China's Semiconductor Distribution Market is Slowing Down

According to the forthcoming report by IHS iSuppli's China research department, Chinese semiconductor distribution market has entered a relatively slow expansion phase. During 2011 to 2016 half of the operating income will increase by less half of the direct marketing. It is expected that the Chinese semiconductor revenue in 2016 will grow to $ 40.5 billion with a compounded annual growth rate of 2.7%.

In contrast, direct operating income of the semiconductor suppliers for the same period from $ 40 billion up to $ 55.9 billion, a compounded annual growth rate of 6.9%. By 2016, direct marketing will account for 58 percent of China's semiconductor market, 53 percent in 2011. Sales focus from distribution to direct sales, reflecting the overall semiconductor industry slowdown situation. Following years of expansion to double-digit rates ,2011-2016 compound annual growth rate of the overall semiconductor revenue is expected to only 5%. Affected, the semiconductor market share increasingly concentrated in the hands of a few large suppliers. These large suppliers to focus on key customers, through the establishment of long-term relationships to maintain this long-term relationship focused on direct sales, less use of distributors. Distribution industry slowdown may encourage the integration of acquisitions in the industry, resulting in the decrease in the number of distributors.

Field of Communication is Important

In 2011, China's telecommunications sector is the most important market for distributors. Was about $ 14.9 billion (42%) of the distribution of operating income from the semiconductor component sales for communication products. Consumer electronics in 2011 is the second largest market for distributors. The electronic components market in China, a major distributor of revenue growth last year, operating income also improved, although the second half of 2011, weak market demand. Comtech Group, and North Gao Zhisheng Technology Co., Ltd. are the two local distributors, and 2011 operating income growth of more than 40%.

Focusing on the service but the next five years, China's semiconductor distributors must endure low market growth rate, even if some powerful distributors will continue to maintain growth. For distributors, on behalf of qualified service suppliers to provide customers with an existing business opportunities in the fields. To do so, the distributor can help suppliers to identify new design opportunities, and to provide services to accelerate the design cycle and to win new business.

The suppliers also provide more design services to key customers. Compared with distributors, suppliers to have more design resources, and to offer our customers more efficient and higher quality design services. In addition, the successful supplier to the partners chip custom. The manufacturer can then create a more diversified products for customers to reduce product cost, according to the customers' requirement.

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Created on Aug 17th 2012 02:43. Viewed 151 times.

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