Smith Market Blog

Device Demands Are Shifting Pillars of Semi Industry


As the Consumer Electronics (CE), end-device market continues to change, we are seeing significant shifts in the global semiconductor and electronics supply chain. The growth of very different CE populations globally, and their new CE demands, has shifted the traditional focus of the semiconductor industry. Companies along the supply chain have been altering strategies to become more agile, to address the new diversification of the device market which is quickly expands.

New competitors and new device focus

Leading edge devices with latest generation components are certainly still a desired item – we've seen this in the recent flurry of purchases and orders for the new Apple iPhone 6 and 6 Plus. But, there is also significant and challenging competition. Today's global CE market is wider and the emerging market consumers outside of the US and EU especially are looking for feature-rich smartphones at prices they can afford. These demands have opened doors for new, locally based OEMs to enter the once tightly held mobile phone market.

The new competition is growing and addressing the high demand for a wider array of devices distinguished by price, features, local network compatibilities, CE trends, and brand awareness which does hold sway. We have seen the local brands of Xiaomi and Huawei, especially, build rapidly with a loyal customer base, and those rises are cutting into leaders like Samsung who has been reporting lower earnings and sales volumes globally.

Core refocus and supply chain changes

Samsung and this week's news from Hewlett-Packard (HP), underscore the changes in the CE marketplace that are directly impacting the industry's pillars. Both of these leading, tier one OEMs are restructuring, albeit in notably different ways. At the core of the restructuring is the shift in strategy by the companies to refocus on the stronger divisions and ensure greater agility to meet the rapidly shifting CE market moves.

As the major OEMs in the industry refocus on their core growth strategies, the demand for vertically integrated supply chain service offerings from leading, global independent distributors similarly grows. As Kirk Wheby, COO of Smith & Associates, recently discussed in Electronics Purchasing Strategies, customer-focused global services support companies in realizing the agility, best pricing, inventory management, and top-quality component sourcing needed to succeed:

Electronics manufacturers have been going through a period of focused outsourcing; simplifying supply chains to make them leaner, more transparent, and more fluid. Component distributors have been responding by increasing their integration strategies in different ways, and with varying successes, depending on the history of the breadth of their core competencies. Some distributors have moved more in the direction of horizontal integration to deepen their reach and extend aspects of their core, while others, such as Smith & Associates, have continued on a longer-trend of vertical integration. Vertically integrated distributors are leveraging existing capabilities and aligning what is in-place across their global offices to offer more elegant and seamless value added services to customers.

As the supply chain continues to shift in response to the market demand changes for end-devices, the role of leading supply chain experts, such as long-standing, quality-focused, global distributors like Smith & Associates is continuing to grow and expand as well. Smith's quality services continue to be in demand and meet the unique business needs and strategies of our customers, regardless of their size, industry focus, or market locations. Smith Global Services is ready to support agile, dynamic market shifts.

Lisa Ann Cairns, Ph.D.
Written on Thursday, 09 October 2014 07:40 by Lisa Ann Cairns, Ph.D.

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