Showing posts tagged 'automation'
21 July 2021
Perfect storm' creates electronic component shortages
A perfect storm has hit the electronic components market, creating supply chain problems that will be felt for several years.
The perfect storm
Even before the COVID-19 pandemic, most electronic component manufacturers were running at 95-98% capacity.
This high demand for electronic components was fuelled by growth in technologies like automation and the Internet of Things - technologies that are only in their infancy now but will mature in the next decade.
This high manufacturing output was felt across all types of components, especially chips (semiconductors, memory) and integrated circuits. It was even difficult to get a hold of some active and passive components in 2019.
Then, in 2020, the COVID-19 pandemic hit. Car manufacturers and other manufacturers affected by shutdowns paused orders for electronic components. Meanwhile, manufacturers benefitting from lockdowns scaled up.
Now, with the development and roll-out of COVID-19 vaccines, industries that shut down have opened up again. But there’s a problem - demand for electronics has not wavered and there isn’t enough manufacturing capacity to serve everyone.
Quite simply, there isn’t enough bread to go around.
Demand is ramping up
We are now in a situation where electronic components manufacturers are running at 99-100% capacity. Demand has soared for all types of components, from chips and memory to diodes and displays. This is squeezing most supply chains.
There are so many contributors to this squeeze. Emerging technologies like AI, automation, virtual reality, augmented reality and machine learning are fuelling demand for smarter chips and data centre modernisation, while technologies like 5G and Wi-Fi 6 are demanding infrastructure rollout, which requires a significant effort.
When it comes to chips, however, cars are the biggest users. Cars can have as many as 22,000 multilayer ceramic capacitors (MLCCs) each. This will increase as cars get smarter (a self-driving taxi sounds great, but it’ll need around 30,000 chips).
Suppliers are slowly adapting
There have been years of under-investment in new foundries and plants. This under-investment has affected manufacturing capacity today.
To their credit, most manufacturers are looking to expand capacity by setting up new foundries or acquiring plants. Trouble is that most plants take years to set up. Some plants that started a build-in in 2017 are still being built.
Staffing is also an issue. The biggest challenge suppliers face is social distancing and COVID prevention policies, which have reduced staff numbers in many factories.
You can’t automate every process in a factory, so it is a given that having limited staff will increase lead times. Some manufacturers have been harder hit than others with this, but all will experience staff shortages during the pandemic.
In addition to this, freight has become more challenging during the pandemic. Things are taking longer to move and there are fewer commercial flights. Global shipping rates have skyrocketed during the pandemic because of this. Higher shipping rates have contributed to price increases for most electronic components.
Weathering the storm
We predicted the electronics component shortage in early 2020 following the UK Government’s national lockdown. We knew supply chains would be squeezed and stretched due to changes in economic output and industry trends.
The best way to weather the storm is to work with us or another reputable electronic components distributor. We focus on delivering outstanding service, with industry-leading quality and dependability. Call us on 01904 415 415 for a chat.
16 December 2020
What does the future hold for the electronic component industry?
The future of the electronic component industry looks very healthy indeed thanks to tailwinds from 5G, robotics and automation, artificial intelligence, edge computing and several other emerging technologies.
A few of the companies destined to benefit from the advancement of these technologies include Infineon Technologies, STMicroelectronics, Würth Elektronik, Eaton Corp, Micron, MaxLinear, Hitachi and Qualcomm. There are hundreds more who are operating foundries and factories at maximum capacity to meet demand already.
Key to meeting the demand is an increase in manufacturing capability, which many companies will have to build through capital expenditure. We are already seeing an increase in investment from many of the aforementioned companies.
As for electronic component distributors, the phrase “a rising tide raises all ships” is a perfect expression. Component distributors like us will see an increase in demand in the future as our world becomes more technology-focussed.
These are the technologies that we see fuelling electronic component growth in the near future (we already mentioned a few in our opening paragraph):
- Wi-Fi 6
- Big data
- Edge computing
- Batteries and power
- Semiconductors and GPUs
- Automated driving
- Consumer electronics: VR, AR, smartphones, tablets
Every infrastructure, and every product, will need a unique set of electronic components in its design. Factories and foundries will make the components, and electric component distributors will help manufacturers source them.
Meeting the uptick in demand
There’s one certainty in the electronics industry: demand on components increases as technologies become more complex. We see this with semiconductors, which are getting smaller (2nm), with 5G, which requires more components than 4G, and in robotics, which require powerful Lidar guidance systems.
To meet this uptick in demand, there are companies that specialise in making specific components and machines.
For example, Axcelis Technologies, headquartered in Beverly, Massachusetts, makes ion implant equipment vital to semiconductor fabrication. Then we have Micron, who recently announced high-density 3D NAND flash memory.
The innovation and investment in new technologies from leading companies is a clear sign that the electronic component industry is not just healthy, but thriving, despite the disruption caused by COVID-19.
The role of electronic component distributors
Our place in all this as an electronic component distributor is to help our customers (who include OEMs, foundries, factories and assemblers) to source the components they need to operate their business.
We are crucial to our customers because we are a global distributor. We enable industry players to buy electronic components with confidence at competitive prices, and our links in the industry allow our customers to gain a competitive edge.
As demand has increased for electronic components, competition has intensified, and it really isn’t uncommon for companies to have to bid for components. This is the result of a market that doesn’t produce enough components for certain applications. We exist to help all companies source the components they need.
With us, you get a fast response to your enquiries and reliable on time delivery. There’s no better partner to have on your side.
Click Here and visit our site today to use our fast component search tool and enquire with us today!
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