Electronics Distributors

2020
Platinum Sponsor
 2020 Platinum Sponsor

2020

2019 Top 50 Electronics Distributors List

TABLE OF CONTENTS

1. Avnet ............................................................................................. 4 7. Fusion Worldwide Q&A ................................................................ 23

2. Mouser Q & A ................................................................................. 7 8. Article: Tracking COVID-19 Supply Chain Disruptions .............. 25
3. Article: Top 50 Distributors: From Back-to-Normal to 9. Corestaff ....................................................................................... 27
the New Normal............................................................................. 9
10. Article: TTI Takes Its Road Shows into the
4. Newark .......................................................................................... 10 Virtual Space............................................................................... 29
5. Smith Q & A ................................................................................... 15 11. Digi-Key Q&A .............................................................................. 31
6. NewPower Worldwide Q&A ......................................................... 19 12. 2020 Top 50 Electronics Distributors List ................................ 35

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Avnet: Distribution
that reaches further
We serve 2 million customers
– all unique but with three
common needs:
Speed to market. You’ll need
this essential ingredient for
capitalizing on a great product
idea in an ultra-heated
environment.
Cost-efficiency. It’s expensive to
move from product design to
manufacturing to global scale,
and no one can afford to waste
money in the process.
Simplicity. Mastering all the
technical complexity of today’s
increasingly sophisticated
products, including regulations,
standards and IoT integration
requirements, is bigger than one
team or person.
Who can manage all this with
you? Our 15,000+ employees in
collaboration with our 1,400
technology suppliers.
Whatever your area of
innovation, you need a partner
Headquarters: Phoenix, Arizona
Founded: 1921
Locations: 125 globally
Web: www.avnet.com
Phone: 480-643-2000
Twitter: @Avnet
Facebook: @AvnetInc
Linkedin: @Avnet
who can supply you with all the
components you need at every
stage of the product lifecycle and
in every global market. And you
also need an ecosystem to
support you through design,
specification, supply chain,
distribution and logistics so you
can meet your speed, efficiency
and simplicity demands.
Design – Rather than spend time
and money hiring hard-to-find
experts, work with us. You’ll gain
our expertise in hardware,
embedded software/firmware,
IoT, application and cloud
computing development as well
as a suite of tools to automate
difficult decisions.
Component procurement –
Order from our 5 million parts
with one click. We’ve built
relationships and accumulated
expertise across markets and
geographies to help you identify
long-life technologies that will
shorten lead times and reduce
inventory.
Supply chain –Avnet’s supply chain
engagements include a review of
your end-to-end materials flow
and customized models to
address your specific needs. We
also manage pipelines, production,
manufacturing, inventory flow,
shipping and much more.
Distribution/logistics – You need
to get your products in the right
place at the right time in the right
volume and while managing
demand, technical certifications,
supply chain efficiency, shipping
costs, technical issues and more.
We customize distribution flows
and operate multiple distribution
centers in each region.
The new form of distribution is
less about fulfillment and more
about what’s valuable to you.
Avnet’s robust ecosystem provides
global technology solutions with
connected regional support. It’s
Distribution. It’s what we do.
how we help you satisfy your
needs for speed, efficiency and
clarity amid complexity. Contact
your Avnet representative today When it comes to getting a product to your customers,
to find out how we can help you.
it can feel like a pretty big world out there. But with
comprehensive support along every step of your
journey — from design decisions to supply chain to
global logistics — Avnet helps you make it a little smaller.
avnet.com
 Interview with Mouser’s
Mark Burr-Lonnon
Senior Vice President of Global Service
& EMEA and APAC Business
1. Tell us the business outlook for the
remainder of 2020 from Mouser’s perspective?
It’s too soon to tell what the full economic impact of the global
pandemic will be on manufacturing. But even with the sudden
economic downturn, the use of electronic devices and systems
seems to be strong worldwide. We are still shipping hundreds of
thousands of components weekly. Once market stability returns,
the biggest challenge will be keeping up with demand. Product
Mouser specializes in the newest products and we stock the
widest breadth of inventory in the world. We are seeing new
sensor technologies from our manufacturers, as well as the
latest in power management and, of course, advancements in
microprocessors. Automotive, factory and home automation
also will continue to be emerging markets as more technologies
are introduced to make buildings, homes and vehicles smarter
and safer. We will also see an increased need for components for
wireless-, mobile- and telecommunications-related devices.
5. What is Mouser doing to prepare for future growth?
We are just finishing up a major expansion at our 1 million square-
foot global headquarters and distribution center in Texas, USA,
where we added a new Customer Service Center and additional
state-of-the-art automation. Investing in automation systems

Your authorized
allows us to expand capacity and efficiency in our warehouse.
delivery lead times and shortages on certain components could
We are excited to have the largest installation of Vertical Lift
become an issue again as demand ramps up. We saw this with
Modules (VLMs) in North America, a testament to our belief in
MLCCs last year.
working smarter.

source for
2. What advice would you give to purchasing professionals
VLMs — essentially giant vertical filing cabinets — can store
for the remainder of 2020?
up to 120,000 parts, helping our distribution teams greatly
There’s never been a more important time to buy from an
expedite orders for our 630,000 customers worldwide. We

the largest
authorized distributor. Purchasing professionals will discover
continue to invest in inventory with the widest selection of stock
many benefits from doing business with Mouser, like the
in the industry (more than one million different parts from over
efficiencies, security and convenience, for starters. We are a Top
800 manufacturers).
10 global distributor and have everything for buyers’ BOMs.

selection of TI
Mouser is strongly poised for the digital future with our industry-
Whether customers are buying online or through one of
leading website, available in 63 country subdomains, 20 languages
our trained customer service representatives, we have the
and 27 currencies. Over half of our business today comes via
professionals and procedures in place to ensure an effective and
the internet, so we continue to expand Mouser.com with search
efficient supply chain, free of counterfeit or gray market products.
enhancements, buying tools and technical resources for buyers
Some sources are very limited in their component offerings. With
and engineers. Ordering is faster and easier than ever.
Mouser, customers can source their entire bill of materials from
6. How are you expanding your global footprint to
us; it’s easy, one-stop buying.
serve customers?
We strive every day to achieve a strong balance of speed and
In 2019, we opened offices in Brazil, Philippines, Vietnam and
efficiency to consistently provide our customers with best-in-
Poland. We now have 27 locations worldwide, positioned to
class service and a full suite of online buying tools, like our new
provide local language, currency and same-time-zone support.
Price & Availability Assistant.
Mouser believes in being glocal — that’s global with a local
3. There is a large amount of counterfeit components floating
presence — to offer our customers best-in-class service. Our focus
in the market. How do you ensure that you always provide
is on providing our customers service excellence. We strive to do
your customers with genuine components?
this every day.
Mouser received accreditation to AS6496, making us the
industry’s first authorized distributor to be accredited with
the aerospace industry’s high standard for anti-counterfeit
measures in authorized electronic component distribution. The
AS6496 aerospace standard sets requirements for the avoidance,
detection, mitigation and disposition of counterfeit products in
the authorized distribution supply chain.
4. How is the Implementation of IoT helping to drive
the demand?
The digital revolution is accelerating, and the expansion of
IoT will continue to fuel the global need across all industries for
semiconductors and electronic components. With 5G, artificial
intelligence, robotics, industrial automation, transportation — all
will be propelling our industry for the next decade and beyond.

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 Power Supplies SOURCE TODAY TOP 50 ELECTRONICS DISTRIBUTORS
2020
Connection Systems BRUCE RAYNER , Contributor
Switches

Relays

Capacitors
Circuit Protection
Optoelectronics
From Back-to-Normal
Resistors
Sensors
to the New Normal
2019 was an okay year. 2020 is anyone’s guess.
Inductors
Discrete Semiconductors

LED Lighting
Thermal Management Twenty nineteen was a pretty good year for the “The first half of the year was really good; we had growth in all
electronics distribution sector, but no match for the stellar regions and strong margins. For online, catalog companies, it is
performance of 2018. always a good time when inventory is hard to find,” said Chris
Breslin, CEO of Farnell, a European distributor that operates
“Looking back, 2019 was more of a typical cycle,” said Phil as Newark Electronics in the U.S., and is ranked eighth on this

The Number to Know for Industry 4.0

Gallagher, global president of Electronic Components for year’s Top 50 list. “But the second half of the year was a real
Avnet, the second-ranked distributor on the SourceToday 2020 challenge; we gave back everything we gained in the first half.”
Top 50 Distributor list. “We saw a decline in Asia in March, then

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Europe, and followed by the Americas. In November 2019, we
saw the market coming back, and we were pretty optimistic
about 2020.”
Other industry leaders had similar journeys. “Q1 of 2019 was the
strongest booking quarter in the history of TTI Americas,” said
Don Akery, president of TTI Americas, the top IP&E distributor
in the industry, ranked fourth on the Top 50 list. “First half, we
were up 9%, and then Q3 and Q4 each got smaller.” Overall,
TTI grew revenue by 2% in 2019, following exceptional growth
in 2018 of 22% and 12% in 2017. “To add 2% on top of that, we
consider a pretty good year,” Akery said.
“2019 was a good year for us, we were right where we
expected to be,” said Dave Doherty, president and COO, Digi-
Key Electronics, ranked fifth on the list. “Revenue contracted
somewhat from 2018, but we didn’t lose sleep over it because
we knew it was attributed to the strength of 2018.”
“2019 was a year when the supply chain got back to normal,”
said Jeff Newell, senior vice president of products at Mouser
Electronics, ranked seventh on the Top 50. “All of the products
that were hard to get in 2018 became easier to get in 2019,
which drove the downturn, which was really an inventory
cycle correction.”
Whether you call the second half of 2019 a downturn or an
inventory correction, the net effect for the top line of the Top
50 distributors in 2019 was a decline of $2.4 billion, or 3.2%,
compared to 2018. For Arrow Electronics and Avnet—the top
two distributors on the list—the combined year-on-year decline
totaled $1.7 billion. These two companies represent 66% of
the revenue for the Top 50. Similarly, the top 10 distributors
accounted for 92% of the Top 50 revenue and collectively
reported a decline of $2.5 billion in 2019 compared to 2018.
There were a few exceptions to the rule. Fourth-ranked TTI
posted a $30 million gain in revenue in 2019 over 2018, sixth-
ranked Allied and eleventh-ranked Fusion Worldwide both
posted an $11 million improvement over 2018, and 10th-ranked
Rutronik achieved a $10 million year-on-year increase. Other
notables include 13th-ranked Sager Electronics ($12 million
increase), 14th-ranked NewPower Worldwide (a whopping
$66.5 million increase) and 15th-ranked Master Electronics
($16 million).
(Continued on page 13) +

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SOURCE TODAY TOP 50 ELECTRONICS DISTRIBUTORS
A number of distributors made investments in 2019 in
anticipation of future growth. Digi-Key started construction on
a new 2.2 million square foot warehouse at its headquarters
in Thief River Falls, Minn. The building is up, two-thirds of
the equipment is in place and the rest of the equipment will
be installed by October 2020. The new building will be fully
operational in June 2021. Similarly, Farnell and Mouser both
invested in expanding warehouse space in 2019.
As 2019 was winding down, the outlook for 2020 looked
promising. Of course, there were economic challenges, but
also signs of an uptick in business. The risks of an expanding
trade war between the U.S. and China were receding with the
signing of the Phase 1 agreement on Jan. 15 that set a course for
reducing tariffs. The Dow Jones Index and other stock indices
were setting records. The Institute for Supply Management
(ISM) Purchasing Managers Index (PMI) was above 50 for the
first time in months. And electronics distributors were gearing
up for a return to growth.
Then came the COVID-19 pandemic.
Welcome to the New Normal
For the first month of 2020, COVID-19 was primarily a China
problem with minimal direct impact on the global electronics
industry. Then in late January, the Chinese government locked
down Wuhan and other cities in Hubei province, which caused
some disruption to global supply chains. At midnight on April 7,
the Chinese government opened Wuhan, and factories began
coming back online. By then, Covid-19 had spread around the
globe. On March 11, the World Health Organization declared
Covid-19 a pandemic, marking the day the world changed.
“2020 was off to a very good start,” recalls Digi-Key’s Doherty.
The company was planning for strong growth, and he
anticipated a revenue crossover point compared to 2019 by the
end of April. “We hit our crossover before planned, and it has
actually accelerated. One reason that contributed to the uptick
was Digi-Key is heavily involved in medical, healthcare and
telecommunications, which are all seeing growth opportunities
as a consequence of the pandemic, Doherty said.
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2020
Other distributors tell similar stories about the impact of
Covid-19 on their business. “Asia started to turn down in
February, but Europe and the Americas remained strong,” said
Farnell’s Breslin. Forty-six percent of the company’s business is
in Europe, about 15% in Asia and 40% in North America.
“All the metrics were up—web visits, orders—and looking
strong until the middle of March, when we saw a decline,”
Breslin said. “Web visits were down 18%, and conversions were
down a bit. At the same time, Asia started to pick back up.”
Farnell’s China business came back to pre-Covid-19 levels in
mid-April. Likewise, Italy, which was hit hard by Covid-19, was
down 40%, but by mid-April had bounced back up to where it
was before the country went into lockdown. “Green shoots are
coming back up,” said Breslin.
At the same time, Farnell is in the middle of an aggressive
investment period in its e-commerce business, which is still
moving forward. Parent company Avnet continues to invest in
improving web speed, interfaces and user experience, and in
new product introductions and maintaining inventory.
A number of distributors are expecting a rebound in the fall.
However, there are many unknowns about Covid-19 that
could impact the economy and the electronics sector, both
negatively and positively. According to many distributors, the
best strategy is to stay nimble. As Farnell’s Breslin aptly put it:
“Q3 will be a fluid environment.”
The pundits agree. The big question for distributors is, “How
strong is your order book?” said Dale Ford, chief analyst at the
Electronic Components Industry Association. Gauging the risk
of customers canceling orders is a challenge given the lack of
visibility and uncertainty about short-term market trends.
Distributors were reporting reasonably strong levels of
confidence in their order books at the end of April, according
to Ford. But that could change. “They may not be seeing
cancellations now, but I’d say they are on thin ice,” Ford said.
Long-time industry analyst Walt Custer at Custer Consulting
agrees. “I don’t think we’ve hit bottom yet. It’s a worrisome
short- and medium-term outlook,” he said in late April.
(Continued on page 17) +
13
 with Marc Barnhill
Chief Trading Officer of Smith
What are some of the highs and lows Smith
experienced during 2019?
Smith surpassed a billion dollars in sales for the third
Mitigating Supply consecutive year and celebrated 35 years in
business in 2019. Growth in our strategic
Chain Disruptions partnerships with hyperscale data centers and cloud
service providers brought many new opportunities.
Since 1984 A focus on IT asset disposition business allowed us
to develop new partnerships and expand our service
The continually evolving COVID-19 crisis
offerings to existing customers. Smith also completed
is impacting manufacturers around the world.
an expansion of our European distribution center
Smith is prepared to help you navigate
these challenges. and continued our investments in quality and
anticounterfeit testing equipment. Supply chain
service programs such as VMI, inventory hubbing,
and PPV cost savings also saw growth in 2019.
Trade wars and geopolitical tensions presented
some complexities for shipping and logistics that
Smith helped our customers navigate.
What were some inventory/pricing trends in 2019?
Leading Primed to The MLCC shortage of 2018 continued into the first
Decades
Distribution Navigate half of 2019, causing demand in the open market
of Experience
Partner Disruptions to remain high until midyear. The SSD market was
strong across all manufacturers and types throughout
Smith is the world’s leading Founded in 1984, we’ve Mitigating supply chain disruptions 2019. CPUs were in shortage throughout the year
independent distributor of helped our partners through all during troubling times is one of as demand from cloud computing and hyperscale
semiconductors and electronic the supply disruptions of the Smith’s greatest strengths. data centers increased, followed by greater demand
components. last 36 years. for desktop and laptop manufacturing. The DRAM
market presented some challenges throughout the
We help customers keep moving — no matter the supply chain challenges.
year due to an oversupply of inventory.
Fully Mobilized Our industry has faced many different uncertainties
Our 475+ employees are mobilized around the world to keep providing uninterrupted, optimal support. over the past couple of years. How has Smith been
able to adapt to all market conditions and provide
Flexible Services
customers with unwavering support?
From shortage sourcing to inventory management programs, our full range of services is available.
Smith’s ability to innovate and our commitment to
Multichannel Sourcing Capabilities our customers allow us to navigate the electronic
Franchised, direct, and open-market sourcing channels help us find the components you need. component supply chain with flexibility and
foresight. Smith’s deep understanding of the
Reliable Quality electronic component market comes from 36 years
Our unmatched in-house testing and QC processes deliver the quality you trust.
of experience. Smith’s market expertise, paired with
our financial stability, commitment to quality, and
operational expertise, allows us to quickly adapt to
Intelligent Distribution changes in market conditions.
TM
www.smithweb.com
How has Smith been able to position itself as a
commodity leader across different geographical
regions?
The strategic locations of Smith’s sales offices and
shipping and logistics hubs give Smith a large
global footprint and a strong presence in all major
markets. Smith’s long-term partnerships with
customers and suppliers in all geographic regions
also position us as a commodity leader. Smith has
deep relationships across all regions with all the
major OEMs and CEMs that buy semiconductor
products. Smith continually invests in IT
infrastructure and utilizes a proprietary trading
and operations platform that provides shared
visibility into global and local market conditions.
Smith captures valuable insight into pricing trends
across commodities by analyzing historic sales
activity using data science and predictive analytics.
How is the COVID-19 situation affecting the
market outlook for the second half of 2020?
The COVID-19 situation will continue to drive
market conditions through the end of the year.
Although there are many market uncertainties,
changes in forecasts should account for some of
the increases we saw in demand for the passives
being used for medical builds. SSD demand will
likely continue to stay active in the second quarter
as need increases for the cloud services that
support teleworking. Growth in the hyperscale
data center market is likely to continue overall,
with demand for memory increasing into the
second half of the year. A resurgence in
automotive business is expected as manufacturing
commences, and an uptick in the smartphone
market is predicted as demand for 5G
infrastructure increases as cities begin to reopen.
“Smith’s ability to innovate and
our commitment to our customers
allow us to navigate the
electronic component supply chain
with flexibility and foresight.”
 SOURCE TODAY TOP 50 ELECTRONICS DISTRIBUTORS
2020

Reading the Tea Leaves
The uncertainty is evident in the latest global manufacturing
purchasing manager indices (PMIs). The IHS Markit U.S.
manufacturing PMI saw a sharp downturn in April to 36.9, from
48.5 in March (see figure). Similarly, the ISM U.S. manufacturing
PMI released on May 1, dropped from 49.1 in March to 41.5 in
April. Europe’s manufacturing PMI fell to 33.6 in April from 44.5
in March. Even China, which started opening factories in April,
reported a slight decline in its manufacturing PMI from 50.5 in
March to 50.1 in April.
“My sense is that market demand will drop further before
it picks back up again,” Custer said. “It’s going to get worse
before it gets better.”
The continued downward slide in purchasing manager
sentiment in April reported by ISM supports that view. The
ratio of negative to positive comments averaged three-to-one
regarding the near-term outlook, with opinion impacted by the
COVID-19 pandemic and the collapse of the oil market. A few
downward trending indices from the April report tell the story:
• Inventories Index was 49.7% in April, up 2.8% from March.
• Prices Index registered 35.3%, down 2.1% from March.
• New Export Orders Index was 35.3% in April, down
11.3% from March.
• Imports Index was 42.7% in April, up just 0.6% from March.
“Common expectations continue to point to a deep and
extended economic crisis as GDP reports reveal the painful
impact of this pandemic on major economies around the
world,” according to the ECIA report in early May. However,
while April surveys of ECIA members indicated a generally
worsening environment, the early May survey data was
mixed. This is likely due to the trend to reopen businesses.
In the May 5 survey, the ECIA reports there was a slight
increase in concern regarding end market demand but a
notable improvement in the health in the supply chain with
improvement at every stage except raw materials supply.
(Continued on page 21) +

U.S. Manufacturing PMI Plummets in April

Source: IHS Markit

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 Empowering Supply Chain www.newpowerww.com
Put NewPower Worldwide’s industry expertise and strategic partnerships to work for you! Our 603-718-8189
Carleton Dufoe Jeffrey Hong Matthew Fonstein
propriety trading platform – SCOUT – synthesizes data globally from MFGs, OEMs, and Authorized
Distributors into a single pain of glass, allowing our team to make data-driven decisions with
unprecedented precision. The SCOUT system ensures efficiency and accountability by delivering Q&A with Carleton Dufoe CEO
traceable, quality product that may otherwise not be available to the Open Market.
1. What do you see as opportunities for growth in your business 4. How will NewPower navigate the challenges of 2020 delivering
NewPower Worldwide is the fastest growing independent distributor in the global market, servicing in 2020? measurable value?
production and repair needs of the world’s top OEMs and EMS providers. Since our founding in
NewPower Worldwide (“NewPower”) has grown from zero revenue in 2014 This question speaks to the core of NewPower and how we have quickly
2014, our focus has been on investing in technology to change the independent landscape by to over 318M USD in 2019. This is impressive growth for any company, but differentiated ourselves from others in the industry. We treasure the
helping to deliver transparent and collaborative solutions to our customers. Experience the particularly strong when compared to peers in the electronics distribution relationships we have built within our customer and supplier bases and work
NewPower difference today! industry. We have a diverse list of strategic customers that have taken the diligently to maintain them. Partnerships and relationships are the keys to
time to audit and validate our internal processes and procedures. Coupled success. And whether the shortage environment of the past two years
with an industry leading team of employees, NewPower is well positioned to persists, or becomes a cost savings-driven market, NewPower has the
continue its strong growth in 2020. relationships and partnerships it needs to adapt. NewPower has dedicated
~ $100,000,000 Committed Credit Facility ~ sales and purchasing teams across the globe who keep their finger on the
2. What will drive demand into 2020 and beyond? pulse of the market, constantly synched through our proprietary trading
Products We Sell Inventory Management Services platform, SCOUT. We have product managers who are focused on their
• CPUs • Excess and Surplus The global deployment of 5G, WLAN, IoT, and Artificial Intelligence (AI) will specific market segments. In these ways, NewPower is “Empowering Supply
• GPUs • Consignment continue to drive demand in 2020. The Automotive, Cloud & Data Centers, Chain”.
• Revenue Share Networking and IoT sectors will also continue to grow. Manufacturers have
• Semiconductors - Active & Passive
been making investments in new capacity, but supply constraints from 5. Covid-19 impact for second half of 2020?
• Chipsets • Entire Lot Purchases
Covid-19 will continue. NewPower’s current services and expertise has never
• Memory • Last Time Buy been in stronger demand. NewPower is constantly adapting to market conditions. As a young company,
• Storage HDD-SSD • Global Strategic Hubbing we are adept at identifying and responding to our customers’ needs. By
• Computer Products and Peripherals • Real-Time Inventory Management 3. Market conditions for 2020 collaborating with customers and suppliers, NewPower maintains a shared
knowledge base which generates value for ourselves and our partners.
At the beginning of 2020, overall demand in many key segments of Cloud, NewPower has multiple warehouses across the globe enabling us to respond
Procurement Services
HPC, PC, Medical Device, Aerospace and Defense continued to show strong rapidly to changes in the market (including Covid-19, tariffs, and trade
• Shortages / Obsolete / Hard to Find / EOL (End of life) demand trends. However, Covid-19 became a tremendous disruptor agreements). Volatility is relative, and while it produces challenges, it also
• Positive PPV / Cost Saving Opportunities seemingly overnight in mid-March and caused demand for consumer produces opportunities.
• BOM Evaluations / AVL Alternative Solutions electronics, automotive, hospitality and “non-essential” products to come to a
• Market Analysis by Commodity and Vertical grinding halt while cloud, networking, AI, PC and security products and
services experienced an explosion in demand. Moreover, travel restrictions,
factory closures, logistics constraints and safety/PPE shortages caused major
supply chain disruptions. Faced with these unprecedented circumstances,
there are many competing opinions about what 2H20 may bring and possibly
cause overly conservative or overly aggressive buying decisions resulting in
more pronounced shortages or excess. In these uncertain times, customers
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SOURCE TODAY TOP 50 ELECTRONICS DISTRIBUTORS
Consumer electronics spending took a hit in the first quarter
of 2020 as households adapted to quarantining, working
from home and a spike in unemployment. For example,
sales of desktops, notebooks and workstations saw a 9.8%
year-on-year decline in the first quarter of 2020, according
to International Data Corporation. The firm expects both
consumers and businesses to tighten spending in the coming
months because of COVID-19.
Similarly, buying a car is a function of job security, which is
in freefall as the unemployment rate continues to rise. March
sales of sedans and SUVs fell by 40% in the U.S., and 50% in
Western Europe, according to LMC Automotive. In the US, April
sales plummeted to record lows, with Toyota reporting a 55.7%
decline in sales and Honda a 54.1% drop. This is bad news for
electronics. Today, the electronic content of autos is in the
double digits and projected to be 50% by 2030 as autonomous
capabilities increate, according to Statista.
Automotive production is forecast to decline by 15.5% in China
this year, 24.9% in Europe, and 25.6% in the U.S,. according to
IHS Markit. Auto assembly plants were shuttered in March and
April in the U.S. and Europe, with many planning to reopen in
mid-May at the earliest.
While aerospace is expected to be less impacted, the Covid-19
pandemic has hit the aviation sector very hard as airlines
ground fleets of planes. Airbus has furloughed 3,200 staff and
announced it would cut production on several programs this
year. Boeing reported just 31 orders in March and received 150
cancellation orders, for a total net change in new orders of
negative 119.
When and how quickly the global electronics sector bounces
back is an open question. Earlier in the year, the consensus was
that there would be a V-shaped recovery from COVID-19, but
that is looking more and more unlikely. Instead, a U-shaped,
or perhaps multiple rolling U’s seem more likely if the virus
reemerges later this year or in 2021. COVID-19 will not be
officially over until a vaccine is available, and even then, it will
take time for economies to get back to full strength.
+ LEARN MORE @ sourcetoday.com |
2020
Where are the Opportunities?
On the bright side, there are some pockets of momentum
for distributors in the defense and IT infrastructure sectors.
Defense spending is largely immune to market trends, and
both the U.S. and China are increasing spending. IDC forecasts
traditional IT infrastructure to contract 16.4% in 2020. However,
spending on cloud infrastructure hardware is projected to
expand by 10.4% this year. One reason is an increase in demand
for cloud services from telecommunications companies in
response to the jump in employees working from home.
And then there’s 5G, which has been a boon for some
distributors.
“Last year, we saw 5G infrastructure and the low-earth-orbit
satellite sector finally take off, and we are ramping up,” said
Michael Knight, president of TTI Semiconductor Group (TSG).
which includes RFMW, ranked 19th, and Symmetry Electronics
ranked 32nd on the Top 50 list. “We are very strong in the
defense and aerospace market, and that hasn’t shown any sign
of a slowdown.”
“There are a lot of products that have much denser
semiconductor content that is driving our business,” said
Knight. “It’s the most momentum that I’ve seen for a while. If
the virus lasts for a long time, it will eventually knock all the
momentum out of the business. But if it doesn’t last, we may
have the momentum to push through this.”
How well distributors read the COVID-19 tea leaves will
determine their rankings on next year’s Top 50.
21

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Q1. What are the market conditions like so
far in 2020?
A1. With COVID-19, the first half of 2020 rocked
supply chains. Unprecedented supply disruptions
coupled with abrupt forecast freezes have left
many wondering what lies ahead. The gaps and
voids that have developed, either due to
communication difficulties or genuine shortages,
have created a lot of need for secondary suppliers.
The easing of lockdowns and "re-globalization" will
certainly see a rush to make up for lost time and
an uptick in ordering. Will the OCMs be able to
support the supply once they’re called upon?
Expect this question, and similar ones to be asked
during 2nd half of this year.
Q2. What inventory and pricing trends are
you seeing?
A2. Inventory has improved, and tremendous
excesses have not been seen yet. However, there
isn’t a party in the electronic component supply
chain that hasn’t been impacted by the COVID-19
pandemic. We anticipate a rise in pricing coupled
with numerous shortages if lockdowns are eased
aggressively and forecasts are refreshed.
Long term, we expect a shift from a just-in-time
supply chain that is globalized to one that is more
resilient, with buffer stocks on hand to better
withstand potential supply chain shocks and more
localized support.
Q3. How do you think COVID-19 will impact
the second half of 2020?
A3. Government mandated work-from-home
orders caused a spike in demand in for laptop
computers, smart-home products, printers,
Webcams and increased data demands caused by
growth in e-learning and gaming sectors. While
mandates are beginning to ease, there is a lot of
talk that traditional office setting will shift to be
remote. Thus, we could see a continuation in these
sectors to enhance this permanent change. The
answer will be clearer as we round out 2020.
Economic downturns have shifted consumer focus
to buying essential items. As we approach the
second half of 2020, and companies try to mitigate
some of the year’s financial losses, some
manufacturers will be shifting production to meet
new customer needs while others will be working
to manage excess on components made from
original forecasts. Some semiconductor
manufacturers may move components to
end-of-life quicker to offset waning demand with
more profitable components.
Q4. What do you see as an x-factor threat
in 2020?
A4. One of the key x-factors is what new
technologies drive the ‘new normal’. The response
to COVID-19 is forcing significant change in how
companies and consumers operate. There will be
new technologies developed to support these
changes.
Secondly, while the dust settles, we could see a
wave of M&A activity as companies look to fill
perceived gaps exposed by COVID-19 and
strengthen their positions globally.

Tracking COVID-19
Supply Chain Disruptions
A new ISM report unveils the impacts on lead times,
manufacturing capacity, inventory and labor as a result
of the global pandemic.
BRIDGET MCCREA, Contributor
As the list of COVID-19-related global supply chain disruptions
continues to expand, the amount of time it takes to get
products made and delivered has grown substantially for some
manufacturing centers.
Supply Chain Solutions
According to a new Institute for Supply Management (ISM) report,
average lead times for inputs are at least twice as long as compared
to “normal” operations, for Asian (222% for China, 217% for Korea
for Operational Readiness
and 209% for Japan), European (201%), and domestically sourced
inputs (200%).
Overall, ISM says response to the coronavirus is expected to
“substantially diminish” organizational revenue and capital
expenditures as impacts start to solidify within more organizations.
It notes that almost one-half (47%) of respondents’ report reduced
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impacts,” said ISM CEO Thomas W. Derry in a press release.
• Warehouse & Staging Optimization “The data suggests that even as companies adjust to supply
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organization would experience some impact due to COVID-19
aviation, space, and defense.
disruptions; by late-March, that number had grown to 95%.
IDEA-STD-1010 “Severe supply chain disruptions were experienced in multiple
regions to varying degrees,” ISM reports, noting that in early March,
6% of firms reported “severe disruptions” across their supply chains.
By the end of March, severe disruptions were being reported in North
America (9% for U.S. supply chains, 6% for supply chains elsewhere in
North America); Japan and Korea (by 17% of respondents for each);
Europe (by 24% of respondents); and particularly China (by 38%
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“We’re seeing further feedback that organizations [that] diversified
their supplier base after experiencing tariff impacts,” said Derry, “are
potentially more equipped to address the effects of COVID-19 on their
supply chains.”
Here’s the Breakdown
As the daily evolution of COVID-19’s impacts on the world’s supply
chains continues, ISM is tracking these primary impacts:
Lead Times
• ISM says lead times for inputs are at least twice as long as
compared to “normal” operations, for Asian (222% for China, 217%
for Korea, and 209% for Japan); European (201%); and domestically
sourced inputs (200%).
• Compared to the end of 2019, 86% of respondents report that lead
times for inputs from China have pushed out. Seventy-four
percent report longer lead times for European inputs and
between 34-44% report lengthening lead times for inputs sourced
from North American countries.
• Through the end of April, 69% of companies expect lead times to
lengthen for U.S. inputs and 57% of respondents expect longer
lead times from Canadian or Mexican suppliers. Europe is
expected to be most impacted, with 85% of respondents
expecting longer lead times for European inputs.
Manufacturing Capacity
• Domestic manufacturing is operating at 79% of normal capacity,
ISM reports.
• Chinese and European manufacturing is at about one-half normal
capacity, 53% and 50% respectively.
Inventory
• Firms report that operations in North America have or are likely
to have inventory to support current operations (U.S., 71%;
Mexico/Canada 64%).
• Beyond April and into the end of the second and third quarters,
while uncertainty increases, “respondent confidence remains
relatively steady that inventory will be sufficient to support
domestic and global operations (Europe being an exception),”
ISM reports.
• Nearly two-thirds (64%) of respondents say their firms’ input
inventories have been adjusted in response to the coronavirus.
Labor
• In an already-tight talent market, the majority of respondents
(54%) to ISM’s survey report that their organizations will likely
delay hiring this quarter, 33% will reduce hours and 24% will
reduce headcount.
• In late February, respondents reported that staffing levels in
China stood at 56% of normal. By March, levels had recovered to
82% of normal.
25
 TOP EUROPEAN
ELECTRONICS DISTRIBUTORS
CoreStaff Co., Ltd. is one of the largest and
acknowledged electronic component distributor in
Japan. CoreStaff specializes in importing, exporting,
and sales of semiconudctors and integrated circuits
of various electronic manufacturers. We own and
operate our own warehouse, as we are also one of
Japan’s largest stocking distributor with over
100,000 items in stock.

  

  


 
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With More Than 6 Billion Components
in Stock, There’s a Good Chance
TTI has Exactly What You Need
At TTI our new custom-built 800,000 square foot distribution center has more than 6 billion
parts, over 650,000 part numbers, zipping along miles of conveyors, pulled from acres of
multi-story racks stocked with the parts you need. TTI has more specialized, available to sell
inventory than anyone in the business – from capacitors and resistors, to connectors and
sensors, on the shelf and ready to ship. And now, we have even more of it.
Call your local TTI Specialist at 1.800.CALL.TTI or check us out online
at ttiinc.com, chances are we have the components you can’t find
anywhere else.
ttiinc.com
1.800.CALL.TTI
A Berkshire Hathaway Company
TTI Takes Its Road Shows into the Feeding off the energy of its 2019 Executive Roadshow—where
executives got on airplanes, flew to different locations and met with
Virtual Space people face-to-face—the virtual events are now helping TTI bring the
More than 500 attendees have already taken part in TTI’s electronics manufacturing and distribution communities together.
“We had nine stops in 2019 and the events proved to be a hit in
virtual “rock shows,” which come complete with tour
person,” says Akery, whose main objective for this year’s events is to
t-shirts and groupies.
get out and hear directly from customers about what’s working well,
BRIDGET MCCREA, Contributor what’s not working, what they want from TTI and what they need from
the industry as a whole. The company had nine more stops planned in
Last year, TTI, Inc., launched a series of town hall meetings where it
2020, but like many other organizations, TTI had to backburner those
interacted in person with its customers, suppliers and manufacturer’s
plans due to the coronavirus.
rep partners. Developed by TTI’s corporate team, this “executive
roadshow” went over so well that the distributor decided to do it again
Connecting with Customers
in 2020. The global pandemic would interrupt those plans—at least
With its virtual events, the company has turned a crisis into a way
for the first half of the year—but it didn’t deter TTI from orchestrating
to connect with its customers, suppliers and reps, all while having a
an engaging “virtual” roadshow.
little fun along the way (something we could use a bit more of right
With its first three virtual events attracting more than 500
now). “We picked the rock tour theme, made the shirts, and started
participants, the company is leveraging the power of technology to
calling the reps and suppliers who showed up at multiple events our
stay in touch with its customers and partners during this difficult
‘groupies,’” Akery explains.
period. “Our colleagues in the industry are hungry for contact/face
The quality of those meetings has exceeded Akery’s expectations.
time and a sense of stability and forward vision,” says Don Akery,
“We’ve been able to get a broader, higher-level audience that includes
TTI’s president, Americas. “By meeting live—though virtually—and
sharing openly, we’re keeping the spirit of our electronic components
a number of CEOs, presidents and other executives,” he says. “In fact,
I think they’ve missed us a bit, and missed our salespeople visiting
community alive.”
them on a regular basis.”
Still to come are six more confirmed virtual tour dates for 2020,
Keep Calm and Carry On
although Akery says that number may increase to 15-20 total markets
Uniquely positioned to offer and share that sense of security
this year. The current dates are:
and stability, TTI is a Berkshire Hathaway company that embodies
the motto, “Keep Calm and Carry On.” So much so, in fact, that it
Cleveland June 17
has made the virtual roadshows fun by emulating a rock concert
Milwaukee September 9
tour, complete with “tour” t-shirts (proceeds are going to the non-
Portland September 22
profit organization Girls in Tech) and “TTI Groupies” (the suppliers
Seattle September 24
and reps).
Orange County October 15
Akery says the virtual events serve as a reminder than even as TTI
Orlando December 10
has grown, the company definitely remembers “where it all started
and everything that’s happened along the way.”
Look for a TTI rock show coming to a town near you!
+ LEARN MORE @ sourcetoday.com | 29
Executive Perspectives
Dave Doherty, president and COO of
Digi-Key Electronics, discusses the
impact of COVID-19 on his company’s
operations with SourceToday.
SourceToday: Do you see the coronavirus impacting
your business?
Dave Doherty: Coronavirus has impacted us in numerous
ways (and not all bad). It’s taught us that our prior
investments in IT infrastructure have enabled us to operate
with almost two-thirds of our workforce (roughly 2,300 team
members) working from home. It has put some pressure on
our suppliers’ inbound receipts to us. We’ve been fortunate
in that customer demand from essential service sectors has
remained high.
It has caused a number of changes in our fulfillment operation
to maintain a safe and healthy work environment with process
changes to adapt to social distancing guidelines, including
increased sanitization breaks every two hours to disinfect
workstations, wearing masks and gloves, and other measures
like asking team members working in the distribution center to
take their temperatures before coming to work.
Our mission is to fuel innovation and the Digi-Key team
takes that to heart—not only to fuel our customers’ innovation
but also our own. Our team took a resourceful approach to
maintaining safety in the Product Distribution Center early on
in the pandemic by creating a tunnel to disinfect totes using
ultraviolet light. The light eliminates any viruses—including
COVID-19—as it passes through the tunnel on the current
assembly line.
+ LEARN MORE @ sourcetoday.com |
We also shared the UV tunnel design with ECIA members
so other distributors can help protect their employees, too.
Digi-Key’s engineers were also part of a small team working
in partnership with the University of Minnesota to design
and supply additional ventilators needed to keep critically ill
COVID-19 patients alive as the world faces a critical shortage.
The Coventor was the first ventilator design approved under
the FDA’s Emergency Use Authorization during COVID-19, and
it’s an open-source design that we hope is copied around the
world.
Digi-Key is also supplying components to customers who
are manufacturing thermometers, motion-activated hand
sanitizing stations and equipment needed for employees
working remotely.
Our longstanding business model—providing the broadest
selection of products and high levels of inventory—has
protected us and our customers through these times. Our in-
stock position continues to deliver consistency and continuity
to our customers when they need it most. We have more than
10.2 million products available globally, with more than 2.2
million in stock and available for immediate shipment (within
24 hours to North American customers), from over 1,200 quality
name-brand manufacturers.
Our commitment to supporting customers with delivering
products when they need them, combined with an online
model and customer service, all contribute to a reliable and
consistent customer experience through these turbulent times.
(Continued on page 33) +
31
ST: How do you see the coronavirus impacting
the industry?
DD: We see COVID-19 reducing overall demand with small
business shutdowns. We’ve also heard that there have been
high rates of absenteeism in manufacturing and distribution
centers because people who are at higher risk and parents
who need to stay home with school-aged children can’t come
to work.
Digi-Key isn’t immune to that, but our entire team has stepped
up in ways we never imagined before, with many business-
side employees putting in overtime to work in our product
distribution center (PDC), and others completely switching over
to PDC work for several weeks on end and putting their day
jobs on hold. We’ve had unprecedented numbers of employees
at all levels showing up on weekends and staying late, just to
make sure every order gets out the door in time.
While other companies seem to be experiencing long shipping
delays right now, our team is doing everything possible to
ensure our customers don’t notice a difference at all in their
orders and deliveries from Digi-Key. The Digi-Key team has
risen to the occasion to adapt, adjust and continue to thrive and
meet customers’ needs, even in challenging circumstances.
ST: How are you handling supply chain risk?
DD: We’ve been in business for nearly 50 years and we’ve
built strong relationships with our suppliers, as well as
logistics and carrier
partners, which helps immensely in managing the current
situation. We’re continuously monitoring the situation with
suppliers, who are providing regular updates so we can
notify customers as soon as possible regarding any changes in
lead times.
Additional buffering of supplier-stated lead times and
pipelining, as well as holding additional safety stock, have
also helped us to manage through this extraordinary time.
We’re also working closely with our carrier partners to mitigate
impacts on shipping. Finally, we’ve seen manufacturers across
the global supply chain coming online again, including factories
in China.
ST: How is the labor crisis impacting your company?
DD: Prior to the pandemic, we’d been slowly automating
some functions and maintaining low turnover of existing
team members. Since the pandemic, we’ve developed and
implemented extra precautions to ensure the health and
safety of our team.
For example: “Take 5 to Sanitize” (breaks every two hours
to disinfect work stations); wearing masks and gloves;
additional deep disinfecting of the distribution center; the UV
sanitizing tunnels noted earlier; asking team members to take
their temperatures before coming to work; and providing an
additional 40 hours of PTO to use and stay home for any team
members who aren’t feeling well.
+ LEARN MORE @ sourcetoday.com |
ST: How has your company been impacted by the tariffs?
DD: To mitigate the impact of tariffs, Digi-Key established
two Foreign-Trade Zones—one in Thief River Falls, Minn.,
where Digi-Key is headquartered and our Product Distribution
Center is located, and a second in Fargo, N.D., where
additional product inventory is sometimes warehoused.
This avoids the imposition of tariffs for simply transporting
material back and forth between the two facilities.
While there are still challenges with suppliers that import
product and don’t provide documentation to allow us to
submit for duty drawback on our international shipments,
we’re working with them to reduce these issues. The process
of setting up the FTZs has taken over a year, working with our
more than 1,200 suppliers, our carriers and CBP to actually set
up the zones. Digi-Key is one of the largest FTZs in the United
States in terms of the number of small packages shipped daily.
Digi-Key is also the first FTZ transferring between two states,
Minnesota and North Dakota. In fact, if you compare Digi-Key
to other large companies doing similar business, we discovered
that even retail behemoth Amazon only has one FTZ, located
next to the UPS hub in Louisville, Ky.
ST: What measures are you taking to counter the
tariff issues?
DD: Establishing the FTZs noted above and duty drawback
are the two major steps Digi-Key has taken to mitigate
tariffs. Digi-Key hasn’t done it alone; it has truly been an
industry-wide effort. Working in conjunction with ECIA, we
are establishing best practices on how FTZs need to be set
up in order to function properly. One of the biggest benefits
to suppliers around the world is that they are able to ship
directly into our FTZ, removing cost and complexity by
deferring duties, taxes and tariffs until the material shipped.
Digi-Key UV Tote Sanitizing
33
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