet their requirements, according to Beck.
“It’s key for us that customers can receive support early on, and the services we provide in early-stage planning distinguishes us among semiconductor distributors,” he said. Chipmakers are progressively recognising Symmetry’s technical capabilities and are “increasing their relationship with us to better service an expanding number of their customers,” according to Beck.
Because Symmetry is specialised, it has close relationships with its suppliers that are “at the forefront of technology,” he said. Many of its suppliers offer “synergistic products” to each other. “This allows us to develop a deeper technical knowledge of our line card through training provided by our suppliers, and we share that knowledge with our customers,” said Beck.
He said the investment in time to solve a technical problem for one customer often benefits multiple customers developing applications with the same technology. “This specialised advantage enables our application engineers to provide support for our customers at no cost,” said Beck.
Symmetry’s support team consists of field sales engineers, a technical field sales team, and a centralised applications engineering team for detailed technical assistance. “With this approach to support, we can dig deep into customers’ designs through constant phone, email and video chat interactions along with local engineering support for onsite meetings” said Beck.
In some ways, Symmetry competes with larger broadline distributors. Just as large broad line distributors do, Symmetry provides supply chain and value-added services. “Symmetry has a full range of services for business of all sizes,” said Beck. Many of Symmetry’s customers are “mid-market companies and we scale our services to the needs of each customer,” he said.
Symmetry operates its worldwide distribution logistics with a single global system, that enable the distributor to track and support customers throughout their supply chain, according to Beck.
With many customers, Symmetry provides bonded and pipeline inventory, and proximity warehousing for customers in China and Mexico, he said. “We also provide reconfiguration and programming services, material planning for our customers, and development kits and bundles on our website,” said Beck.
Field support available
As a specialized semiconductor distributor with extensive technical knowledge, Symmetry can provide “highly technical field support for our customers, a service that distinguishes us from the broad line distributors.”
Symmetry’s intention with customers is to focus on the “wireless and/or video part of their system that we can offer the most support for,” said Beck. “Rather than trying to capture an entire bill of materials (BOM) list, we help customers design some of the key support-intensive devices into their products and offer a few of the most synergistic technologies around these devices,” he said.
Another distributor that focuses on new product development and is seeing an increase in semiconductor sales is Mouser Electronics, based in Mansfield, Texas. Mouser is not a semiconductor specialist distributor, yet about 46 per cent of its business is for semiconductors.
“Semiconductors have gained about 10 per cent internal share of Mouser’s business and continues outpacing most of the other product categories,” said Mike Scott, vice president, product management for Mouser.
Don’t forget legacy parts
He said Mouser’s goal is to offer customers every component they need for their new designs, including legacy products. While Mouser focuses on manufacturers’ new products, legacy products must also be available for immediate shipment or customers’ “designs can stall waiting for the full bill of materials to arrive,” said Scott. It’s also critical to have the development tools and test equipment available for OEM customers, he said.
Mouser’s semiconductor business involves the “entire semiconductor ecosystem,” including integrated circuits and discretes, development tools, and modules, said Scott. For example, if a customer wants to add wireless capabilities to a design but isn’t sure that wireless capability of the product will be successful enough in the marketplace to warrant the hiring of an engineer who understands antenna and transmission line theory. The customer can buy a pre-FCC certified wireless module that Mouser has in stock for the design so the level of interest in the wireless capability of the product can be determined.
If the product is a success, the OEM may want to hire an RF/wireless engineer to take cost out of their system prior to high volume production, said Scott.
A large part of Mouser’s mission with semiconductors and other components is to get manufacturers’ new products design into systems and to reach new customers for chipmakers. Manufacturers have a limited reach to potential new customers with a new product because there is not yet volume demand for it, so the parts may not be stocked by large volume distributors until a customer base materialises,
Some designers will not consider using a new product unless “they see we have stock on our shelves. That means a manufacturer could miss one or more design cycles simply because the product is not immediately available for purchase from Mouser,” said Scott.
Besides having new products, Mouser also provides customers with technical information so that OEMs can evaluate new semiconductors. Such information is conveyed via distributor websites, new product newsletters or manufacturers.
Mouser has a technical support team to provide necessary information about new products for engineers considering using the components in the design. Information is critical because design cycles are shrinking and there is more pressure to develop and get products the market quickly.
“Mouser spends a tremendous amount of effort gathering as much technical information and resources designers may need to design with the newest products as well as millions of legacy products,” said Scott. This includes data, development tools, and how-to videos. Mouser also has online tools customers can use to validate that their device selections have positive lifecycles and available stock, said Scott.