News You Can Use – 5.13.19 – 5.17.19

As the leading independent distributor of electronic components, Smith tracks open-market activity and conditions as an early indicator of trends and supply chain disruptions. Industry news provides important and time-sensitive information when strategically procuring components, planning for NPIs, or making any critical decisions in the supply chain.

We’ve curated a selection of this week’s industry articles that we feel can help customers gain relevant, useful knowledge and prepare for any supply chain requirements.

Notebook ODMs eyeing shipment growths in 2Q19 despite setbacks in April

ODM notebook shipments are expected to gain momentum in June after news that Intel has promised to ramp up its shipments of entry-level processors next month. The ongoing CPU shortages have plagued ODM makers since the second half of 2018, and supplies are still said to be 5% below market demand currently. April was not a good month for most Taiwan-based notebook ODMs. Quanta shipped 2.2 million units in April, down 21.43% from the 2.8 million units the company shipped a month earlier. The sequential decline in April was caused by the delayed shipments of consumer models that resulted from the CPU shortages and from having a higher base reached in the previous month, Quanta said. If Intel can follow through on its supply promises, expect Taiwanese notebook manufacturers, including Quanta, Compal, and Wistron, to increase quarterly shipments in coming months. Read More. [1]

ASEAN supply chains to develop fast as server, network equipment makers move production from China

Many Taiwanese manufacturers of servers, wireless networking products, communication equipment, and desktop motherboards have chosen to relocate their production lines after the U.S. decided to raise tariffs from 10% to 25% on $200 billion worth of Chinese imports. Quanta, Inventec, and Wistron account for 90% of the global server market and have moved or will step up the movement of production lines back to Southeast Asia. This is expected to disrupt supply chains, as new suppliers will be called upon to meet demands in new markets. Read More. [1]

Top 50 Distributors: Stellar Performance in 2018, But What Comes Next?

Last year was a very good year for electronics distribution. The results are captured in the recently announced SourceToday Top 50 Electronics Distributors ranking. The top 50 distributors had combined revenue of $158.8 billion dollars in 2018, up 10.7%, or $44.4 billion, from the previous year.

So, what is ahead for 2019? Many distributors are taking a cautiously optimistic approach. When surveyed, many of the top 50 distributors identified forecasting as one of the top challenges of 2019. “A changing market environment generally drives wild swings in customer demand as their backlog gets right-sized,” noted one top-10 distributor. The ongoing tariffs and trade disputes were also listed as a top concern. Read More.

Analysts Duel on Chip Slump Projections

According to IDC, global chip sales will drop 7.2% from last year, marking the first decline in three years of growth.

“The current market downturn is being driven by a broad weakness in demand, specifically centered in China, and an ingestion of excess inventories in some of the major markets, including automotive, mobile phones, and cloud infrastructure,” said Mario Morales, a vice president with IDC. The market research firm expects a recovery to start in the second half of the year. A depletion in inventory for the memory used in data center servers could drive an upturn in memory sales in the second half of the year, the firm said. Read More.

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