Avnet China 30th Anniversary Special Issue: Gathering Global Wisdom, Building China's Chip Path

"Avnet's business network spans over 140 countries and regions worldwide, providing clients with comprehensive technical support and supply chain services," said Cai Zongfu. In recent years, facing multiple challenges in the global economic and industrial environment, Avnet has leveraged its global sales and logistics network, along with its professional local service capabilities, to successfully support numerous international clients in achieving steady growth in the Chinese market. Furthermore, through the collaborative support of Avnet's teams in Asia, Europe, and the Americas, companies can more agilely respond to Chinese customer needs, optimize supply chain resilience, and accelerate their local business expansion.

Cai Zongfu emphasized that Avnet is an enabler connecting global technology and local ecology. The company integrates advanced domestic and foreign products and technologies into the local innovation system, promotes the deep integration of international semiconductor brands with the Chinese market, and grows and shares the same destiny with the Chinese economy.

In addressing localized demands and international compliance challenges in supply chain management, Avnet consistently adheres to the philosophy of "global presence, local decision-making." With over a decade of experience in the automotive semiconductor field, the company has become a global leader in automotive chip distribution, leveraging its solid customer base, extensive product line, and comprehensive end-to-end technical support. At the same time, in response to the rapid development of China's new energy industry, Avnet has integrated decentralized application resources such as wind power, photovoltaics, energy storage, and charging to establish the Wind, Solar, Energy Storage, and Charging Business Unit to more precisely serve local customers. Currently, Avnet has supported R&D projects for hundreds of industry clients and will continue to strengthen its resource investment and business layout to better support the achievement of China's dual carbon goals.

Furthermore, with the rise of artificial intelligence (AI), Avnet is actively developing its services, offering AI companies a comprehensive range of services, from chips to systems. Cai Zongfu stated that with increasing local clients demanding high compliance requirements, Avnet, leveraging its expertise in global trade compliance, can provide comprehensive support. "Our team is familiar with the latest regulatory requirements and compliance requirements, enabling us to help clients achieve steady growth based on compliance."

Cai Zongfu explained how Avnet leverages its global resources and ecosystem to synchronize its development with the Chinese economy. Meanwhile, the company also prioritizes intelligent optimization of back-end decision-making. Hu Jialong, Senior Manager of Data and Business Analytics at Avnet, leverages data to provide deep insights for the company's supply chain optimization and strategic partnerships.

In chip distribution centers' stocking strategies, predictive analytics have enabled a critical shift from responsive to proactive decision-making. Hu Jialong shared that traditional stocking methods are often limited by historical sales, purchasing experience, and quarterly demand plans, lacking the ability to respond to market fluctuations. However, these methods can now achieve the following optimizations:

• Identifying trend changes: AI-powered predictive analysis can identify trend changes, capture inflection points in market demand for chips like power management ICs and MCUs in real time, and deploy inventory in advance.

• Precise product allocation: By sinking the forecast results to the model level and combining them with dimensions such as region, customer group, and industry trends, more refined product allocation strategies can be implemented;

• Optimize inventory structure: avoid problems such as out-of-stock of high-turnover products and backlog of low-turnover products, and improve overall inventory health.

In practical applications, AI forecasting not only integrates historical sales data but also incorporates industry chain signals, macroeconomic indicators, and unexpected events. Hu Jialong's team has built a hybrid forecasting framework using various models, including LSTM, XGBoost, and Prophet. To ensure even more accurate forecasts, all models are evaluated using the MAPE metric and automatically retrained monthly.

Hu Jialong explained that the AI ​​model's predictions are fed into the "Intelligent Stocking Recommendation System," where they are combined with business rules (such as MOQ, delivery date, and price fluctuations) to generate optimal stocking recommendations, which are then confirmed by operational decision-makers. Hu emphasized that AI doesn't replace experience; rather, it empowers decision-making with data. Through AI-driven predictive analysis, we can create a closed-loop, dynamically iterative intelligent supply chain system, from "demand forecasting" to "stocking guidance" to "inventory structure optimization."

In an era of highly unstable chip supply, AI is not the icing on the cake, but a core tool for preparing for a rainy day.

With the rapid rise of Chinese electronic component suppliers, data insights are driving the continuous optimization of Avnet's supplier partnership strategy. By building a unified data platform covering both global and local markets, Avnet is tracking and analyzing the development of its domestic product lines in China from multiple perspectives. In terms of sales growth, we conducted a stratified comparison of Chinese production lines and international brands by channel, industry, and customer group. We found that the penetration rate of domestic production lines among small and medium-sized customers and specific industries is rapidly increasing, with some categories experiencing a compound annual growth rate exceeding 35%. Furthermore, based on in-depth analysis of customer purchasing behavior models, we have identified that an increasing number of customers are gradually replacing international brands with Chinese brands in their bills of materials (BOMs). This reflects the increasing advantages of Chinese components in terms of cost-effectiveness, delivery flexibility, and local support.

Furthermore, increasing geopolitical and supply chain uncertainty is driving customers to actively seek secondary sourcing, significantly benefiting domestic brands. Avnet quantifies this trend through modeling and promptly incorporates relevant insights into supplier partnerships and product selection strategies. Furthermore, in terms of quality and certification, we systematically track customer return rates, quality disputes, and certification pass rates, finding that high-quality domestic companies have achieved comparable levels of stability and reliability to top international brands.

Based on the above insights, we make several strategic recommendations:

• Optimize the supplier portfolio: Strengthen strategic cooperation with Chinese manufacturers with R&D and delivery capabilities to enhance local responsiveness;

• Customized ecological services: Build a customized sales, technical, and FAE support system around the Chinese production line to help it better serve end customers;

• Co-creation of product definition: Through data sharing and joint market research, we promote co-creation of product definition and help Chinese companies develop new products that better meet market needs;

• Establishing a risk diversification mechanism: Through a multi-source introduction strategy, Chinese production lines are incorporated into the supply chain system, thereby building a more flexible and risk-resistant product portfolio and comprehensively improving customer stickiness and satisfaction.

For Hu Jialong, data isn't the end point, but the starting point for strategic optimization. Leveraging in-depth data analysis and agile decision-making systems, Avnet not only identifies industry opportunities but also guides and reforms supplier partnership strategies, achieving a balance between global resources and local strengths.

For 30 years, Avnet has consistently prioritized customer needs. From supply chain empowerment to solution innovation, from local support to global compliance, the company has continuously broken through traditional distribution boundaries and reshaped the foundation of supply chain value. Looking ahead, Avnet will continue to align with China's technological innovation and embark on a new journey together with its partners.