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Thread: Distribution versus Direct

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    Distribution versus Direct

    Dear Friend at SemiWiki, Can someone enlighten me as to how much industry product ships to customers via distribution versus direct... perhaps the answer can parsed memory, CPU and other. Many thanks in advance. gjh

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    Blogger Daniel Payne's Avatar
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    After a quick Google search I found a report by McKinsey that states, "Distributors handle 24 percent of the semiconductor industry's revenues."

    http://www.mckinsey.com/~/media/McKi...tnerships.ashx

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    Daniel Payne, EDA Consultant
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    mmm... seem's low. i get conflicting numbers from different people.

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    Blogger Bernard Murphy's Avatar
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    Not my area of expertise, but I would doubt that direct selling is a big channel. Costs would be prohibitive unless every deal was zillions of parts. In EDA a rule of thumb is that you use distribution in a region until annual revenue crosses ~$5M. You get a smaller profit on that revenue but that more than compensates for sales cost and support borne by the disty. So I would expect some QCOM and Intel parts could be sold direct to the big phone, PC and server manufacturers, and maybe some other parts, but everything else would go through distributors. But again, not my area of expertise.

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    Thanks Bernard for the insights, very helpful

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