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Component Distribution Industry has Undergone Great Changes in Recent Years

Uma Pingali element14
Uma Pingali, Business President, element14

1/ How about the business performance of your company in 2018? Which business lines contribute most to your business growth?  

element14’s parent company, Premier Farnell, delivered strong performance in 2018. Latest published results for the fiscal year FY19 first quarter ended 30 September 2018 showed global revenue of $379m, up +7.2% year over year (+8.2% year over year on a constant currency basis).  Premier Farnell made significant investment across all categories during 2018 which both broadened and deepened the stocking position and enabled the business to support customers through high demand. This investment has underpinned strong growth in core interconnect, electro-mechanical and semiconductor categories alongside excellent growth in passives and single board computing. In the Test and Tool category, the business also delivered an impressive level of growth, with strength particularly within tools and production supplies supported by recent new supplier additions.  element14 continues to focus on delivering a strong portfolio of supplier products and new innovative technologies to customers, coupled with multi-channel support to meet our customers’ needs so they can focus on what is important to them. 

2/ What new technologies or services did your company introduce in 2018? Which application area is it mainly for? How is the market feedback?

element14 continues to focus on delivering new technologies for design engineers to support them as they design and manufacture products for market.  During 2018, element14 has introduced new technologies that enable design engineers to add intelligence to their products.  Early in 2018, element14 introduced the Graspio CloudIO, a Raspberry Pi expansion board with a mobile platform for end to end IoT development and deployment.  The versatility of GraspIO Cloudio along with its ease of use has made it popular with makers and innovators in a wide range of application environments. Claudio, when combined with a Raspberry Pi, is a Full Stack IoT platform meaning that you can programme IoT devices simply and quickly with drag and drop programming on a mobile app .  The combination of built-in hardware facilities and access to innovative application software has made Cloudio a valuable addition to the range of tools available to developers of projects involving voice, motion, imaging and cloud interaction.

More recently, element14 launched the Ultra96 board, jointly created by Avnet, Xilinx and 96Boards, enabling developers to build in intelligence at the gateway level. This new, ARM-based platform simplifies machine learning for developers, featuring programmable logic acceleration engines which help to deliver complexity with simplicity. It allows software developers to accelerate the development process for applications that require intense processing and high performance in areas such as artificial intelligence (AI), machine learning, virtual reality, IoT and industrial control.

Most recently, Farnell element14, elements’ sister company in EMEA, demonstrated the SmartEdge Agile at electronica Munich.  This new product, which will be available in early 2019, is a revolutionary product field, bringing artificial intelligence to the edge.  The device also supports applications where connectivity is unreliable or where multiple sensors need to operate independently.  With easy to use, drag and drop programming, intelligence is now there to deploy, even to users with no coding experience.

3/ What challenges has your company encountered in exploring business development in 2018? In which aspects has your company made improvements/enhancements during the process?  

The concentration and integration of the component distribution industry continues, with the proportion of original direct sales increasing and the number of agents decreasing – this presents challenges such as the industry has never seen before.  The component distribution industry has undergone great changes in recent years and the structure of the electronics industry has changed significantly.  New intelligent technologies have expanded the market and customer needs continue to evolve, with customers demanding different levels of service and support at each stage of the product development and manufacturing process.  In addition to traditional distribution services, distributors ask for support in design services, technical information, sub-assembly and supply chain management services.

4/ What significant measures/actions has your company taken in 2018? How about the results?   

During 2018, we have worked with colleagues at Avnet to introduce a process that provides seamless support to customers as they grow.  As a high service distributor, element14 holds a stocking profile of about a mile wide and an inch deep, allowing customers to access the broadest range of products available at the lower quantities that our customers seek.  As part of the Avnet group, we guide customers all the way from early stage design and low volume production to high volume production.  By monitoring customers buying patterns we can identify when they are moving into the next phase of their journey and introduce them to our sister businesses which can support them as they grow further.  These customers are now benefitting from access to Avnet’s ecosystem at the point where its adds new value to their business, without the need to onboard a new partner for this phase of their journey.

This example is one where we are working carefully to use the entire Avnet ecosystem to provide new value and benefit to customers. The combination of Avnet and element14 offers the heavyweight resources needed by large manufacturers along with the finer touch to work with inventors, makers and engineers to help them turn their ideas into prototypes. The ability to engage in the earliest stages of product design and development with innovators, is fueling a new chapter of growth.

5/ What do you expect for the business performance of your company in 2019? Facing the slowdown of global semiconductor growth, what measures will your company take to ensure healthy revenue growth?  

The semiconductor market continues to be strong, driven by increased demands for semiconductor materials from IoT and AI markets, autonomous and electric vehicles and AI-led electronics.  The demand for memory products remains strong and memory products will become an ever-increasing portion of the overall semiconductor market.

We are beginning to see pressure on the supply change as jump in demand for, for example, capacitors, has caused extended lead times, and increased costs.  We are positive about performance in 2019 as high service distributors such as element14 are well placed to work with customers to identify the most secure supply chain and also look for alternatives that help customers manage their businesses through increased periods of costs and reduced supply.

6/ Which application segments do you think will usher in explosive growth in 2019? What applications will your company mainly focus and invest in? 

The continued reduction in power consumption combined with wireless connectivity will open up a whole new realm of possibilities for connected devices that will drive the continued adoption of IoT, with a focus on IIoT with the development of smart factories and implementation of predictive maintenance.

Elsewhere, the adoption of AI in almost any area of life will lead to the most revolutionary technology/application developments thanks to the sheer access to affordable processing power. The implementation of AI will become more and more prevalent in our daily lives. Within 10-15 years, we might be headed towards a scenario where AI and machine learning has drastically changed how we live and how certain services are performed and we can see AI significantly altering our lifestyles, how we commute (transportation), our healthcare system – how drugs are administered, patients monitored etc.  The difference we see between the adoption of the IoT and Artificial Intelligence is the availability of products to make AI a reality – from voice recognition right through to machine learning.

7/ Regarding AI, what do you think will be the development track of AI in 2019? What actions/measures will your company take to respond to AI development in 2019? 

In order to respond to the growth in AI, element14 has launched products with intelligence built in, that enable design engineers to focus on their use case.  New products, such as GraspIO Cloudio and SmartEdge Agile also allow entrepreneurs to embed intelligence into their devices with little or no coding experience, opening up the market for further growth opportunities.

To help developers identify the right development boards for their AI devices, element14 has created an online tool designed to help engineers confidently select the ideal board for their artificial intelligence projects. Users can select the application that most closely match their requirements from a list including predictive maintenance, voice recognition, object or human recognition, motion recognition and machine learning and add requirements for sensing and wireless connectivity. Once the requirements have been defined, the AI Configurator identifies boards (including add-on boards necessary to provide the required sensing capabilities) that meet the needs of the design; as well as  relevant resources to help speed up the design cycle, including tutorials, case studies or technical documentation, such as Alexa API documentation for voice recognition applications. element14’s AI Configurator can be found at cn.element14.com/ai-configurator

Currently, is the distribution industry facing even greater challenges than ever before, and why? 

The concentration and integration of the component distribution industry continue, with the proportion of original direct sales increasing and the number of agents decreasing – this presents challenges such as the industry has never seen before.  The component distribution industry has undergone great changes in recent years and the structure of the electronics industry has changed significantly.  New intelligent technologies have expanded the market and customer needs continue to evolve, with customers demanding different levels of service and support at each stage of the product development and manufacturing process.  In addition to traditional distribution services, distributors ask for support in design services, technical information, sub-assembly and supply chain management services.

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