Buyers probably won’t see a shakeup in the distribution channel as Infineon Technologies embarks on its $10 billion acquisition of Cypress Semiconductors. Both chip companies sell through global volume distributors Arrow Electronics Inc., Avnet Inc. and Future Electronics Inc. They also have Digi-Key, Mouser and Newark in common, small-volume (or “catalog”) distributors that cater to design engineers.

Vendor consolidation has been a longtime factor in the channel that has accelerated in recent years. Not every merger is a win-win for distributors.

If merging suppliers don’t sell through the same distributors, they may consolidate their efforts under their largest partners. Following Analog Devices Inc.’s 2017 acquisition of Linear Technology, ADI named Arrow Electronics as its sole global distributor.

In other cases, the combined entity will expand franchises to inherited partners. When chip makers Microchip and Microsemi merged in March 2018, only Microchip sold through Avnet. By August, both brands had authorized the distributor.

“So far, consolidation has benefited Arrow because of the capabilities we bring to our suppliers,” said Chris Stansbury, Arrow senior vice president and CFO, at the Bank of America Merrill Lynch 2019 Global Technology Conference. “We have dedicated significant resources to Cypress; we are familiar with their products; and we expect to broaden our investment with Infineon.”

Cypress’s portfolio of microcontrollers, software and connectivity components complements Infineon's power semiconductors, sensors and security solutions, the companies said. Combining these technology assets will enable comprehensive advanced solutions for high-growth applications such as electric drives, battery-powered devices and power supplies.

“Infineon is a great supplier for us,” Stansbury added. “It’s a good partnership; and we are in a good position [to support both companies].”

There are a few differences in the Cypress and Infineon distribution rosters but they're unlikely to cause waves.

Infineon sells through catalog distributor Allied and an assortment of local distributors in EMEA and the Asia-Pacific region.

Cypress distributes through Farnell and RS Components and a variety of local and regional resellers. Allied and RS are subsidiaries of Electrocomponents plc, a global distributor headquartered in Europe; Farnell is an Avnet company.

Both also sell through Verical, which is part of Arrow.

This “dance of distribution” is a necessity for merging suppliers. If they carry too many resellers, they’re over-distributed. If they carry too few, they’re excessively dependent. Most component makers spread their risk among global distributors, catalogs and local/regional players.

Franchises may be local or limited for a variety of reasons: suppliers are supporting a key customer; avoiding line card conflicts or amplifying design assistance. In the Asia-Pacific region, local distributors only carry a few lines so channel rosters are populous. Infineon-Cypress may finetune its partnerships there.