Avnet (AVT) investor relations material

Semiconductor cycle and regional trends

• Asia experienced four consecutive quarters of growth, with fiscal 2025 up roughly 12%, signaling a broad-based recovery that began after six quarters of declines.

• Book-to-bill ratios are above parity in Europe and Asia, at parity in the Americas, indicating stabilization and early signs of recovery in the West.

• Orders within lead times (turns business) are increasing, suggesting depleted inventories and improving near-term backlog.

• Sequential growth is expected in Europe and the Americas, with September seen as a key indicator for the December quarter.

• Asia now represents about 50% of business, up from 40% five quarters ago, due to significant growth in Asia and declines in Europe and the Americas.

Demand, inventory, and customer behavior

• Growth observed in compute, communications, and transportation end markets, while industrial remains weak, especially in Asia and Europe.

• Customers are cautious with forecasts, leading to shorter visibility and a mixed response to requests for longer-term orders.

• Inventory stands at roughly 94 days, with a near-term goal to reduce it to the 80s; progress made but further optimization needed.

• Inventory is seen as critical for meeting near-term demand, especially as lead times may extend with rising demand.

• No plans to increase inventory; focus remains on working down excess and aligning with sales levels.

Pricing, tariffs, and mitigation strategies

• Pricing remains stable, with average selling prices holding up and no significant downward pressure expected.

• Tariffs have minimal financial impact but create operational challenges; mitigation includes dual sourcing and optimizing regional supply chains.

• About $3B of annual revenue is from China, with strategies to match product origin to destination and use foreign trade zones to minimize tariffs.

• Tariff-related demand pull-ins in Asia have ranged from $50M to $100M per quarter due to trade uncertainty.

• Less than 3% of Americas sales and under 1% globally are subject to tariff billings, with nominal impact on gross margin.