Distributor Arrow Electronics has issued a profits warning, saying its second quarter profits are likely to fall below expectations.
The news sent a cold shiver through other component distributors as they struggle to shift kit to their customers in a slack market.
Arrow said there is "pervasive weakness" in the electronics market and that, as the effects of the Asian economic crisis spread, there is increasing pressure on average selling prices, plus narrowing gross profit margins.
According to Arrow, suppliers' output of components remains high, lead times for products are shortened, and products are freely available on a global basis.
As a result of all these trends, the company predicts that its profits will be 20 per cent down on its first quarter.
The news from Arrow is echoed by UK distributors of both memory and storage products. Last week, Ideal Hardware issued a profits warning. And yesterday, two memory distributors, Datrontech and French-owned Dane-Elec, said demand for products was weak, while output from factories across the world remained too high.
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