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Advanced MP Sale Boosts America II Growth

One of the electronics industry’s largest hybrid distributors – America II Electronics—has acquired another leading hybrid, Advanced MP Technology. The combination of two companies—an estimated $427 million in revenue—would rank the company 15th on EPSNews’ Top Global Distributors List.

Both companies have been augmenting their independent – or non-authorized – distribution model with franchised suppliers. The model has so far proved a win-win for the distributors and suppliers. Original component manufacturers (OCMs) that are not large enough to command attention from global authorized distributors gain significant support from hybrids. For the distributors, the audit process that accompanies an authorization from an OCM provides a high level of confidence for customers.

The independent/non-authorized distribution model has been criticized in the past for its sourcing practices (independents buy excess inventory from OEMs, EMS providers, OCM factories and other distributors); the inability to trace the origins of every product; pricing; and as a source of counterfeit components. America II, Advanced MP and a number of high-profile independents have adopted stringent quality practices; provide component testing services; and have added authorized lines. 

“The strategic synergies of our combined years of experience will significantly enhance our already expanding regional capabilities and customer coverage to bring the best of each to our ever-growing industry,” America II said in a release. “This acquisition further builds on America II’s global position as a leading electronic components distributor.”

America II itself was recently acquired by Wynnchurch Capital, LLC a private equity investment firm. America II’s founder, Michael Galinski, remains its CEO.

The merger comes at a good time for distributors that have a lot of sourcing flexibility. The electronics industry is undergoing a severe components shortage — that began in mid-201— that is expected to continue through next year. Hybrids can source products outside of their authorized lines, and they can adjust pricing based on supply and demand. America II grew 19 percent in 2017; Advanced MP did not share its growth rate.

“The distribution market is evolving faster than ever,” Kamran Malek, global vice president of marketing /Asia director for Advanced MP, told EPSNews in June of last year. “We believe in taking different approaches to the market because our customer base is changing so rapidly.”

Investment firms Morgan Stanley and Stifel, in their most recent market updates, reported the ongoing electronic component shortage appears to be getting worse. “Lead times remain elevated across a number of components, including capacitors, resistors, memory, and certain discretes, according to our analysis of distribution data,” Stifel reported in a July 16 update. “We continue to see signs of double ordering as customers scramble for parts. The multi-layer ceramic capacitor (MLCC) shortage is the most severe, with many parts seeing order-rescheduling requests from customers waiting on MLCCs or other parts.”

Since the second half of 2016, OEMs have been coping with the limited supply of capacitors, specifically MLCCs, Advanced MP said in a recent market update. Some experts believe the shortage will extend to 2019, while many others expect until year 2020. The report continued: 

Considering product advancement in smartphone, automobile and IoT sectors is rapidly growing, many experts believe there is no relief in sight for the current MLCC shortage. Although MLCC production is increasing, demand continues to outweigh supply. MLCC manufacturers including Murata, Vishay, Kemet, TDK and AVX have been adding capacity trying to keep up with demand. The global MLCC market is expected to hit US $9,720 million by 2022.

However, not a lot of capacity is going toward legacy products. “Passive component makers are adding capacity for the products that the business of the future is going to need; not the legacy products,” said Michael Knight, president of TTI Semiconductor Group (TSG). “We are talking about products that have been relatively unchanged for 20 to 30 years, and suppliers that have limited capital expenditures to invest. Do you invest in products whose days are numbered, or do you invest in next-generation products?” 

Component sourcing remains a global challenge for the supply chain, but companies with significant leverage often move to the front of the line. Both America II and Advanced MP have locations in the Americas, Europe and Asia. “This acquisition represents a pooling of the expertise of two leading global distribution organizations and significantly amplifies America II’s territorial strengths through additional warehouses and increased international growth,” America II stated. 

“We are excited about this next step for our business, and we are all completely committed to supporting and serving our customers and business partners,” the distributor concluded. “We are dedicated to continuing to provide [customers] with the highest quality and broadest line of products, fastest lead times and industry leading service.”

1 comment on “Advanced MP Sale Boosts America II Growth

  1. Mike Stifter
    September 20, 2018

    Congratulations America II & Advanced MP Technology on this historic union of two immensely experienced and vastly knowledgeable top global independent distributors.  I'm excited to provide our customers with an infinite level of service and support that will be unmatched in the industry.

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