Electronic Components & Semiconductor Wholesalers Industry Profile

About 15,000 wholesale distribution outlets for electronic parts and equipment operate in the US, generating combined annual revenue of about $225 billion. Major companies include Arrow Electronics and Avnet. The industry is concentrated: the 50 largest companies account for about 65 percent of revenue.

COMPETITIVE LANDSCAPE

Demand for electronic components is driven largely by business and consumer purchases of computers and telecommunications equipment. The profitability of individual companies depends on business volume and correct merchandising, or stocking the products buyers want. Large companies have advantages through buying in high volume at discounted prices, more-efficient inventory management, and the ability to fulfill large customer orders. Small wholesalers can compete by offering specialized products or better service.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products include semiconductors (computer chips); connectors; and electromechanical devices. Other products include disk and tape drives, computer subsystems, microwave and fiber optic components, transistors, diodes, power supplies, and switches. Computer chips account for about 55 percent of industry revenue. In some cases components may be very small and inexpensive. Most distributors operate a single distribution center, although big distributors such as Arrow operate dozens of centers serving multiple countries. Distribution centers are often larger than 200,000 square feet.

In addition to products, wholesalers offer services like purchasing; marketing; warehousing; packing, shipping, and delivery; customized packaging, private labeling; minor repair and refurbishment; "kitting" (simple assembly); and other end-user support services.

The product mix for most wholesalers is always changing, due ...