Distributors continue to profit from chip shortage

01 February 2022

The chip shortage that has been impacting the supply chain continues to be problematic for many industries including the automotive sector. However, that doesn’t mean companies are not profiting from the predicament. In fact, most chip makers, chip manufacturers and distributors are seeing record level revenues as semiconductor demand is at an all-time high.

Smith, a global distributor of electronic components and semiconductors, said it has reached record levels of revenues in 2021, surpassing $3.4 billion, more than doubling its sales from 2020.

Smith is not the only one. Last year, nearly every electronic distributor said they were having a banner year in 2021 as the chip shortage caused companies to lean even more heavily on these distributors to find necessary electronic components.

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Electronics distributors are known for buying bulk inventory to meet the demands of many customers simultaneously. This strategy has paid off during the pandemic-fueled chip shortage.

E-commerce distributors have also found significant growth during the chip shortage as the stay-at-home orders and lockdowns have companies interacting more through the internet for transactions. While face-to-face transactions are not going away, web offerings are serving to develop a digital customer base that is growing.

Smith said it has grown its customer base by 44% over 2020 while also expanding its product offerings by 30% in unique part numbers shipped over 2020. Demand for IC components has been especially high with year-over-year sales increasing more than 1,000%, Smith said.

Continued investment

Because Smith sees demand not going away, it increased its workforce by 38% in 2021, opened a new office in Berlin, Germany, and increased its Hong Kong sales office and distribution center by 40% and 70%, respectively.

Additionally, Smith invested more than $1.1 million in equipment and process automation across its three distribution centers in Houston, Hong Kong and Amsterdam in 2021.

“2021 was a banner year for Smith, and we are ready to take on even bigger and more exciting opportunities in 2022,” said Bob Ackerley, co-founder and director at Smith. “Our expansions and investments — from our skilled workforce and global footprint to our state-of-the-art equipment and pioneering, data-centric digital tools — will allow us to continue to build new relationships and strengthen our existing partnerships worldwide.”

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