The Top 50 Electronics Distributors: Restarting Growth and Running with It
Last year, Digi-Key Electronics announced plans to add an additional million square feet to its main warehouse in Thief River Falls, Minnesota. Last month, the company started construction on the $300 million project. But Digi-Key’s president and chief operating officer, Dave Doherty, said that the timing could have been better in retrospect.
“The right time probably would have been three years ago,” Dougherty told SourceToday. The company, which has been growing rapidly in recent years, would have been in an even better position to tap into the recent boom in electronics manufacturing. Now, Digi-Key plans to occupy more than half of the new space immediately after construction wraps up.
Following two years of slow growth, Digi-Key is far from the only electronics distributor trying to take advantage of the recent market rally. Some are building new warehouses to handle more orders, others are ploughing cash into global expansion and hiring, still others are focused on capturing more business online, and nearly everyone is basking in healthy growth.
Currently, electronics distributors share a feeling of cautious optimism, industry executives say. The Internet of Things is reinvigorating the hardware business, giving a booster shot to these companies, the middlemen in the electronics supply chain. Most distributors project double-digit percent growth over the next year and plan to add new products, services and business around the world.
That came through in SourceToday’s Top 50 Electronics Distributors list. Our analysis draws from financial results reported by each company and verified where possible, as well as estimates for several privately held companies that declined to comment. Each company explained their business priorities and major concerns, as well as projected revenues for the next year.
Pushing electronics distributors deeper into the black is the Internet of Things, which could include billions of devices—ranging from smart thermostats and factory sensors to connected cars and traffic lights—which will all store information in the cloud. Executives agree almost unanimously that these applications could serve as long-term fertilizer for the industry.
The automotive sector has created voracious demand, aggravating shortages of many components. Doherty said that the average car is now manufactured with 10,000 capacitors, whereas several years ago that number hovered around 3,000. Last year, the average lead times for power MOSFETs—discrete semiconductors routinely used in vehicles—stretched to 30 weeks.
Only 36 electronics distributors shared sales forecasts with SourceToday, but three-fourths project double-digit growth over the next year, while nine respondents say their businesses will grow more than 20 percent. That reflects what the Electronic Components Industry Association recently said about 2017 component sales in North America, which increased 10.4 percent after two years of stagnation.
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