Velocity Electronics is a global electronic components distributor and supply chain partner to contract manufacturers and OEMs.
Why does Velocity Electronics matter to the semiconductor industry?
If you look back at the evolution of distribution, the shift from franchise to independent distributors has reshaped the ecosystem. Originally, OCMs like Microchip manufactured components and distributed them through franchise distributors such as Arrow, Avnet, and Future. These distributors would manage orders and lead times, but 15 years ago, they stopped holding significant inventory. As lead times stretched to 14-26 weeks, customers sought more agile and flexible partners like Velocity to manage their supply chains.
Over the last five years, as manufacturers increasingly focused on emerging technologies like AI, older components became obsolete faster. This created challenges for sectors like military, oil and gas, and healthcare, where redesigns require years of regulatory approval.
Velocity became essential by providing these industries with access to discontinued parts. Our commitment to quality, even without direct manufacturer traceability, ensures reliability across critical applications—from oil rigs to medical devices—where failure is not an option.
Do you hold all inventory in-house, or are you sourcing it from multiple suppliers?
We have high inventory turnover. We hold inventory to support our customers’ inventory management needs or when we have taken a strategic position in the parts. Our real strength lies in sourcing the right parts at the right time through trusted global partnerships. Clients are experts in product design and manufacturing, but we specialize in finding, verifying, and ensuring the authenticity of the components they need. This involves a three-pronged approach: cultivating a committed supply base, rigorous product testing, and fostering a culture of precision among our operators. We do not just rely on machines like x-rays and decapsulation tools—our people play a critical role in inspecting and validating parts. The philosophy that drives us is "operate globally, manage regionally, and live locally." This approach allows us to build a reliable supply chain, ensure consistent quality, and maintain strong relationships with our business partners, whether we are buying or selling to them.
How do you see the issue of obsolescence evolving, and what impact does it have on your business?
Obsolescence is happening faster than ever. What used to take three to five years now occurs in as little as 18 months, driven by industry consolidation and a shift towards high-margin technologies. Companies that once had multiple supplier options are now limited. For example, NXP acquired Freescale, and Analog Devices bought Maxim. This consolidation forces manufacturers to prioritize newer products, leaving legacy industries scrambling for discontinued components. Velocity thrives in this space by helping customers manage these disruptions. We strategically position ourselves in high-margin sectors such as automotive, healthcare, and renewable energy. With rapid manufacturing shifts from China to countries like Vietnam, India, and Mexico, we are also aligning our operations to meet future supply chain needs. Our ability to provide hard-to-find parts during this volatile cycle makes us an essential partner for businesses navigating an increasingly complex landscape.
Can you give us a case study or example of how Velocity makes a difference for everyday consumers?
During the pandemic, supply chains were paralyzed, with lead times extending beyond a year. Velocity stepped in to support industries we had not traditionally worked with, like automotive, which saw unprecedented demand for components due to the shift toward electric vehicles (EVs). In EV production, having 99 percent of the parts is meaningless if one component is missing—it halts the entire process. We partnered with car manufacturers and their suppliers to keep production lines running when traditional channels failed. Without independent distributors, the automotive industry would have stalled during 2021 and 2022. This experience underscored the importance of resilience in supply chains, especially during crises like COVID. Our ability to quickly source critical components ensured businesses could continue generating revenue and fund redesigns to adapt to future demand. Velocity’s role in these moments proves the value of independent partners in maintaining continuity across industries.
How do you visualize the U.S. and Velocity's role in 2030?
The U.S.’s future will depend on carefully balancing global partnerships while moving away from over-reliance on countries like China. Isolation is not the answer, but we must choose the right partners. I have spent years working in China, and it is clear they are pursuing a China-first strategy, often reverse-engineering components from U.S. and European suppliers. Moving away from these partnerships is critical. Looking ahead, I expect consolidation to continue as companies acquire others to secure IP and control market pricing. Velocity will remain focused on mid-to-back-end technologies, supporting industries like advanced healthcare, renewable energy, and automotive. While we will not chase trendy sectors like AI, we aim to make a meaningful impact where it aligns with our expertise. We must ensure that large U.S. manufacturing projects, like the Samsung and TSMC fabs, succeed and avoid past mistakes like the Foxconn deal in Wisconsin.
What keeps you up at night as you look at the future of Velocity Electronics and the industry?
One challenge is ensuring that we do not get complacent or rely too much on past successes. It is tempting to look back, but running a business is about looking forward. A favorite quote of mine says the windshield is ten times bigger than the rearview mirror because you should focus on where you are going, not where you have been. Balancing growth with operational efficiency while meeting the needs of both the company and our employees is a constant task. I also question the sustainability of the AI hype. While hyperscalers like Meta and Google will continue investing billions, I wonder if other companies can truly profit from it. Automation is happening—factories with no workers are already a reality—but we need to consider the social and economic impact. Traditional jobs that built this country, like those held by longshoremen and teamsters, are disappearing. The question is whether we are prepared for that shift and what it means for the future of work.
