Distribution_Dispatch
January 8, 2014 
Editor's Note 
BarbaraJorgensenLast month's article about the Xilinx-Flextronics lawsuit prompted a lot of discussion online and over the phone. With credit to EPS readers, a few misconceptions were corrected: although Xilinx products are programmed to customer specs, the parts are not necessarily proprietary--they can be wiped and reprogrammed. (See: The Multiple Dangers of Component Resale.) As such, the parts have widespread use -- and appeal -- in the open market. It also appears that the sale between Flextronics and the end customer in this case--Checkpoint Systems Inc. --did not involve a distribution channel: the sale was direct from the EMS to Checkpoint. To quote my 16-year-old: "My bad." The issues around the case are unchanged, though: the right to resell electronics components and charges of counterfeiting. Flex is alleged to have remarked Xilinx parts to reflect a higher-cost product.
 

Some readers have suggested Flex was acting like a distributor in this case by selling parts at a profit. EMS companies can order components in such volumes that they get a preferential price. By reselling parts at a profit, an EMS is actually competing against distributors and possibly its own suppliers. It's unlikely suppliers will end the preferential pricing or cut off sales, though, because EMS companies are also their biggest customers.

 

The more egregious issue is of course counterfeiting. Suppliers and distributors have been jumping through hoops to protect customers like Flextronics from counterfeit components. The channel has invested in processes, equipment and technology to thwart counterfeiting. They have pointed fingers at one another as the "cause" of the problem. The idea of an OEM or EMS being directly involved in counterfeiting is almost unthinkable. As nothing has been proven yet, I'll hold off on the implications: We'll know more as the case unwinds.
  

The channel seems to be looking forward to 2014. Distributors expect demand to pick up, and there's evidence that it will. (See Distribution Bullish on 2013.) U.S.-based manufacturers are predicting revenue growth the first half of 2014 and even better performance in the second half. If prices remain stable, supply is steady and demand doesn't take a precipitous dip, it should be a good year. My colleague Bolaji Ojo -- as always -- adds some high-level perspective to the economic outlook in The Perils of a Low-Growth Economy. And our thrid colleague, Gina Roos, take a look at how the Internet of Things (IoT) will impact the electronics supply chain in Suppliers Eye IoT.

 

We at EPS wish all a happy, healthy and profitable New Year. And let us know what you think about the market, our coverage or the big issues of 2014 at editors@epsnewsonline.com.

 

 

Barbara Jorgensen

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Xilinx Inc. (NASDAQ: XLNX) is hot with investors and the analyst community. Link

As the year winds down, it's inevitable that we reflect on the past year. Here is Electronics Purchasing Strategies' top 10 most read, most clicked stories for the year. Link

Top 10 Products of 2013   
The top 10 most read new product introductions in 2013 ranged from sensors and ferrite beads to op amps and 32-bit microcontrollers. Four of the top ten devices were IP&E components from three suppliers: Bourns, Murata, and Molex. Link
 
The high-tech industry didn't get to become the economic leader it is today by oozing fear. Its pioneers took huge risks. Link 
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News 
Mil/Aero Industry to Grow 5% in 20134
Although overall revenue growth in the aerospace and defense (A&D) industry is projected to grow five percent in 2014, global revenues for defense companies is on a downward trend, falling 1.3 percent in 2012 and 1.9 percent in 2011, according to Deloitte Touche Tohmatsu Limited (DTTL). Link
Jabil to Sell Aftermarket Unit for $725M
Jabil Circuit Inc. (NYSE: JBL) has announced plans to sell its aftermarket support business to iQor Holdings Inc. for $725 million as the electronics manufacturing services provider intensifies its multiyear reorganization and cost-reduction programs.Link

Resilinc, a provider of supply chain resiliency solutions, and KPMG LLP, the U.S. audit, tax and advisory firm, have formed an alliance to help clients change their approach to supply chain risk management. Link  

The semiconductor and electronics original equipment manufacturing (OEM) industries are set to enjoy significant revenue growth in 2013-partly due to their tight management of inventory levels-according to a Supply Chain Inventory market brief from IHS Inc. Link
News Wire
 
 

 

Ametek Acquires Teseq

  

 

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