Electronic Component Industry Analysis

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The electronics distribution industry is inherently a volatile one because it is based on technologies that are constantly evolving and improving as time passes. The industry has already survived three major technological revolutions and can probably be expecting another one in its long-term future. These "revolutions" usually concern the refinement or replacement of a component that is fundamental to all electronic circuitry. While demand for related component parts remains relatively stable, the revolutionized component becomes a high demand item (product growth) and all other circuit design considerations will revolve around it. This in turn causes an increased focus on the item in the distribution industry, and the impact is felt in all markets. Despite these revolutions the industry has grown and developed over the years into what is currently a 6.97 billion dollar industry. This is quite a respectable market considering the humble beginnings of electronics distribution. Most significant distributors of the 1980's originated from New York City's old time "Radio Row." This was an area in the city (Cortlandt street) where radio supply stores aggregated to do their business. The business at that time was comprised mostly of supplying radio hobbyists or professionals with radio crystals and other related components. The first revolution occurred with the advent of the vacuum tube which quickly became the mainstay of all radio and later television products. The onset of World War Two fueled the industry because equipment used to fight the war, especially that involving aviation, was becoming increasingly dependent on electronic parts and equipment. Technological pressures at this time led to the development of the miniaturized transistor, which increased the efficiency of electronic circuits while at the same time reducing the bulky space requirements previously created by vacuum tubes. This marked the second major revolution in the electronics distribution industry. Distributors managed to stay abreast of the technology throughout this time, mostly due to their connections with the manufacturers of electronic parts who were being forced to develop new technologies. During the late 1950's and early 1960's, the industry experienced healthy growth that was mostly attributable to its increasing service of civilian and consumer markets such as commercial aviation, communications industries, and medical equipment manufacturers, while at the same time maintaining its markets in military and television and radio supply. The industry remained stable again until the third major product revolution, the introduction of semiconductors. Semiconductors allowed large and complex electronic circuits to be placed into very small "chips" and, as expected, made obsolete most forms of transistors and tubes. Again, most distributors managed the change-over successfully but the industry did witness some changes. The high demand for semiconductors and resultant systems allowed many of the larger corporations to flourish while many of the smaller "ma and pa" organizations were left to sink. This was mostly attributable to the fact that demand was now coming from large technology oriented customers such as computer manufacturers, and these customers expected reliable delivery of large quantities of produc t, as well as technical expertise from their suppliers. Many distributors survived this period by moving from broad lines to more limited (specialty) lines, but a few were able to maintain line diversity. This is where the industry stands today. The permeation of electronic technology into our society has made virtually any original equipment manufacturer (O.E.M.) a potential customer. Although no major revolutions have occurred since the invention of the semiconductor, the technology is still evolving, and semi's are getting more sophisticated and dynamic every day. Distributors are requiring more and...
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