German distribution market in Q2/24

The sales and inventory records of recent years are currently being reversely reflected in the books of German component distributors. After -28% in the first quarter of 2024, the turnover figures of FBDi members fell by as much as 38% year-on-year to just under €890 million Euros in the second quarter of 2024, the lowest level since mid-2021. Incoming orders were also disappointing: at 628 million Euros (-28%), new orders were at the lower end of expectations. A turnaround is therefore not in sight, although the book-to-bill ratio rose slightly to 0.71 (due to weak sales).

Semiconductors in particular remain critical. Semiconductor sales fell by a record 44% to 565 million Euros, incoming orders reached 365 million Euros, which is -27% compared to the same quarter last year, but still a slight sequential increase of 6% compared to Q1/24. Passive Components did slightly better, with Q2 sales down "only" 31% to 125 million Euros. Electromechanics performed comparatively well with a decline of 19% to 130 million Euros. The order situation in both segments was slightly better but showed no signs of stabilisation. Other components such as sensors, displays, power supplies and assemblies followed the general trend. The distribution of sales between the various component technologies shifted to the detriment of semiconductors, which now only account for 63% of the total pie.

FBDi CEO Georg Steinberger: "2024 proves difficult, as expected. As my board colleague Tom Gerhardt said a few months ago, 'after the booking pause comes the billing pause'. Orders remain at a low level and show little impetus for growth. Our positive impression from Spring has faded somewhat. Visibility in the supply chain to the end customer is worse than it has been for a long time. And compared to other countries, Germany doesn't just seem to have only an inventory problem.”

Commenting on the situation, Steinberger says: "Germany is very dependent on automotive and industrial electronics, and industrial electronics is also affected by the fate  of automotive production in Germany. We estimate that the market as a whole relies about 50% on the automobile. And this is precisely where things are going wrong at the moment, be it the botched e-mobility strategy or the weakness in exports of fossil-fueled vehicles. Coupled with the uncertainty among end customers due to the political and economic situation, not much good can be expected in the short term. However, plans for the digital and energy transformation that could drive our market forward have long been on the table. And there are also positive signs, for example in the production of renewable energy".

Nevertheless, the FBDi remains optimistic: "German industry has little to report in the current hype about artificial intelligence, so I expect little impetus for the components sector. But we have by no means written off the rebuilding of the European energy industry and the transition to an all-electric society. We are convinced that this can be achieved with European innovations, not just Chinese ones. Perhaps German society should not lose itself in pointless political polarisation and instead focus on what once made the German economy great: ideas and engineering skills. The FBDi has set itself the goal of increasingly promoting developments from German think tanks and universities that could be suitable for the mass market.”