China is chip distribution battleground

Semiconductor distributors could see sales in China grow by 28.5% this year, according to the market research firm iSuppli.

With estimated sale in 2010 of $33.1bn, the distribution sector will account for 51% of all semiconductor sales in China.

According to iSuppli, the total chip market in China could reach $64.8bn this year, a 30% increase on 2009.

“Distributors were strong in the memory, logic and analogue component markets in 2009,” said Horse Liu, manager for China research at iSuppli.

Distributor acquisitions continue to be an important factor in the Chinese market.

“Among the biggest distributors, mergers and acquisitions have become a favourite tool during the last five years as a means to grow quickly, iSuppli research has determined,” said Liu.

For example, Taiwanese-based distributor World Peace Group (WPG) acquisition in March of Yosun Industrial Group added to the conglomerate’s total China revenue of approximately $3.8bn in 2009.

According to iSuppli, WPG’s continuing efforts to strengthen its role throughout Asia may yet displace Arrow Electronics from its perch as the world’s largest electronics component distributor.

Arrow had global sales of $9.75bn in 2009, with WPG just behind at $9.57bn followed by Avnet with $9.18bn.

Arrow has recently strengthened its position in China in particular with the proposed acquisition of Nu Horizons for $120m.

Learn more about the China market with Liu’s latest report, entitled: Distributor Mergers and Acquisitions Prepare Semiconductor Supply Chain for Rebalancing.

See: Distributor acquisitions are inevitable

Tags: Arrow, Avnet, China, WPG

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