Distribution rebound to follow semis by end of year

"They're lagging the upturn but I expect it to rebound in the December quarter and into the March quarter of 2010," said Brendan Furlong, an analyst with Miller Tabak.

But more persistent uncertainty in the European economy is highlighted.

Both Arrow and Avnet will report their June quarter results in the next 10 days.

The figures may not turn out to be that reassuring, but the view is that better numbers are not that far away.

From a low point in March, the SOXX semiconductor business index has gained 57%.

There is already a feeling of growing confidence across the semiconductor industry.

Much of this may be down to the short-term effect of replenishing the supply chain with inventory.

One estimate is that in the last year around $7.5bn worth of semiconductor inventory has been cut from the supply chain.

Some observers feel this has been an over-reaction on the part of suppliers and there are now short falls which need to be replenished.

A more positive note is also coming from the mobile phone sector where network investment in China is generating genuine new business for chip firms and distributors alike.   

All this could point to a better end of the year for distributors.

The only thing which might hold things back is uncertainty about the strength of recovery in Europe.

Markets like UK and Germany are still well down and some observers feel it may be just alittle optimistic to expect them to rebound before 2010.