Will Avnet call an upturn in the electronics market when it announces its quarterly results this week?
Nothing is certain in the current climate but experience tells me that Avnet’s view of the world is more credible than most.
Back in the dark days of last winter, Avnet CEO Roy Vallee surprised many in the market by predicting that the worst of the downturn would most likely have passed by the middle of 2009.
See: Worst could be over by mid-2009, says Avnet CEO
“I suspect by the middle of next year we will have seen the worst and while we may still be in a recessionary environment we’ll being seeing improvements quarter-on-quarter in the economy,” Vallee told our sister website Microscope in November 2008.
That assessment of things turned out to be bang on.
Then in June, Vallee was still holding to his optimistic views in the face of continued economic pressure.
Speaking at the Global Technology Distribution Council meeting in London earlier in the summer Vallee described himself as a “card carrying optimist” and said that he believed that things were improving in the US.
So Avnet’s numbers due later today and most importantly Vallee’s assessment of the electronics and IT distribution markets will tell us much about the direction we are heading.
The numbers may not be that pretty. Remember that Arrow Electronics last week reported a 23% fall in Q2 component distribution sales of $2.27bn, compared with this time last year.
But the hope must be that Vallee could call the upturn. Something which rival Arrow was reluctant to do.
“In global components, our revenue results exceeded the mid-point of our expectations, driven by strength in Asia as well as a solid finish to the month of June for our North American business," said Michael Long, Arrow CEO.
"The European economies remain weak and we continue to see significant year-over-year declines in the pace of business activity," added Long.
And if Vallee feels able to take the positive view, then much of his optimism may rest on a rebound in the China mobile market.
Only this week signs of a rebound in the mobile phone market are becoming undeniable.
The latest comes from Taiwanese chipset supplier Mediatek which has revised this year's chip shipment target up by 20%.
The market where all the action seems to be is China and Mediatek is expecting to ship about 300 million chips this year.
"Compared to the previous quarter, there is now a recovery in demand for PCs and consumer products, which will help us gain market share in China and other emerging markets," Mediatek President Hsieh Ching-jiang told analysts during a call.
This company is not alone, Qualcomm, TI and TSMC have all identified increased demand for silicon in the China mobile phone market.
See: Qualcomm and TI hint of mobile market rebound
So when will the price rises follow? Pretty soon in the memory market, according to iSuppli.
The analyst believes that Shortages and a memory segment price hike are expected to force average global pricing for commodity electronic components up 2.3% in Q3 as compared to Q2.
Mediatek has reported a 80% rise in Q2 net profit to $280m, the good news starts here.