Since the rise of domestic chips in recent years, more and more voices have questioned the value and significance of chip agents and spot dealers.

Some customers question that agents have grabbed profits that should have been given to the original manufacturers. Some chip original manufacturers have even learned from TI and expressed the idea of not needing agents, selling to customers and delivering by themselves.

For a time, agents and spot dealers, these "middlemen", seemed to have lost their value and significance, but this is not the case. The emergence of chip agents (distributors, spot dealers) is an inevitable product of industrial division of labor. After Texas Instruments (TI) invented the integrated circuit in 1958, the semiconductor industry entered a period of rapid growth.

Early IDM companies (such as TI and Fairchild Semiconductor) were responsible for both R&D and manufacturing, and also had to face industrial customers such as Ford Motor and IBM. But in the late 1960s, when the consumer electronics (radio, TV) market exploded, facing scattered OEM manufacturers, the original manufacturers found that the marginal cost of directly serving small and medium-sized customers was too high. In 1967, Avnet took the lead in transforming into a professional electronic components distributor, marking the birth of the modern chip agency model.

As the electronics industry shifted from the United States to Japan, Taiwan, and the mainland, agents in Japan, Taiwan, and the mainland rose one after another. The reason for the development of agents during this period is attributed to the following roles:

1. Customer localization service. In the last century, European and American chip manufacturers dominated. These chip manufacturers faced huge cultural differences and communication barriers when facing customers in Japan, Taiwan, and the mainland. Building a local sales team will undoubtedly cost a lot of manpower and financial resources, and finding a local agent can solve these problems.

2. Inventory buffer, logistics transit. In the 1970s, local agents such as Marubun in Japan helped Intel and other companies open up customers such as Toshiba and Sony by establishing local warehousing and technical support teams, verifying the bridge value of agents in cross-border trade. At this time, the core functions of agents are "inventory buffer" and "logistics transit".

3. Solved the problem of fragmented market services. The semiconductor industry has a typical "80/20 rule": the top 20% of customers contribute 80% of revenue, but the remaining 80% of small and medium-sized customers determine the market penetration rate. When the Motorola 68000 processor was released in 1980, it had to serve major customers such as Apple and Atari and hundreds of industrial control equipment manufacturers at the same time. The original manufacturer found that the cost of maintaining a 100-person direct sales team was much higher than covering the market through 10 regional agents.

4. Chip value-added services. After the PC revolution in the 1980s, the application scenarios of chips expanded dramatically. When the Intel 80386 processor was launched, customers needed support such as BIOS development and motherboard design. In 1992, Arrow Electronics took the lead in establishing a FAE (field application engineer) team and pioneered the "technology distribution" model. From then on, agents assumed the role of "technology translator" to convert original chips into solutions available to customers.

5. Adjust the market fluctuations caused by the original manufacturer's supply problems. During the period of sharp fluctuations in DRAM prices in the 1990s, spot traders smoothed market fluctuations through inventory adjustments. When Samsung encountered a memory oversupply crisis in 1995, it digested inventory through agents such as WPG and WT to avoid price collapse. This "reservoir" mechanism has become an important guarantee for the stability of the industrial chain.

As the chip manufacturers' model changes, the functions of chip agents have also changed. In the 1970s and 1990s, when chip manufacturers were mainly IDMs, agents played a supporting role.

When TI established its first authorized distribution network in 1983, it explicitly required agents to reserve at least $500,000 worth of inventory and have testing and programming capabilities. This "inventory forward" strategy helped the original manufacturer reduce financial pressure. After the rise of the fabless model of Qualcomm, Broadcom, etc., agents assumed more core functions. When MediaTek entered the mobile phone chip market in 1999, it established a Turnkey solution through agents such as World Peace and Pinjia to package and deliver chips, software, and reference designs, creating a new "turnkey agent" model.

The globalization of the supply chain in the 21st century has transformed agents into resource integration platforms. In 2010, Avnet established a supply chain financial business to provide customers with account period support; in 2015, Arrow Electronics launched a cloud design platform to connect original manufacturers and customers through digital tools. At this time, the core value of agents has been upgraded from "goods transfer" to "resource optimization."

As domestic chips gradually occupy the mainstream of the market, agents (spot dealers) still have the following indispensable roles:

1. After some large customers switch to direct supply, there are still a large number of small and medium-sized customers. Their huge number and market scope require agents to promote products, provide technical support, and deliver goods. A domestic MCU manufacturer completed the design-in of 2,000 customers in just 3 years through the agent network, while it would take 200 million yuan and 5 years to build a team of the same scale. The agent's technical service network is essentially a "reusable infrastructure".

2. For customers, centralized procurement through agents can reduce procurement management costs.

3. For chip manufacturers, agents can allow agents to bear inventory and account periods, reducing the pressure caused by direct delivery.

4. It is not convenient for chip manufacturers to solve it themselves, but they can solve various public and private needs of customers through agents.

5. When out of stock, spot dealers can help customers solve urgent needs and usually provide competitive supply prices. Morris Chang, the godfather of semiconductors, once said: "Excellent distributors are not rivals of original manufacturers, but extensions of their nerve endings." This symbiotic relationship is an important cornerstone of continuous innovation in the semiconductor industry. Whether in the past or in the future, chip distributors (spot dealers) have irreplaceable value and role in the development of semiconductor chips.