We are a national distributor of brand name electronic components and supplier
of original designed and manufactured (“ODM”) electronic components
(“ODM Components”), with our product offerings ranging from discrete
semiconductors through small electronic devices. We also offer value-added engineering
and turn-key services, focusing on providing contract electronic manufacturers
(“CEM”s) and original equipment manufacturers (“OEM”s)
with ODM services for their multi-year turn-key projects (“ODM Projects”).
We are incorporated in California, and were originally formed in 1989. We maintain
a majority-owned subsidiary in Mexico (our Mexico subsidiary sales and distribution
operations closed in May 2013) and two divisions in each of Taiwan and China.
We have developed a reputation for stocking a large selection of inventories
and having an in-depth knowledge of the products in our markets. Our “superstore”
strategy consists of carrying a large quantity and variety of components in
inventory to meet the rapid delivery requirements of our customers. To differentiate
from other distributors, we also offer ODM Components, which are manufactured
electronic components based on our own engineering specifications under the
private label brand “TCI” through manufacturing partners. Our inventory
consisted of approximately 12,000 different products manufactured by more than
100 different suppliers. Our Taiwan and China locations provide support for
inventory sourcing, purchases and coordinating the manufacture of our ODM Components
and ODM Projects (collectively we refer to as “ODM Products”). Our
China location also serves as the engineering center responsible for making
component datasheets and test specifications, arranging pre-production and mass
production at our manufacturer partners, preparing samples, monitoring the quality
of shipments, performing failure analysis reports, and designing circuits with
partners for ODM projects.
Discrete semiconductors are basic electronic building blocks. One or more different
types of discrete semiconductors generally are found in the electronic or power
supply circuitry of products as diverse as automobiles, televisions, radios,
telephones, computers, medical equipment, airplanes, industrial robotics and
household appliances. The term “discrete” is used to differentiate
those single function semiconductor products which are packaged alone, such
as transistors or diodes, from those which are “integrated” into
microchips and other integrated circuit devices.
The U.S. electronics distribution industry is composed of national, international,
regional and local distributors. Electronics distributors market numerous products,
including active components (such as transistors, microprocessors and integrated
circuits), passive components (such as capacitors and resistors) and electromechanical,
interconnect and computer products. We focus our distribution efforts almost
exclusively on discrete semiconductors, optoelectronic devices and passive components,
a small subset of the electronic components market.
Semiconductors can be broadly divided into two categories - discrete semiconductors,
including transistors, diodes, rectifiers and bridges, which are packaged individually
to perform a single or limited function, and integrated circuits (“IC”s),
such as microprocessors and other “chips,” which can contain from
a few to several million transistors and other elements in a single package,
which are usually designed to perform complex tasks. However, the commodity
ICs, a combination of a limited number of discrete and passive components in
one package, are far less sophisticated than other integrated circuits and perform
simple tasks in circuits similar to discrete components.
While other integrated circuits may garner more public exposure, discrete semiconductors
and commodity ICs, the ancestral root of today’s complicated integrated
circuits, have been a core element of electric equipment for more than 30 years.
Discrete semiconductors and commodity ICs are found in most consumer, computer,
communication, automotive, instrumentation, medical, industrial and military
electrical and electronic applications.
Discrete semiconductors and commodity ICs represent only a small subset of
the different types of semiconductors currently available. Discrete semiconductors
and commodity ICs are generally more mature products with a more predictable
demand, more stable pricing and more constant sourcing than other products in
the semiconductor industry, and are thus less susceptible to technological obsolescence
than other, more complex, integrated circuits.
Discrete Semiconductors and Commodity Integrated Circuits
Semiconductors can be broadly divided into two categories - discrete semiconductors,
including transistors, diodes, rectifiers and bridges, which are packaged individually
to perform a single or limited function, and integrated circuits (“IC”s),
such as microprocessors and other “chips,” which can contain from
a few to several million transistors and other elements in a single package,
which are usually designed to perform complex tasks. However, the commodity
ICs, a combination of a limited number of discrete and passive components in
one package, are far less sophisticated than other integrated circuits and perform
simple tasks in circuits similar to discrete components.
While other integrated circuits may garner more public exposure, discrete semiconductors
and commodity ICs, the ancestral root of today’s complicated integrated
circuits, have been a core element of electric equipment for more than 30 years.
Discrete semiconductors and commodity ICs are found in most consumer, computer,
communication, automotive, instrumentation, medical, industrial and military
electrical and electronic applications.
Discrete semiconductors and commodity ICs represent only a small subset of
the different types of semiconductors currently available. Discrete semiconductors
and commodity ICs are generally more mature products with a more predictable
demand, more stable pricing and more constant sourcing than other products in
the semiconductor industry, and are thus less susceptible to technological obsolescence
than other, more complex, integrated circuits.
Optoelectronic Devices and Passive Components
In addition to discrete semiconductors, we offer optoelectronic devices such
as LED’s, infrared sensors and opto couplers, along with passive devices,
such as resistors, capacitors and inductors which are electronic components
manufactured with non-semiconductor materials. We market these optoelectronic
devices and passive components through the same channels, as the discrete semiconductors.
Electronics Distribution Channels
Electronic component manufacturers, which we refer to as suppliers, sell components
directly to CEMs and OEMs, as well as to distributors. The practice among the
major suppliers is generally to focus their direct selling efforts on larger
volume customers, while utilizing distributors to reach small and medium-sized
CEMs and OEMs, as well as smaller distributors. Many suppliers consider electronic
distributors to be an integral part of their businesses. As a stocking, marketing
and financial intermediary, the distributor relieves its suppliers of a portion
of their costs and personnel associated with stocking and selling products,
including otherwise sizable investments in warehousing, logistics and finished
goods inventories. By having geographically dispersed selling and delivery capabilities,
distributors are often able to serve small and medium-sized companies more effectively
and economically than can the supplier.
Electronic distributors are also important to CEMs and OEMs. CEMs and OEMs
frequently place orders which are of insufficient size to be placed directly
with the suppliers or require delivery schedules not available from suppliers.
Distributors offer product availability, selection and more rapid and flexible
delivery schedules keyed to meet the requirements of their CEM and OEM customers.
Also, they often rely upon electronic distributors to provide timely, knowledgeable
access to electronic components.
There is also pressure on the suppliers, CEMs and OEMs to maintain small inventories.
Inventory is costly to maintain and thus suppliers desire to ship finished goods
as soon as the goods are manufactured. CEMs and OEMs typically demand “just
in time” delivery -- receipt of their requirements immediately prior to
the time when the components are to be used. Distributors fill this niche.
ODM Service Industry
ODM service providers have experienced rapid change and growth as an increasing
number of OEMs outsource their manufacturing requirements. OEMs have continued
to turn to outsourcing in order to reduce product cost; achieve accelerated
time-to-market and time-to-volume production; access advanced design and manufacturing
technologies; improve inventory management and purchasing power; and reduce
their capital investment in manufacturing resources. This enables OEMs to concentrate
on what they believe to be their core strengths, such as new product definition,
design, marketing and sales. We believe further growth opportunities exist for
ODM service providers to penetrate the worldwide market. By designing private
brand products to OEM customers in the US, we are able to expand export sales
to overseas CEM customers.
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