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Showing posts tagged 'supply'


13 October 2021

Electronic Component Shortage update

istockphoto-1206098096-612x612

The ongoing electronic component shortage is one of the biggest challenges global supply chains face today, with demand for many components, from chips to actives and passives, well and truly outstripping supply.

A lot has happened in the last month, with new research and analyst insights pointing to when demand might ease (hint: it won’t be this year).

Here’s your latest electronic component shortage update:

Chip lead times hit all-time high

According to Susquehanna Financial Group, chip lead times hit an all-time high of 21-weeks in September, up from 20.2 weeks in August and 18 weeks in July. However, in a research note, Susquehanna analyst Chris Rolland said that while lead times for some chips got worse, lead times for others like power management chips saw relief.

Gartner says global chip shortage will persist until Q2 2022

Gartner predicts the global semiconductor shortage will persist through Q1 2022 but recover to normal levels by the second quarter of 2022. They rate the current shortage as moderate and the shortages of early 2021 as severe.

Chipmakers should brace for 'oversupply' in 2023

Analyst firm IDC predicts that the global chip shortage may well turn into an oversupply situation in 2023, sending prices diving. They say the industry will see normalisation by the middle of 2022, with a potential for overcapacity in 2023.

EU pushes for chip sovereignty

The EU will legislate for chip sovereignty with the forthcoming “European Chips Act”, bringing together the EU’s semiconductor research, design, and testing capabilities, so that EU countries can make demand meet supply as one nation. “Europe cannot and will not lag behind,” the EU said in a statement on the Chips Act.

Ford Europe predicts chip shortages could continue to 2024

In an interview with CNBC, Ford Europe chairman of the management board Gunnar Herrmann estimated the chip shortage could continue through to 2024. Herrmann also revealed a new company crisis in raw materials. “It’s not only semiconductors,” he says, “you find shortages or constraints all over the place.”

Tesla's China output halted on chips shortage

Tesla temporarily halted some output at its Shanghai factory for four days in August due to the chips shortage, shutting part of the production line for electronic control units (ECUs), a small but significant action that cost it millions in revenue.

New forecast says chip shortage to cost car industry $210 billion

The total estimated cost of the chips shortage to the car industry keeps rising, with a new report from AlixPartners predicting a global cost of $210 billion. This is nearly double what their first report predicted in May ($110 billion).

Counterfeit chips penetrating the supply chain

As a result of the chips shortage, some manufacturers are turning to riskier supply channels, leaving themselves vulnerable to counterfeits. As ZDNet reports, this puts low-volume manufacturers whose supply chains are less established at risk.

If you are worried about counterfeits in your supply chain, read our 8 Step Guide To Buying Electronic Components With Confidence and Avoiding Counterfeits.

If you are struggling to find those hard to find and obsolete components. Contact Cyclops Electronics today. Call 01904 415 415, email sales@cyclops-electronics.com or visit our website https://www.cyclops-electronics.com/.

Tags: electronic component shortage global supply chains chip lead times semiconductor shortage chip sovereignty ford tesla alixpartners counterfeit chips


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


28 July 2021

What Shortage? How Electronic Component Distributors Make Supply Meet Demand

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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


16 June 2021

Government asks for views on supply chain security

component security

The Department for Digital, Culture, Media and Sport (DCMS) has called for views on security measures across digital supply chains and IT services, including data processing, infrastructure management and supplier assurance.

The call comes as more organisations move their operations online and pivot to digital business models. A few obvious examples are retailers moving online and car manufacturers offering cars on subscription, which may kill showroom sales.

As organisations increasingly move their operations online, it’s a given that digital supply chains and third party IT service operators will become more vital. The Government wants to take a leadership role in helping organisations make the transition.

“We’re seeking views from firms that both procure and provide digital services, as a first step in considering whether we need updated guidance or strengthened rules,” said Digital Infrastructure Minister Matt Warman.

Call for Views

The Call for Views focuses on two parts:

Part 1 seeks input on how organisations across the market manage supply chain cyber risk and how government intervention would help.

Part 2 seeks input on the suitability of a proposed framework for Managed Service Provider security and how it can be appropriately implemented.

You can read more about the Call for Views here.

The information submitted by organisations will be used to develop new policy solutions that support organisations in cyber risk management.

However, responses are not limited to organisations and all those that have an interest in supply chain cyber risk management are being asked to provide their opinions.

Security comes first

The Government wants to ensure that organisations can properly review the cyber security risks coming from suppliers and their supply chains.

The National Cyber Security Centre (NCSC) already offers a raft of support to help organisations assess the security risks of their suppliers, however the Government wants to go further and is asking for views from organisations on this matter.

They have requested views on existing guidance for supply chain risk cyber management and they are testing a new security framework with some firms. This is a managed service provider framework, which requires Managed Service Providers to meet the current Cyber Assessment Framework so feedback can be collected.  

On the Call for Views, Digital Infrastructure Minister Matt Warman has said: “There is a long history of outsourcing of critical services. We have seen attacks such as ‘CloudHopper’ where organisations were compromised through their managed service provider. It’s essential that organisations take steps to secure their mission critical supply chains – and remember they cannot outsource risk.

“Firms should follow free government advice on offer. They must take steps to protect themselves against vulnerabilities and we need to ensure third-party kit and services are as secure as possible.”

Want to take part?

If you wish to take part in the Call for Views, you can complete the online survey. If you are unable to complete the survey, you can email your response to cyber-review@dcms.gov.uk or send it via post to the following address:

Call for views on supply chain cyber security

Cyber Resilience Team - 4/47

DCMS

100 Parliament Street

London

SW1A 2BQ

Tags: supply chain security data processing infrastructure management and supplier assurance chain cyber risk management ncsc


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.

Tags: uncertain markets supply equivalent components aerospace biotechnology substitutes flexibility


24 February 2021

Electronic component supply chain efficiency. Will we see another increase in supply and demand due to COVID-19 this year?

supply chain

In 2020, the electronics components industry saw both increases and decreases in supply and demand depending on where you look.

For example, demand for semiconductors that enable servers, connectivity and cloud usage skyrocketed due to stay at home workforces. Meanwhile, demand for semiconductors used in the automotive industry declined as car sales fell.

In other words, the supply and demand for electronic components was different across various sectors. Now that 2020 is behind us, 2021 is looking to follow much the same path as we continue to contend with COVID-19.

However, there will be one big difference - most of the sectors that had reduced demand for components in 2020 will ramp up their purchase orders in 2021. This is the result of economies opening up and companies getting back to operations.

Supply and demand in 2021

We believe the electronic component industry will witness a significant increase in supply and demand in 2021. There are a few reasons for this. The first is that most industries hampered by the COVID-19 pandemic will open up. Car manufacturing is the big one. This will fuel a surge in demand for semiconductors and sensors.

2021 will also play host to cyclical sectors and several tailwinds. 5G, Wi-Fi 6, AI, robotics, cloud, communications, edge computing and AR / VR are the big ones. These technologies will fuel demand for new electronic components.

Supply constraints will persist

Factories will have to ramp up production to meet demand. 2019 was a bumper year for electronics and a lot of infrastructure was built to meet demand. 2020 stuck a fork in the road, placing higher demand on certain components. In 2021, demand will return to a form of previous normality, increasing supply constraints.

We expect supply constraints of components to grow in 2021. Manufacturers will struggle to get a hold of the parts they need.

This will increase the need for partnerships with electronic component distributors like us who are ingrained into the fabric of the industry.

Things will get better over time

With the global rollout of the coronavirus vaccine in place and manufacturing sectors protected from Government shutdowns in most countries, 2021 should be a year where we see supply constraints reduce over time.

Supply and demand will get back to 80% normality toward the end of 2021. 2022 should be much better. This assumes we get to grips with this horrible virus.

In the meantime, tailwinds will continue to fuel demand for electronic components in sectors like AI and edge computing. COVID-19 has only accelerated digital transformation in most sectors. This is a powerful tailwind.

Ultimately, the demand for passive and active components will increase in 2021. You can make sure you have access to the components you need by partnering with us. We specialise in the procurement and delivery of electronic components and parts for a wide variety of industries from the world's leading manufacturers.

Tags: supply chain efficiency semiconductors covid-19 supply constraints


04 November 2020

How the electronic supply chain has been divided by COVID-19

supply chain

Amidst doom and gloom predictions of global economic fallout from COVID-19 and further human and social ramifications, the electronics industry is quietly confident that demand for products will not stall this year or shortly.

This makes for a morale-boosting headline, but underneath the battle lines, there is a trade war raging as a result of a divided supply chain.

Equipment manufacturers are struggling to get a hold of components and component manufacturers are struggling to make enough new components. This, the result of a virus that has thrown the world into unchartered territory and forced elected leaders into making profound decisions that have affected our way of life.

The electronics sector is healthy for now, but keeping it going has required change and intelligent thinking. This is how the electronic supply chain has been divided by COVID-19:

The battle for stock

With the production capacity for electronic components down as a result of COVID-19, it is no surprise that the components' supply chain has been impacted. Fewer components are being made, creating a shortage of stock.

As a result of this, we are now seeing a shift in behavior from manufacturers, who are component hoarding and paying over-the-odds for stock to meet demand. This has reduced the number of components available on the open market, creating a shortage, and the issue is compounded by a lack of new production.

Supply moving away from China

As a result of the coronavirus in China, which has devastated the workforce and adversely impacted the country’s social reputation, manufacturers are beginning to seek alternatives to meet the demand for electronic components.

Taiwan, South Korea, Singapore, Malaysia, the United States, Japan, Vietnam, the Philippines, and Germany are all rich manufacturers of electronic components. We are now seeing greater diversification in supply chains. This is good news for the global economy, but not so much for China and Hong Kong.

Changes in supply chain planning

COVID-19 has forced manufacturers to pivot their supply chains to boost efficiency. From being more flexible with transportation to estimating capacity and accelerating production, manufacturers are doubling up on decision-making processes.

The optimization of production and distribution capacity are key areas, so that production can continue to meet demand while managing health. Available inventory has now become a more important factor than ever too - no longer can manufacturers rely on a steady supply of components. Orders must be planned.

Closer partnerships with electronic component distributors

Pre COVID, manufacturers typically kept the procurement of electronic components in-house with a slick and efficient operation. Inventory would be automatically updated with component orders placed electronically between supplier and manufacturer.

If COVID has taught manufacturers one thing, however, it is that you can never rely on one single supplier to deliver. One failure breaks the system.

This has led manufacturers to partner with component distributors who can deliver the stock they need. The sourcing of components is being increasingly outsourced, which brings some inefficiencies, but is necessary to keep things ticking over. 

Tags: covid-19 battle for stock supply moving away from china supply chain planning partnerships with electronic component distributors electronic components


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