Last week, Texas Instruments notified Avnet that it would end its distribution relationship with Avnet on December 31, 2020. Just a year ago, Texas Instruments ended its authorized distribution relationship with another distributor, the Serial Group. It seems that TI is adjusting its distribution channels faster than the supply chain expects.
As we all know, Avnet is the world’s top distributor of electronic components, TI’s products account for 10% of Avnet’s total sales, the loss of TI’s distribution rights is a heavy blow to Avnet.
Regarding the reason, according to the official statement given by TI, it is due to changes in the company’s development strategy, which is consistent with the speculation of the supply chain a few years ago. In fact, as early as the end of 2016 to the beginning of 2017, TI has begun to adjust its distribution channels. At that time, two companies within the WPG Group transferred the authorized distribution rights of TI. From that time, the supply chain has realized TI will reduce its distribution channels.
In addition, TI said that in the past few years, TI has been developing a distribution network to better match its strategic partners and establish a closer and more direct relationship with its customers. With these direct relationships established by TI, the volume of business through distribution channels will gradually decrease, so the demand for authorized distributors will also decrease.
After TI notified Avnet, Avnet issued an internal letter, and its CEO said that Avnet will continue to look for opportunities to support current and future customers while reducing operating costs. Below is the original text of the internal letter from Avnet.