Q&A with Frank Cavallaro, CEO of A2 Global Electronics + Solutions
Key Highlights
“Supply Chain Connect has compiled sentiment and insight from a range of distribution leaders across the electronic component and semiconductor industries to deliver an informative outlook for 2026. From investment strategies to regional trends, tariff navigation and more, Distribution Outlook 2026 covers everything industry leaders are currently facing—as well as what they expect to see in the year ahead and beyond.”
Outlook
How would you describe your business outlook for 2026 — bullish, cautious, or uncertain — and what key factors are driving that sentiment?
As 2026 approaches, we’re cautiously optimistic. The semiconductor supply chain is simultaneously showing momentum and fragility. Volatility may come from continued trade frictions, resurging inflation in materials and logistics, or regional conflicts that threaten access to critical minerals. Our focus is less on predicting disruptions and more on building resilience through visibility, diversification, and velocity.
Regional Trends
What’s your outlook for the North American market in 2026? How do European and Asian trends compare, given differing economic and regulatory pressures?
The North American market will continue to be driven by the “haves” and “have-nots” through the first half of 2026. Companies with exposure to the hyperscaler ecosystem—the “haves”—will continue to experience rapid, unpredictable growth, while more traditional industrial supply chains—the “have-nots”—will continue to experience flat to medium demand during this period.
In the second half of 2026, we anticipate that industrial supply chains will gain momentum, driven by a fully digested tariff environment and a more stable macroeconomic backdrop. For hyperscaler-related companies, however, the second half of 2026 presents a larger question mark, as capacity ramp-up plans will further be examined for “bubble-like” tendencies, which could introduce some hesitation in the market.
How do European and Asian trends compare, given differing economic and regulatory pressures?
We expect the European market to behave similarly to the North American industrial sector, while Asia is likely to remain aligned with the 2025 “China +” strategy as long as tariff exposures are fully absorbed and remain stable.
Tariffs & Trade
How are current or potential tariffs and trade shifts shaping your sourcing, pricing, or customer strategy heading into 2026?
Trade frictions and tariffs continue to shape sourcing and pricing strategies. Regional tensions and shifting trade policies have underscored the importance of multi-region sourcing intelligence and strategic supplier diversification. These dynamics make agility in procurement and logistics a necessity rather than a competitive advantage.
Investment Focus
Where are you focusing capital investments this year — inventory expansion, digital tools, AI automation, new facilities, or other priorities?
Our investments are focused on data analytics and multi-region sourcing tools that enhance supply chain visibility. We’re also reinforcing supplier partnerships and redundancy to anticipate chokepoints before they escalate. The shift from “just-in-time” to “just-in-case” drives our capital strategy across inventory management and agile logistics frameworks.
Technology & Transformation
How are AI and automation influencing your operations or customer experience in 2026 compared to previous years?
Our exposure to AI and related productivity tools has thus far primarily focused on non-mission-critical internal applications. We have seen the best use cases in these areas. Our use in customer experience areas will be driven by our customers and not by novelty.
Opportunities & Risks
What do you see as the greatest opportunity for distributors this year — and the biggest risk to growth?
The greatest opportunity lies in transforming volatility into a competitive advantage. Those who can detect and adapt to disruptions faster—through real-time data and diversified sourcing—will capture market share. The biggest risk remains overreliance on single regions or suppliers in a landscape still exposed to geopolitical and economic shocks.
End-Market Demand
Which end markets (automotive, industrial, computing, defense, etc.) do you expect to lead demand in 2026?
We expect steady growth in the industrial-related industries throughout 2026. In the compute areas, the first half of 2026 is expected to see continued robust growth, with the second half remaining uncertain due to the cost/capacity/profitability questions that are beginning to be raised.
Future Vision
In your view, what will separate successful distributors from the rest by 2030?
By 2030, success will hinge on how well distributors design supply chains to absorb shocks and reallocate quickly. Those that build agility and intelligence into their operations will turn uncertainty into opportunity and set the pace for the next decade of growth.
