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Showing posts tagged 'components'


17 November 2021

The tech industry is bracing for a potential shortage of passive electronic components

mmt

By now, everyone has heard of the global semiconductor shortage. Still, the tech industry is bracing itself for an altogether larger shortage of passive electronic components that could reduce manufacturing output across multiple categories.

Passive components do not generate energy but can store and dissipate it. They include resistors, inductors (coils), capacitors, transformers, and diodes, connecting to active elements in circuits. Passives are necessary for circuit architecture, so the shortage is bad news for the electronics industry as a whole.

The current state of the passive component shortage 

The truth is there has been a shortage of certain passive components since the coronavirus pandemic hit in 2020, particularly with multilayer ceramic capacitors (MLCCs), which can be difficult to get hold of in large quantities.

Certain diodes, transistors and resistors are also in shorter supply than they were in 2019, partly because of the pandemic and a shift in manufacturing investment for active components, which have a higher margin.

You also need to look at consumer trends (what people are buying). Smartphone and smartwatch sales are higher than ever, and smart ‘Internet of Things’ devices are growing in popularity rapidly, not to mention in availability.

These devices require a lot of passive components. For example, a typical smartphone requires over 1,000 capacitors. Cars are also huge consumers of passive components, with an electric car requiring around 22,000 MLCCs alone.

The trend for next-generation technology adoption is up across all categories, be it the Internet of Things, edge computing, semi-autonomous cars and 5G. Passive components are in more demand than ever at a time when supplies are under pressure.

Price rises are now inevitable 

The price for most passive components has risen by the largest amount in over a decade in 2021, caused by supply and demand economics and a price explosion for common materials like tin, aluminium and copper, as well as rare earth metals.

While some suppliers can afford to take a hit on profits, for most, raising prices is inevitable to ensure the viability of operations.

With higher component prices and greater shortages, it is more important than ever for companies to bolster their supply chains. Complacency is dangerous in today’s market, and no company is immune to disruption.

How to beat the passive components shortage 

The passive components shortage is likely to get worse before it gets better, but there are several ways you can bolster your supply chain:

  • Equivalents:Specifying equivalent passive components is a sound way to keep your supply chain moving. When a specific passive component isn’t available, an equivalent may be available that functions in exactly the same way.

  • Ditch outdated components:Outdated components have limited or no manufacturing output when discontinued. Upgrading to modern components that are manufactured in larger quantities can help you meet demand.

  • Partner with a global distributor:Global components distributors like us source and deliver day-to-day, shortage, hard-to-find and obsolete electronic components. We can help keep your supply chain moving in uncertain times. Contact us today SALES@CYCLOPS-ELECTRONICS.COM

Tags: the tech industry is bracing itself for an altogether larger shortage of passive electronic components that could reduce manufacturing output across multiple categories.


20 October 2021

Memory suppliers to benefit from strong demand and supplier shortages

DRAM

While the downsides to electronic components shortages are well known, business is booming for smaller memory suppliers.

Sales of Samsung DRAM grew 26% in Q2 2021 without meaningful production capacity growth, and as supply-demand imbalances grow, memory suppliers like Samsung, Micron and others are turning to smaller suppliers to fill gaps.

As chip shortages continue, demand grows. Order books get filled off the page, creating longer lead times (up to 40-weeks) and extending standing orders. This is bad news for the end-product manufacturer but great news for suppliers, who see sales rise and bids increase to fuel record turnover and, in some cases, net profits.

The sector as a whole is booming, but no better example of taking the bull by the horns exists than Alliance Memory.  

Alliance Memory is a US-based 30-year old DRAM manufacturer, billed as a legacy SRAM supplier and a leading domestic supplier of DRAM and flash memory. The company’s run rate in 2021 is double what it was in 2020.

In an interview with EPS News, Alliance Memory CEO David Bagby explains why: “we went out to customers struggling to get Samsung. Now we have maybe the best representation of DRAM and SRAM product of anybody out there.”

Memory upturn forecast to continue

IC Insights, the foremost authority on memory and chip demand, has predicted a new record high for memory demand in 2022.

Stronger DRAM pricing is expected to lift total memory revenue 23% in 2021 to $155.2 billion. The memory upturn is forecast to continue into 2022 to $180.4 billion, surpassing the all-time high of $163.3 billion set in 2018.

Demand for memory, including DRAM, SRAM and flash, is being driven by economic recovery and the transition to a digital economy. Unlike other technological cycles, the current cycle of digitalisation has weight behind it, fuelled by innovations in data centres, 5G and space networks, AI, robotics and IoT.

Sequentially, the average price of DRAM rose 8% in the first quarter of 2021. Another increase of 18-23% in Q2 sent memory suppliers into a spin. Demand is outstripping supply, creating a perfect storm for continued price increases.

Price increases expected to continue until late 2022

The price of memory is more sensitive to other electronic components because supply is controlled by a few big players. Smaller memory suppliers fill in gaps in supply, but the big guns like Samsung and Micron rule the roost.

When demand outstrips supply at the big guns, prices explode. We’ve seen it several times before, such as the memory price increase of 2018. Prices fell again in 2019, recovered a little in 2020, then soared again this year.

Memory is a commodity and companies are willing to pay big to get a hold of it. Bidding wars are not uncommon and 40-week lead times are normal today.

However, while the memory upturn is predicted to continue into 2022, Gartner says memory prices will dive at the end of the year, predicting that an “oversupply” of memory chips will develop as demand eases and supply increases.

Tags: electronic components shortages samsung micron chip shortages dram manufacturer sram supplier dram sram flash digital economy


06 October 2021

Rare earth metal prices explode

earth metals]

Prices for rare earth metals have exploded over the last 12 months, moving nearly 50% higher on average since March.

This development could push prices of electronics components higher than ever, as a perfect storm of expensive raw materials + limited production capacity + higher demand = rocketing prices.

As we are seeing with the global semiconductor shortage, fluctuations in supply chains ripple through the electronics industry.

Electronic component shortages have, in part, been caused by reduced mining quota for raw materials including rate earth metals. But the problem now isn’t a lack of mining, but the soaring demand for rare earth metals.

The high price reflects strong demand. Rare earth metals are used in most electronic components and devices, from integrated circuits to displays, vibration motors and storage, so it’s easy to see why demand is so strong. 

For example, materials like neodymium and praseodymium used to make magnets have seen a 73% increase in demand in 2021. Holmium oxide used in sensors, terbium oxide used in displays and cobalt used in batteries have also seen increases.

Why have prices exploded?

China is the only country in the world with a complete supply chain for rare earth metals from mining, to refining, to processing. With over 55% of global production and 85% refining output, the world depends on them for rare earth metals.

In January, Beijing hinted at tightening controls for earth metal exports, triggering panic across the world and sending prices soaring.

For those of you who remember, rare earth prices exploded in 2011 when China’s export volumes collapsed. China cut export quotas of the 17 rare earth metals and raised tariffs on exports, sending prices soaring by more than 50%.

Talk about déjà vu!

Another factor for the price explosion is supply and demand. Even with China’s hints, demand for rare earth metals is outstripping supply. The world is using more electronics than at any time in its history, and rare earth metals are needed to make more of them.

It isn’t only relatively unknown materials like neodymium and praseodymium that are surging in price, but also more commonly known materials like tin, aluminium and copper, which have also surged in price in 2021.

So, in a nutshell, demand for rare earth metals is outstripping supply, and China (which has significant control over rare earth metals) has hinted at tightening exports, sending a shockwave through the supply chain.

The issue is bad and will take time to resolve. The United States is the second biggest producer of rare earth metals, and in February, President Joe Biden announced a review into domestic supply chains for rare earths, medical devices, chips and other resources, with a $30 million initiative to secure new supply chains.

Unfortunately for the world, China’s control of 55% of global production and 85% of refining output for rare earth metals means they control the market. Missteps, problems at home, and hints about tightening controls have already sent rare earth metal prices soaring, and it stands to reason they will continue creeping higher in the near-term. 

Tags: rare earth metals limited production capacity higher demand semiconductor shortage supply chains electronic components


29 September 2021

Communications including 5G will drive the components market

5G

According to IC Insights, the communication sector’s share of integrated circuit sales reached 35% in 2020 and is expected to grow to 36.5% by 2025. For perspective, the automotive sector’s share of integrated circuit sales was 7.5% in 2020 and will grow to 9.8% by 2025 - significantly less than communications.

Industry tailwinds

What’s driving such high demand for ICs in the communications sector?

There are four big tailwinds:

  • 5G
  • Edge computing
  • Internet of Things
  • AI (artificial intelligence), MI (machine learning) and data analytics

5G

5G is the main driver for components demand, with 5G infrastructure rollout happening slowly, but surely. We are nowhere near a complete version of 5G, and networks are in a race against time to deliver a reliable service.

The first step for networks is replacing low-band 4G spectrum, followed by mid-band spectrum that uses 2.5, 3.5 and 4.5 GHz, enabling faster data speeds. The final step is the rollout of millimetre wave, which enables true 5G speeds. Millimetre wave also happens to be a precursor for next-generation 6G.

On top of 5G infrastructure rollout you have more 5G-enabled devices coming to market, such as smartphones, tablets and laptops. Smartphones, in particular, are leading the way for 5G adoption, putting faster data in our hands.

The rapid growth in IC demand in the communications sector also stretches to other components like modems, memory and antennas. 5G isn’t just an IC boon - it’s a boon for all the electronic components needed for 5G. 

Edge computing

Second to 5G we have edge computing, which by a miraculous twist of fate is needed to deliver a 5G experience (and needs a whole lot of components).

Edge computing puts compute capabilities relatively close to end users and/or IoT endpoints. In doing so, it reduces latency, while 5G delivers faster data speeds, providing a seamless experience on certain devices.

Internet of Things

IoT describes a network of connected smart devices that communicate with each other. For example, a vital sign monitor in a hospital could communicate with medicine dispensers and automate medicine dosages for doctors.

The Internet of Things has been talked about as a trend for several years, but we now have real applications that are useful.

AI (artificial intelligence), MI (machine learning) and data analytics

AI (artificial intelligence), MI (machine learning) and data analytics require enormous, powerful data centres to power them. These data centres require significant investment in chips, memory and other electronic components.

Also, AI, MI and data analytics need cloud computing, edge computing and in some cases 5G to deliver a real-time experience.

The future

By 2025, the communications sector is forecast to have a 36.5% usage share of integrated circuits, making it the biggest consumer of semiconductors.

Demand for integrated circuits, discrete circuits, optoelectronics and sensors will grow to an all-time highs thanks to the industry tailwinds in this article. The future is bright, but to stay ahead, a robust supply chain will be needed.

Electronic components distributors like Cyclops are helping supply meet demand, while the communications sector battles to secure chip orders. Call us today at +44 (0) 01904 415 415 or email sales@cyclops-electronics.com 

Tags: communication automotive ics 5g edge computing internet of things components ic demand modems memory and antennas artificial intelligence machine learning data analytics integrated circuits


01 September 2021

Component Prices Rise 10% to 40% - But why?

pexels-photo-1105379

While component price rises are expected when demand outstrips supply, the scale of recent increases has come as a shock to many businesses.

In its Q3 Commodity Intelligence Quarterly, CMarket intelligence platform Supplyframe reports that some electronic components have seen prices rise by as much as 40%, making it uneconomical for products to be made.  

In particular, semiconductors, memory, and modems are seeing 10 to 40% price increases, exceeding what most analysts envisioned for 2021.

Why are prices rising?

Price rises start with materials. There are long lead times for many raw materials, causing shortages. Add rising commodity prices and difficulties transporting products and you have a disrupted manufacturing economy.

You also have to factor in the impact of the coronavirus pandemic, which has caused labour shortages and disrupted the manufacturing economy with shutdowns.

Logistics is also a big fly in the ointment for electronic components. The industry is recovering from COVID-induced shutdowns and travel restrictions are causing problems at borders, creating delays that ripple through the supply chain.

Supply and demand

The bulletproof economics of supply and demand also rule the roost for electronic components, and demand is higher than it has ever been.

We are in a situation today where most electronic components manufacturers are running at 99-100% capacity and can’t keep up with demand.

Demand is outstripping supply for chips, memory and communications components like integrated circuits, discrete circuits, optoelectronics and sensors, creating a bidding war as manufacturers scramble to get what they need.

Growing demand for new technologies

Emerging technologies like artificial intelligence, machine learning, virtual reality, augmented reality and edge computing are fuelling demand for smarter chips and data centre modernisation, while technologies like 5G and Wi-Fi 6 are demanding infrastructure rollout, which requires significant investment.

Across the board, technology is booming. Manufacturers are making more products for more people, and they must do so while balancing costs at a time when component prices are rising - no easy feat even for established businesses. 

Pressure relief

Everyone is raising prices in line with their own cost increases, from semiconductor manufacturers to outsourced fabs and suppliers. At 10 to 40%, these increases are putting pressure on supply chains and businesses.

How many price increases will target markets absorb? How can we sustain production without significant margin pressure? These are the challenges facing manufacturers, who are stuck between a rock and a hard place right now.

There are a few solutions:

  • Equivalents: Source equivalent components from different brands/makers/OEMs that meet size, power, specification, and design standards.
  • Use an electronic components distributor: Distributors are the best-connected players in the industry, able to source hard-to-procure and shortage components thanks to relationships with critical decision-makers.

Prices will fizzle down, eventually

Although research published by Supplyframe says pricing challenges will remain through early 2023, they won’t last forever. Price rises should fizzle out towards the end of 2021 as manufacturers catch up to orders and reduce disruption.

If you are experiencing an electronic component shortage, we can help. Email us if you have any questions or call us on 01904 415 415 for a chat with our team.

Tags: electronic components semiconductors memory price rises rising commodity prices coronavirus pandemic integrated circuits discrete circuits optoelectronics sensors artificial intelligence machine learning virtual reality augmented reality and


25 August 2021

Automotive electronics market set to grow

car

With vehicles getting smarter, more connected and more autonomous, the automotive electronics market looks set to soar.

Future growth in numbers

Back in March, Precedence Research predicted the automotive electronics market would hit around US$ 640.56 billion by 2030.

Then, in July, Global Market Insights released research predicting the automotive electronics market would hit around US$ 380 billion by 2027.

Interestingly, measured across the same period, both research reports (which are independent) predict a similar growth pattern. Global Market Insights predicts a 6% CAGR, while Precedence Research predicts a CAGR of 7.64% over a 3-year longer period.

With two separate reports indicating significant annual growth, the automotive electronics market looks set to boom. But wait, there’s more.

A 9.3% CAGR is expected in the automotive electronics market by 2030, according to research by P&S Intelligence. They predict slightly less growth than Precedence Research to 2030, at US$ 615.3 billion (versus $640.56 billion).

Growth factors

There are approximately 1,400 chips in a typical vehicle today, which each chip housing thousands of components on a semiconductor wafer, creating the integrated circuits that power computing, memory and a host of other tasks.

Those are just the chips.

Cars have thousands of other electronic components, including passive, active and  interconnecting electronic components, from batteries, sensors and motors, to displays and cameras. Oh, and everything is connected.

All told, a typical car today has more than 50,000 electronic components that enable features like in-car Wi-Fi, self-parking technology, adaptive headlights, semi-autonomous driving technology, keyless entry and powered tailgates.

However, cars are getter smarter and more advanced. Electronic components today make up around a third the cost of a car, which will increase over time as more sophisticated and greater numbers of components are used.

Smarter cars need more components  

The future of cars involves electrification, autonomous and self-driving technologies, hyperconnectivity, Internet of Things, augmented reality, artificial intelligence, biometrics and a whole host of next-generation technologies.

How will these be enabled? With electronic components.

Let’s take electrification as an example. An electric car handbook will tell you an electric car has a motor, a battery, an on-board charger, and an Electronic Control Unit (ECU) that controls one or more of the electrical systems or subsystems in the vehicle. Together, these let you drive around, charge, and pop to the shops.

In-between these systems, are hundreds of thousands of electronic components that make them work. You see, an Electronic Control Unit is a single component, containing thousands of smaller components, each performing a critical role.

The automotive electronics market is set to soar because cars and other vehicles will need more components with electrification and next-gen technologies. Sometimes, things can be simple to explain, and this is one of those times.

Meeting demand

The electronics industry is facing a global chip and electronic component shortage which is expected to last 2-3 years. As demand for automotive electronics soars, shortages look very likely for certain components like CPUs and memory.

The solution for many companies will be to use an electronics component distributor, to fill gaps in the supply chain and keep things moving.

Electronic component distributors like Cyclops can source hard-to-procure components because we have relationships with the best suppliers in the industry. Contact us today with your enquiries at sales@cyclops-elecronics.com or call 01904 415 415.

 

Tags: automotive electronics market electronic chips electronic components semiconductor wafer integrated circuit passive components active components interconnecting electronic components electrification internet of things augmented reality artificia


10 August 2021

Passive and Interconnecting Electronic Components market to display lucrative growth

k-p-209-eye-chim-083032

The passive and interconnecting electronic components market is predicted to display lucrative growth across all regions over 2020-2025, with North America the dominant market due to the prominence of players in the country.

These predictions come from The Passive and Interconnecting Electronic Components market report from Market Study Report, which you can request a sample of here. The report delivers a rigorous analysis of the market, examining the main growth drivers and restraints, as well as opportunities for revenue cycles.

The passive and IEC markets are forecasted to experience a CAGR (compound annual growth rate) of 3.1% from 2020-2025, with the US market expected to reach $32.3 billion by 2025, up from $28.6 billion in 2020.

Key players in the industry include:

  • ABB
  • API Technologies
  • AVX Corporation
  • ST Microelectronics
  • 3M Electronics
  • Fujitsu Component
  • American Electronic Components
  • Hamlin
  • Eaton Corp.
  • Datronix Holding Ltd

As the world gets smarter and demand for passive and interconnecting electronic components increases, small players will also take a bigger role. Trade barriers caused by geography will need to be overcome to meet demand, fuelling an explosion in growth across all developed markets, from Europe to Asia Pacific.

What is fuelling growth?

While the report provides in-depth analysis of factors that will fuel growth, we don’t want to tread on its toes, so we’ll provide a simpler analysis.

The reason the passive and interconnecting electronic component markets are going to experience significant growth over the next several years is because of industry tailwinds and technological advancement. Given today’s technological innovation, it’s no wonder that demand for all types of electronic component is soaring.

Disruptive new technologies, rapid advancement in existing technologies and the adoption of smarter, more connected devices, is fuelling unprecedented demand for everything from passive components to chips.

For example, in 2021, manufacturing of passive components could see an 11% increase, but demand is likely to exceed 15%.

Making supply meet demand

There has been a lot of talk about how the next great technological cycle will fuel growth for the semiconductor industry, but it’s important to recognise that chips are nothing but silicon and metal without other components like passives and IECs.

While supply for some components like display drivers is ticking along, there is a global shortage for other components like active, passive and electro-mechanical components, putting manufacturers in a compromised position.

The shortage for some IECs and passive components is expected to last several years, so making supply meet demand will be a challenge in the near future.

To make supply meet demand, suppliers and manufacturers will need to partner with well-connected distributors. Electronic component distributors are the best-connected players in the supply chain, linking sellers with buyers and vice versa.

Sourcing and allocating shortage electronic components is something that we specialise in at Cyclops. We help source components that are impossible to find, helping to keep supply chains moving and manufacturing plants going.

With the passive and interconnecting electronic components market set to soar, planning is essential to make supply meet demand and capitalise on growth.

Tags: passive components electronic components trade barriers interconnecting electronic components rapid advancement passive components electronic chips semiconductor industry iecs


28 July 2021

What Shortage? How Electronic Component Distributors Make Supply Meet Demand

truck image

When buyers can’t find electronic components, they turn to distributors like us who can source scarce and obsolete parts.

Our experience has been tested to new extremes over the last several months due to the semiconductor and wider electronic components shortage. This shortage was years in the making but has been amplified by COVID-19.

It says everything about the state of the electronic components supply chain when Samsung, who make their own chips, don’t have enough chips. Shortages have affected brands like Samsung, Apple, Volkswagen and Nintendo not just in terms of supply, but also prices, which have skyrocketed in 12 months.

When the chips are down, prices go up.

Distributors are busier than ever

Cyclops Electronics, as well other distributors, have become more essential than ever in supply chains since the COVID-19 pandemic began.

It’s no exaggeration to say distributors like us are keeping many businesses going. We keep production lines going by sourcing scarce parts from around the world - parts that would be impossible to source without excellent connections.

We are seeing desperation from companies that have never experienced supply chain problems. We’re talking about global companies listed publicly.

The situation is so bad for some components that some companies are paying a 100% premium just to secure them. Supply and demand is driving fierce competition and bidding wars are not uncommon.

If these revelations shock you, consider this - the electronics components shortage isn’t expected to abate until late 2021 at least. By then, there should be more order to the chaos, but some industry experts expect it to persist longer.

For example, IBM has said the chip shortage could last 2 years.

A 2 year extension would extend the chip shortage to 2023 at least. This is likely to be the case for other components too, including memory, integrated circuits and display drivers. A huge number of companies will be affected.

Playing a crucial role in the supply chain

Distributors like us are able to source hard-to-procure components because we have rapport with the best suppliers in the industry. In other words, we have immense buying power, and we put this to use for our customers.

Another way we are playing a crucial role in the electronics components supply chain is the reduction of counterfeit components.

Counterfeiters are taking advantage of weakened supply chains, lapse quality control processes and inadequate reporting to flood the market with illegal components. This has affected thousands of buyers and will affect many more.

Our role in this is to deploy anti-counterfeiting technologies including a SENTRY machine, die testing and decapsulation testing to test the components we procure. This ensures the components we supply are genuine parts.

We provide industry-leading chip testing to catch counterfeit parts. We have ISO 9001:2015 certification and ESD qualified staff.

If you need to buy parts and the only way to get them is with a distributor, don’t rush in - make sure your distributor is as equally qualified as us first. If you need help, feel free to call us on 01904 415 415 for a chat with our experts.

Tags: electronic components distributors obsolete parts semiconductor components shortage covid-19 supply chain production supply and demand anti-counterfeiting iso esd qualified


02 June 2021

IBM says chip shortage could last two years

pexels-photo-1105379

As technology has advanced, semiconductors have found their way into everything that requires computing power, from coffee machines to cars. But the manufacturing output for semiconductors has not kept up with this change.

The semiconductor industry has also been hit with an industry rotation in demand that it was never prepared to deal with.

This happened at the start of the coronavirus pandemic when automotive manufacturers scaled back semiconductor orders. Lockdowns meant they weren’t making enough cars, so they scaled down and battened the hatches.

Meanwhile, the demand for data centre, computing and home device semiconductors soared. Rather than finding themselves down on orders, semiconductor makers were all of a sudden making more semiconductors than ever before.

And then the automotive sector came roaring back.

Now, the semiconductor industry is in a state of disarray. Manufacturers are struggling to make enough chips in a situation we’ve called Chipageddon. This is compounded by the fact that silicon prices are soaring, making chips more expensive.

How long will the chip shortage last? The latest opinions don’t deliver good news - IBM says the chip shortage could last 2 years.

2 years!?

The president of IBM, Jim Whitehurst, has said that the current chip shortage could last another two years. Here’s what he said in an interview with the BBC:

“There's just a big lag between from when a technology is developed and when [a fabrication plant] goes into construction and when chips come out. So frankly, we are looking at couple of years… before we get enough incremental capacity online to alleviate all aspects of the chip shortage."

What Whitehurst means is it takes a long time to set up a chip fab before it can start producing chips. It takes 12-24 months typically, so you have a situation where even if a lot of fabs are being built, they won’t contribute for years.  

The chip shortage is so severe that it has led IBM to look towards other ways to meet demand. “We're going to have to look at reusing, extending the life of certain types of computing technologies,” says Whitehurst, “as well as accelerating investment in these [fabricating plants], to be able to as quickly as possible get more capacity online."

IBM isn’t alone

There is a serious imbalance in the semiconductor industry, and this is a problem many companies are having to contend with.

For example, Ford cancelled shifts at two car plants earlier this year and said profits could be hit by up to $2.5bn due to chip shortages. Meanwhile, Apple announced it would take a $3 billion to $4 billion hit due to the global chip shortage.

However, the most telling story of the semiconductor shortage comes from Samsung.  

Samsung is the world’s largest manufacturer of DRAM and the world’s fourth largest semiconductor manufacturer, and even they are experiencing shortages, having to delay the launch of the next-gen Galaxy Note until as late as 2022.

The fact that Samsung is experiencing a chip shortage when it manufactures its own chips tells us everything we need to know - the chip shortage is severe. It isn’t a small shortage at all - it’s an enormous shortage affecting everyone across the supply chain.

Unfortunately, it looks like the global semiconductor shortage will be around for a few years yet, and things could get worse before they get better.

Semiconductor woes

The semiconductor shortage is the result of a catalogue of problems going back several years. Here are some of the highlights:

Intel’s woes

Intel is the world’s leading supplier of CPUs for PCs and data centres and in 2018 they caused a chip shortage with the troubled development of 10nm chips. Intel’s mistakes have led to a shortage in CPUs for computers.

Declining DRAM prices

DRAM is a computer’s main memory. In 2019 and 2020, prices for DRAM declined, causing the biggest players - Micron, Samsung and SK Hynix - to curb their output. This led to supply constraints when the coronavirus pandemic hit.

Super cycle

The global demand for chips has hit an all-time high. Data centres, computers, cloud services, augmented reality, 5G, connected devices and connected vehicles are fuelling demand. This is great for chip sales, but the industry can’t keep up.

Tech war

The U.S. created a semiconductor shortage of its own making when they levied sanctions against several Chinese companies, including SMIC and Huawei. This exasperated the chip shortage, placing strain on domestic manufacturers.

Coronavirus pandemic and cancelled orders

During the coronavirus pandemic, demand for semiconductors soared in some industries (e.g. electronics) and dropped in others (e.g. automotive). When demand came back for “down” industries, demand didn’t drop for “up” industries, leading to a shortage.

Fierce competition

We now have a situation where carmakers are battling the electronics industry for chips. There aren’t enough chips to go around and increasing manufacturing capacity is impossible without significant investment in new foundries.

Meeting demand

The electronics super cycle is not going to end anytime soon because there are so many tailwinds, including self-driving cars, VR, AR, AI, 5G and space travel. So, we cannot expect demand to drop and the chip industry to catch up with itself.

To meet demand, we need new foundries. These take 12-24 months to set up. Many companies are already building new foundries, or they are boosting capacity at existing plants, which is good news for the long run.

In the here and now, manufacturers can meet demand for chips by partnering with an electronics component distributor like us. We specialise in the procurement and delivery of electronic components and parts (including semiconductors) for a wide variety of industries from the world's leading manufacturers.

The semiconductor shortage has affected the entire manufacturing supply chain but our close links in the industry mean we have better access to chips than most. No promises, but we have an excellent track record across all sectors.  

Get in touch with us for a chat about your needs. We’re here to help.

Call: 01904 415 415

Email: sales@cyclops-electronics.com 

Tags: ibm chip shortage electronic components semiconductors


12 May 2021

Equivalents keep the supply chain moving in uncertain markets

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In uncertain markets, the demand for specific, branded components tends to outstrip supply. We have seen this recently with the semiconductor shortage, where specific chips are hard to come by at a time when they are needed.

Equivalent components, also known as equivalents in the industry, provide an immediate solution. These ‘generic’ parts can be specified when specific parts can’t be sourced and in cases where parts no longer need to be from one brand.

Successive cycles of electronic component shortages (especially in the semiconductor sector) has led to manufacturers specifying equivalents on their order sheets. Outside of sectors that have precise specifications for safety, like aerospace and biotechnology, these equivalents are helping to keep supply chains moving.

Equivalent in quality and specification

One of the common misconceptions about equivalent components is that they are somehow castoffs or second-best components. This is untrue. They are simply equivalent components from a different brand/maker/OEM.

The term ‘equivalent’ is used to describe components that can be used as substitutes for specific components. They meet the size, power, specification and design standards set by design teams. They are ‘like-for-like’ on the spec sheet.

The quality aspect of equivalents is only a concern when the electronic component distributor cannot verify the provenance of the components. At Cyclops, we only source genuine, verifiable components. We would rather expand our supplier base than source a batch of equivalents that we cannot be sure of.

A pragmatic approach to managing supply

Companies that are fixated on using specific components run the risk of running into roadblocks. There is a global shortage for chip passives and discrete semiconductors and this problem is expected to last through 2021.

Specifying equivalents is a pragmatic approach to managing supply chains in uncertain markets for several reasons. For the customer, generic specification reduces supply chain risk. It allows the customer to meet demand requirements without the risk of backorders, supply constraints, or being outbid by other companies.

The biggest benefit is flexibility. Rather than be tied to what is in stock and what you can source from an OEM, you can specify a value and chip size for passives, or a generic diode designation, and let your distributor source equivalents.

If you want to give yourself the best chance of meeting demand for scarce electronic components, equivalents will need to form part of your supply chain. Otherwise you run the risk of disruption and higher procurement costs.

How we can help you

Cyclops specialises in the procurement and delivery of electronic components and parts for a wide variety of industries from the world's leading manufacturers.

We can source equivalent components for you from our global network. All we need is a value and chip size for passives or a generic diode designation for actives. We will work with your spec sheets and source high-quality, equivalent components.

If you are currently experiencing an electronic component shortage, we can help. Email us if you have any questions or call us on 01904 415 415 for a chat with our team.

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Cyclops Electronics Ltd, Reg. No. SC128862, VAT No. GB561633447

Registered Office: Allan House, 25 Bothwell Street, Glasgow G2 6NL

(Registered in the United Kingdom)

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