Knowledge is a limitless resource in the knowledge-based economy; therefore, organizations should learn, store, transfer and apply knowledge to add value or gain competitive advantage (Sveiby, 1997). Knowledge management (KM) refers to identifying and leveraging the collective knowledge within the organization for competitive advantage (von Krogh, 1998). However, it is usually discussed and implemented in high-tech industries (e.g., TI, TSMC and Winbond) and the software industry (e.g., Microsoft and Oracle). In Taiwan, the upstream firms or suppliers of the electronics industry (e.g., Winbond and UMC) implement KM in their organizations. As well as the suppliers, the downstream firms or manufacturers (e.g., Quanta and ASUS) also put KM into practice. However, in the intermediaries or distributors, only a meager number of firms really implement KM in their companies. Therefore, we have neglected whether KM is still suitable to implement in the distribution industry. The IC distributors in Taiwan evolved from partnerships or intra-family enterprises into the overall arrangement in Asia, with output value in 2004 beyond $38.7 billion (United States dollars). IC distribution industry outsiders may consider that distributors just transact business, but don’t have their own products, even though the scale of IC distributors has expanded. So an inaccurate notion exists that it isn’t necessary to innovate or put KM into practice therein. In fact, IC distributors have to face not only the rapidly changing upstream firms, but also the variable requirements of downstream customers. Therefore, distributors have to adapt and learn even faster than their suppliers and customers to face the drastically changing and intensely competitive environment.