Resilience and Innovation Coexist: Cytech Systems Wins Awards Again at IIC Shenzhen 2024, Sharing Its Self-growth amid the Challenges of the Supply Chain
During the period from November 5 to November 6, the 2024 International IC & Component Exhibition and Conference (hereinafter referred to as IIC Shenzhen2024 or the Exhibition) successfully concluded at Hall 7 of Shenzhen Convention & Exhibition Center, and the Exhibition was sponsored by AspenCore, a well-known media in the global electronics industry. As an influential system design summit in the industry, IIC Shenzhen 2024 once again provided the semiconductor industry with a professional communication platform, which brings together electronics industry leaders, managers, design elites and decision makers from home and abroad, and focuses on major emerging frontier technologies/products, market applications, as well as the development, changes and trends of the supply chain, in order to promote the innovative and steady development of the industry.
At the concurrent "2024 Global Electronic Component Distributor Awards", Cytech Systems Limited (hereinafter referred to as "Cytech Systems" or the Company), a leading electronic component distributor in the industry, was conferred "International Potential Star Distributor"! It’s the second time for Cytech Systems to win such honor following 2023.
Figure 1. Ted Wang, Sales Director of Cytech Systems (Left). He took the stage as the company representative to receive the "International Potential Star Distributor" trophy
Resilience! Challenges of the Supply Chain Still Exist amid Market Differentiation in the Future
The Company’s success in winning the award again is not only a recognition to its strength, but also an incentive to its active adjustment of strategies during the transformation. Cytech Systems also noted that this award means favor and recognition from the market and is a reward for the Company’s years of painstaking efforts in operation. The award itself will inspire Cytech Systems to keep enhancing its strength, provide customers with more premium products and services, and then shore up and steadily improve its status and influence in the industry.
In 2024, the semiconductor industry has seen a strong recovery, but it remains in an unbalanced state, and there are still a lot of challenges and vulnerabilities in the supply chain, thus the test on the resilience of the distribution industry has intensified. Latest forecast from the World Semiconductor Trade Statistics (WSTS) shows that the global semiconductor market is expected to grow by 16% to touch US$611 billion in 2024. The main driving force for this growth come from logic chip (expected to grow by 10.7%) and memory chip (expected to grow by 76.8%).
Bain & Company also warned in its report that the surge of demands driven by AI will pose new challenges to the supply chain. Presently, breakthroughs in generative AI lead to a sharp increase in the demands for data center GPU. It is expected that by 2026, the demands of data centers for the current generation of GPU will double. Besides that, the embedding of AI functions in personal devices will also contribute to the growth of new device purchase demands. It is expected that by 2026, PC sales will increase by 31% and smartphone sales will go up by 15%. This trend will undoubtedly further aggravate the shortage of the supply chain, especially the supply shortage of high-end chips and memories.
Updated report from McKinsey & Company reveals that in 2024, 90% of the enterprises in survey have fallen into supply chain predicament, and there are a variety of reasons for this predicament, such as geopolitics, natural disasters, or serious influence on the global circulation of some semiconductor products due to the current trade tension.
In view of the ever-changing global economic environment and the volatile electronic component market, Cytech Systems estimates that differentiation will predominate in the future market: on the one hand, some traditional electronic component markets may shrink little by little; on the other hand, the electronic component markets related to emerging technologies will greet fast-rate development.
Based on in-depth research of the front-line market, Cytech Systems remarked that the market development in such fields as the Internet of Things (IoT), artificial intelligence (AI), and new energy will be upbeat over the next few years. To cope with this trend and change, the Company has already made preparations in different respects such as product selection, technology reserve, and market exploitation.
Tempered into Steel, Shoring up Digital “Hard Power” in the Cycle of Transformation
Since 2022 when the semiconductor market was in short supply, the electronic component distribution industry has got through ups and downs resulting from various “Black Swan” incidents. As a matter of fact, the parallel strategy “PPV + Shortage” once helped Cytech Systems achieve a round of rapid growth, but the market is shifting from shortage to oversupply, thus strategic adjustment is must-do.
To tap new business opportunities, Cytech Systems attaches importance to the strong development of both agency division and PPV services, in a bid to cope with new challenges. As a common knowledge, the distribution business undulates with the market and has extremely high requirements for information technology. To seize business opportunities amid the market undulation, Cytech Systems must keep abreast of the market trend and the customers' production plans, and adjust inventory level reasonably, all of which depend on advanced digital management.
Introduction of a more advanced SAP supply chain system is just the first step. Cytech Systems leverages the ERP system to conduct real-time monitoring and management over various links such as procurement, inventory, and sales, thereby greatly improving the transparency and efficiency of the supply chain. Besides, Cytech Systems has also brought in the LIMS and WMS intelligent warehouse management systems to achieve automated process management, raise the efficiency in inventory and logistics management, increase the response speed to customer needs, and further improve customer satisfaction.
Aside from digital empowerment, Cytech Systems is supposed to strengthen in-depth cooperation with upstream and downstream enterprises, establish closer strategic alliances, and achieve information sharing and collaborative operation, only by doing so can Cytech Systems cope with challenges at ease. For example, for products with inventory backlogs, the Company should actively explore emerging markets and application fields to find new sales channels. In an environment featuring price decline, the Company should further optimize procurement strategies, ask for more favorable price terms from suppliers, and further beef up cost control, with a view to strengthening competitiveness and improving the overall efficiency and resilience of the supply chain!
Stress on value-added services is the bedrock amid the backdrop of market diversification
Judging from the recovery of the semiconductor industry in 2024 we can see that the global semiconductor market will still keep expanding over the next few years. However, with the rapid growth of investment and the continuous expansion of production capacity, the industry will also face new risks arising from supply-demand imbalance. In the meantime, intensified market differentiation will also lead to development speed differences in different regions and industries, implying that customer demands will become increasingly diversified.
Cytech Systems has discovered that over the past few years, quite a number of overseas OEMs have changed their attitudes towards Chinese semiconductor manufacturers, and their acceptance of “Made in China” chips has been on the rise. After being keenly aware of this change, Cytech Systems has also started to tap the agency business of more premium domestic chips. Its subsidiary CHCHIP, which is engaged in the promotion of domestic chips and modules, has taken on this important mission.
For example, PHY PLUS, which focuses on low-energy Bluetooth master chips, boasts proprietary Bluetooth protocol stack and strong capabilities in market product application development. MOT, with a rich variety of product types and applications in the field of power devices, is not only a famous high-tech enterprise in domestic semiconductor packaging & testing field but also a state-level “Specialized, Sophisticated, Distinctive, and Innovative” little giant enterprise. AIPUPOWER, which specializes in AC-DC/DC-DC high-frequency modular power supplies, is a 20-year-old brand enterprise and a high-tech enterprise with rich product design experience and refined power supply solutions/products. So far, CHCHIP has amassed excellent domestic manufacturer resources in their respective fields, including LORENTZ, AIPUPOWER, MOT, Neoway, PHY PLUS, FMD, WCH, BORN, HT semi, CXW, HPMicro, and METAX.
Figure 2. Cytech Systems and CHCHIP exhibit some original factory products at IIC Shenzhen 2024
In addition to bringing in domestic product agency lines, Cytech Systems has further refined its services - providing customized solutions including product selection, technical support, and after-sales services. Cytech Systems has also explored a lot of new supply channels, introduced online sales platforms, and leveraged offline sales team and service outlets. On the one hand, it aims to integrate more competitive product lines; on the other hand, it integrates value-added technical solutions. Then, the Company takes advantage of online and offline integration services to provide customers with a more convenient and efficient purchasing experience.
Taking full-fledged quality management system and swift response to customer demands as the service cornerstone, Cytech Systems keeps expanding its capacity boundary, for example, going global.
Developing overseas customers and business is something that Cytech Systems has been planning for years. In the future, the electronic component distribution industry will be inevitably challenged by intensified market competition, rapid technological updating, and diversified customer demands. How to improve the Company’s overseas reputation has become a top priority of Cytech Systems.
Extending the customer group to global OEM, EMS, and ODM has become the Company’s strategic focus for now. In August this year, Cytech Systems reached an authorized agency cooperation with Torex, a top-class Japanese power management IC manufacturer. For overseas business, Cytech Systems said in public that the Company would expand its business to Japan, Singapore, Malaysia, Thailand, Vietnam and other places on a gradual basis to keep increasing its market share, hoping to become a leading enterprise in the electronic component agency and distribution industry. Although the hard & core technology industry is making unremitting efforts to enhance the resilience of the global supply chain, there are still a lot of challenges and vulnerabilities in the supply chain. Undoubtedly, those who move ahead with guts will see all these as opportunities!
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