API web leaderboard

Analog Devices-Maxim Deal Portends Distribution Shakeup, EPSNews Reports

Originally posted on EPSNews

By Barbara Jorgensen, EPSNews

If past is prologue, Analog Devices Inc.’s $20 billion acquisition of Maxim Integrated Products Inc. will prompt a major shake-up in its electronics distribution channel. When ADI acquired Linear Technology in 2017, it consolidated its global volume distribution network under one distributor – Arrow Electronics Inc. – and discontinued with the industry’s second-largest player, Avnet Inc.

Analog Devices, Maxim, M&A, distributionThe stakes are huge if ADI once again realigns its post-merger channel. Both component makers sell more than 50 percent of their volume through distributors. ADI, which sells 55 percent of its products through the channel, reported 2019 revenue of $6 billion. Maxim, which derives about 52 percent of its revenue through distributors, reported sales of $2.31 billion in 2019.

The combined enterprise will be valued at $68 billion. Currently, Maxim sells its products through Avnet, Future Electronics Inc., RS Electronics, catalog distributors Digi-Key, Newark and Mouser and a number of specialty and regional companies. ADI sells through Arrow, Digi-Key and Mouser.

“Analog Devices’ move to acquire competitor Maxim Integrated, announced this morning, is […] a potentially negative blow to Avnet, which lost the ADI line in 2017,” Stifel said in a Monday industry update. “Although it’s too early to tell whether ADI moves Maxim to Arrow or retains the Avnet relationship, keeping everything under the Arrow umbrella would seem to make better sense, in our opinion, than increasing business with Avnet. The move comes at a time when Avnet is losing its largest semiconductor line, Texas Instruments.”

At the same time, the Covid-19 pandemic could dispense with conventional wisdom following a supplier M&A. The coronavirus has wreaked havoc in the electronics supply chain, and customers are evaluating the risk of not receiving critical products on an almost daily basis. OEM and EMS companies currently procuring ADI and Maxim products from multiple distributors are unlikely to embrace a channel consolidation in the short term. Too much dependence one on source – such as a single distributor – is anathema to most large electronics manufacturers.

Indium EMSNow Durafuse x
TTI humancomponent max x static TTIbuy
SEHO x
whitehorse
SUBSCRIBE Ad
thumbnail TrustedParts x B
EMSNOW MPU Ads
x fhe master class semi ad