"Business has been trending up month over month since September and we don't see it reversing itself any time soon," CEO of America II, Mike Galinski tells "A CONVERSATION WITH SEMITRENDS" AUDIENCE

Online, May 26, 2010 (Newswire.com) - Dallas, TX-May 25, 2010-Independent distribution leader, America II is seeing their business being driven from not only their traditional customer base of EMS and industrial customers, but are also expanding into areas such as automotive and networking. This demonstrates the desperation that these tier 1 customers who are used to being fully supported by the component suppliers are suffering from.

Speaking on "A Conversation With SemiTrends," America II CEO Mike Galinski, said that typically customers procure their products from the component suppliers or their franchised distribution partners. Only when they can not find components from these sales channels will they reach into the independent channels and engage with America II. So, before America II's phones ring, the customers typically have already struck out with the suppliers and their distributors.

America II utilizes their proprietary tools to forecast where these shortages are likely to exist in the future and try to build up strategic inventories ahead of the shortages. "We began procuring strategic inventories last summer prior to the tightness in the supply chain," Mike told us during our conversation. "In September we really started seeing the activity levels picking up in N. America and we were able to keep many of our customers' production lines up due to our vast inventory that we have on hand." America II holds about $1B worth of inventory Chuck Magee, VP America II advised us. Chuck further went on to say, "Some of our inventory is consigned, some of it is excess inventory, and the balance of it is America II owned inventory." America II believes that other than the top franchised distributors, America II has more available for sale inventory than any other distributor.

Many followers of the component industry have noticed significant lead time expansions from the component suppliers. America II has seen leadtimes from many of the High Performance Analog , FPGA, discrete, and capacitor manufacturers continuing to be extended. Suppliers like ADI, LTC, Maxim, Altera, Xilinx, STM, On Semi, Vishay, and Atmel are expected to continue to have longer lead times according to America II. Conversely, TI who has been suffering badly the last couple of quarters is now starting to see improvement in their quoted delivery times.

Galinski and Magee both agreed that as far as they can see, the shortages are likely to continue with no letup in sight through Q410. This presents a great opportunity for America II to demonstrate to its customers that they can help solve some production line problems by sourcing hard to get components on the open market. They explained to us that their typical customer doesn't place long scheduled orders, but rather book/ship in the same day in most cases. So, it is of paramount importance for America II to have the right inventory available for sale at the right time.

In the past downturn in 2000, Mr. Magee stated that inventory was typically owned by the EMS companies and by the franchised distributors. The difference this time around is the component manufacturers are holding a greater share of the inventory so the supply chain is a lot leaner. "We do not see nearly the amount of inventory available in the supply chain during this upturn as we saw last time." Suppliers have been fairly conservative about adding capacity so the lack of supply is expected to continue for a while.

Normally, America II likes to hold 15-30 days worth of inventory on hand. They have significantly added to their inventory and would like to hold anywhere from 3-6 months worth. Galinski told us that, "We began buying products last fall and these are the parts that we have on our shelves available to sell." They anticipated the upturn once they noticed Asia starting to turn on and aggressively placed inventory orders for their high running products. They try to keep the top movers in stock all the time. "We have had more difficulty obtaining inventory during this cycle than in past cycles, ": related Mr. Galinski. They continue to utilize sources in Asia, Japan, Europe, and N. America, but it is getting harder and harder to obtain inventory. Some of America II's backlog with their suppliers stretches out over 20+ weeks.

A story that was related to us demonstrates how tight the supply chain is. He mentioned that a European automobile mfg has a contract price with his supplier for a $.10 component. However, they were not able to obtain these components from their supplier so they contacted America II. America II's price was significantly higher than $.10, but they had over 850k units in stock. Ultimately, the automobile mfg sent a courier to the St. Petersburg, FL Headquarters of A2 to hand carry the components back to Europe for the next day's production schedule. A2 told us that typically the tier 1 customers get supported in good or bad times by the suppliers or the franchised distributors. Networking, automotive, and consumer customers are now reaching into the America II supply chain to solve their critical issues as the traditional supply chain is not able to support them.

• America II derives about 2/3 of its revenue from NA based customers.
• Their revenue is from shipments of components, as they do very little systems business.
• Most orders are booked and shipped in the same day. Very little of their revenue comes from scheduled deliveries to their customers
• They source their products from franchised distributors, excess inventory of OEM's and EMS companies, and other sources of supply around the world.
• Resale value of their inventory is approximately $1B
• Do not participate in much processor business
• Typically they do not support the computing or consumer customers

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About America II
America II Electronics, Inc., one of the world's largest independent distributors of semiconductors and passive components has offices in all major markets in the world including N.America, Europe, Asia Pac, and Japan. They have ISO9002 certification and certification to the Counterfeit Components Avoidance Procedures (CCAP). The CCAP-101 Certified ProgramTM CR was developed by the Components Technology Institute, Inc. (CTI) to define mandatory practices for use by independent distributors to detect and avoid the circulation of counterfeit components. As an independent distributor, they are not affiliated with the manufacturers of the products it sells except where expressly noted. For further info on A2 contact [email protected]