Chinese Distributors Look for New Opportunities in New Markets
China’s semiconductor distributors are endeavoring to develop their businesses in automotive and industrial electronics in order to continue growing as well as to attain higher profit margins. Success in these areas could be a decisive factor in determining the survival and development of the country’s distributors, according to iSuppli Corp.
The automotive and industrial electronics markets are characterized by diversity and fragmentation. In China, however, both markets are expected to post the highest growth rates among all application markets during the next five years, with higher industry growth and lower manufacturing concentration ratios providing distributors many business opportunities.
Semiconductor suppliers must depend on distributor networks to expand market coverage and to find more business opportunities within Ratio both the automotive and industrial electronics markets. Higher-profit margins in both markets are also being seen by some small- and medium-sized distributors, which are able to satisfy the diversified needs of customers, including extensive design services and customization projects. Significantly, these distributors can accept smaller volume purchase orders by following up on a project after more than six months.
In comparison, large distributors have opportunities to build a fulfillment business with international makers because some complex systems, such as automotive power trains, mainly are designed overseas.
Lack of Coverage
Distributor networks cannot provide sufficient coverage in emerging markets mainly due to diversified customer demands and small-volume purchase orders. Key chip suppliers must utilize more resources to meet customers’ needs and to generate more purchase orders. As a result, suppliers are actively improving design service networks in China in order to develop the automotive and industrial electronics markets.
Semiconductor suppliers call their design partners many different names, including third-party partners, design alliance members, Value Added Resellers (VARs), software providers and developers. Whatever their names, these partners play important roles within the semiconductor supply chains of the automotive and industrial electronics markets.
The major design partners of chip suppliers are focusing on product design and system integration. The design partners can define and develop full systems according to customer demands or their own ideas. They also seek Non-Recurring Engineering (NRE) business models in emerging markets through customization projects and design-team outsourcing.
Design partners also generate profits through providing multiple services, including engineer training, development tools, teaching equipment and design platforms.
Suppliers and their partners face huge challenges in the automotive and industrial electronics markets, so they must penetrate both segments in a step-by-step fashion. Suitable products, effective promotion partner networks and patience on longer-term design projects are necessary for new suppliers to be successful.
The automotive and industrial electronics markets are characterized by diversity and fragmentation. In China, however, both markets are expected to post the highest growth rates among all application markets during the next five years, with higher industry growth and lower manufacturing concentration ratios providing distributors many business opportunities.
Semiconductor suppliers must depend on distributor networks to expand market coverage and to find more business opportunities within Ratio both the automotive and industrial electronics markets. Higher-profit margins in both markets are also being seen by some small- and medium-sized distributors, which are able to satisfy the diversified needs of customers, including extensive design services and customization projects. Significantly, these distributors can accept smaller volume purchase orders by following up on a project after more than six months.
In comparison, large distributors have opportunities to build a fulfillment business with international makers because some complex systems, such as automotive power trains, mainly are designed overseas.
Lack of Coverage
Distributor networks cannot provide sufficient coverage in emerging markets mainly due to diversified customer demands and small-volume purchase orders. Key chip suppliers must utilize more resources to meet customers’ needs and to generate more purchase orders. As a result, suppliers are actively improving design service networks in China in order to develop the automotive and industrial electronics markets.
Semiconductor suppliers call their design partners many different names, including third-party partners, design alliance members, Value Added Resellers (VARs), software providers and developers. Whatever their names, these partners play important roles within the semiconductor supply chains of the automotive and industrial electronics markets.
The major design partners of chip suppliers are focusing on product design and system integration. The design partners can define and develop full systems according to customer demands or their own ideas. They also seek Non-Recurring Engineering (NRE) business models in emerging markets through customization projects and design-team outsourcing.
Design partners also generate profits through providing multiple services, including engineer training, development tools, teaching equipment and design platforms.
Suppliers and their partners face huge challenges in the automotive and industrial electronics markets, so they must penetrate both segments in a step-by-step fashion. Suitable products, effective promotion partner networks and patience on longer-term design projects are necessary for new suppliers to be successful.
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