Growth in Global Components
Our Global Components business achieved record sales of $11.2 billion, more than half from outside the United States. We are the market leader in North America and Europe, as well as a major player in Asia-Pacific, and we increased sales and profitability in 2007 in a market that showed low single-digit growth.
In North America, we saw strength in our vertical market initiatives as we grew our business in the lighting, industrial and transportation markets. We are moving ahead with strategic initiatives to expand further into our core area globally, serving small- and medium-sized customer segments. In an increasingly competitive marketplace, we are always identifying ways to operate more efficiently and create even more value for our business partners.
In Europe, we are building upon our market-leading position. We are investing in broadening our customer base, and made progress in our initiatives to achieve a seamless Pan-European structure. The ongoing movement of manufacturing to Eastern Europe presents growth opportunities for us, and we have expanded our operations in Russia.
The Asia-Pacific market continues to expand and now accounts for approximately half of
the worldwide use of electronic components. This region represents 22 percent of our total components revenue, up from 13 percent in 2003. Our focus is to drive profitable growth through our strong local presence while leveraging our global reach. Ongoing efficiency initiatives helped us generate the highest operating income for this business since 2000 as well as significant improvements in our return on working capital.
Our strategic move to launch the Arrow Japan subsidiary and the acquisition of Universe Electron Corporation, a Tokyo-based distributor of semiconductor and multimedia products to the region’s major manufacturers and firms, will allow us to expand our components business in Japan’s $60 billion marketplace.
As we look forward, we see significant opportunities to grow across markets, geographies and products, particularly with small- and medium-sized customers that comprise approximately 80 percent of sales in our components business. This customer base represents a growth engine for us and is expected to outpace long-term market growth rates.
Other growth areas include high-brightness light-emitting diodes, or LEDs, where we
have established an industry-leading position and doubled our customer base and revenues over the past year. LEDs are expected to be an $8 billion global market by 2010, and we are excited about the opportunities in this rapidly developing market where electronic lighting modules are playing an increasing role.
Passives, electromechanical and connector products are another growth area for our components business as we build upon our number-one position and expand into new customer segments. We are also well positioned in the medical market where we provide the design, compliance and critical time-to-market services for customers operating under stringent government regulations and certifications. Industrial and transportation represent additional growth opportunities given the trend toward the increasing use of electronic components in those markets.
As our world becomes more digitally oriented, the demand for analog products that convert real-world sources into digital signals is increasing at a pace much greater than the overall components market. We have an industry-leading position in analog products, and we fully intend to grow that position.
