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Showing posts for November 2021


24 November 2021

Global chip shortage to impact electronic retailers holiday season

resized shutterstock_1022824408

The holiday season usually marks the start of an electronics sales boon for retailers. Consumers buy more electronics in the lead up to Christmas than at any other time of the year. This year, however, things are different.

This holiday season, the global chip shortage is set to impact electronic retailers, with shortages of popular products like games consoles, graphics cards, smartphones, laptops and tablets likely to persist through to 2022.

Due to problems buying stock, most retailers are bracing themselves for low Christmas electronics goods sales. The global chip shortage means fewer electronics goods are being made, so there is a long lead time from suppliers - some retailers are waiting several months for new stock, only for it to sell out within days.

Consumers should start holiday shopping now 

Chips are in critically short supply this year, which has reduced manufacturing output at many of the world’s biggest factories.

Companies like Samsung, Apple, Intel and AMD are experiencing problems getting the chips they need. Today, some chips have delays of over a year, and inventory supplies for chips are running low, putting pressure on supply chains.

All of this means there is a shortage of in-demand electronics goods, from games consoles to smartwatches. The message is simple - consumers should start holiday shopping now to ensure they can get hold of the electronics they want.

It is also crucial that consumers don’t take stock levels for granted. What’s in stock today might be out of stock tomorrow, and many retailers have lead times of several months for new stock. So, if you need it, you should buy it while you can.

Is the chip shortage being blown out of proportion? 

We are so used to next-day Amazon delivery and seeing shiny electronics on store shelves that chip shortages appear to be a fantasy.

However, the chip shortage is real - manufacturers are struggling to create enough chips, and suppliers can’t get hold of the inventory they need.

Another fox in the henhouse is chip price increases. Companies are bidding through the roof for components, and prices are rising rapidly. Manufacturers don’t absorb these price rises - they are passed down the supply chain, and eventually, they find their way to the consumer (creating consumer inflation).

Chip prices are increasing for several reasons. The obvious reason is supply and demand economics - the less available something is, the higher the price.

Another significant reason is prices for rare earth metals have exploded over the last 12 months, moving nearly 50% higher on average since March.

Summing up the chip shortage

There is a severe chip shortage happening right now that threatens the availability of electronics goods this holiday season. Prices for chips are also skyrocketing, increasing the price of devices like smartphones and smart devices.

All of this is to say, if you plan on buying some chip-reliant electronics this holiday season, you should start shopping now or face being disappointed.

Tags: global chip shortage graphics cards samsung apple intel and amd chip price increases rare earth metals


17 November 2021

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

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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.


10 November 2021

Global silicon chip shortage will last until at least 2023

new electronic component image

How long will the global silicon chip shortage last? If you were to ask ten CEO's of leading technology companies, you'd probably get ten different answers.

However, there's one timeframe most CEO's quote…

2023 is the date CEO's are optimistic about 

Intel's CEO, Pat Gelsinger, has given us a realistic timeframe for the chip shortage to end - he says the chip shortage won't end until 2023.

"We're in the worst of it now; every quarter next year, we'll get incrementally better, but we're not going to have supply-demand balance until 2023," Gelsinger told CNBC.

Gelsinger's thoughts echo those of Glenn O'Donnell, a vice president research director at advisory firm Forrester, who says the chip shortage will last until 2022.

"Because demand will remain high and supply will remain constrained, we expect this shortage to last through 2022 and into 2023," O'Donnell wrote in a blog in March.

Daimler chairman Ola Källenius also believes the chip shortage could last until 2023.

"Several chip suppliers have been referring to structural problems with demand," Källenius told reporters during a roundtable event ahead of the Munich IAA car show. "This could influence 2022 and (the situation) may be more relaxed in 2023."

What will chip demand look like in 2022-2023?

In July, the CEO of STMicroelectronics provided insight into what we can expect in 2022-2023, "Things will improve in 2022 gradually, but we will return to a normal situation ... not before the first half of 2023," he said in an interview.

The global silicon chip shortage has led to car plants shutting down, paused manufacturing lines and delayed product launches. It isn't a short-term problem, and no one knows for sure when supply will start catching up with demand.

All industries and companies that use chips have been affected by the shortage - even Samsung, the world's biggest computer-chip manufacturer, has been affected by it, delaying the launch of several Galaxy and Note smartphones.

Most experts agree that 2022 will echo 2021, with moderate-extreme shortages of integrated circuits and chips, as well as certain active and passive components. Prices are also expected to rise in line with raw material costs.

2023 may be the year that supply starts meeting demand, but it will require the mass opening of foundries and factories. Investment in new plants and manufacturing lines is ongoing, with new fabs set to open in the next two years.

In 2023, we hope to see regular chip inventory levels and average delays of about three months to replenish components. At the moment, some components have delays over a year, and inventory supplies for chips are running low.

Keeping supply chains moving

The best way to keep supply chains moving is to partner with an electronic components distributor like us. We can source chips from around the world, tapping into stockpiles and inventory that isn’t available to the average company.

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 to chat with our team.

Tags: silicon chip intel chip shortage stmicroelectronics manufacturing delayed shortage integrated circuits raw material costs foundries factories


03 November 2021

Incoterms Explained

incoterms

Incoterms (International Commercial Terms) are a set of trade rules issued by the International Chamber of Commerce to define the responsibilities of sellers and buyers globally to reduce confusion in cross-border trade.

Incoterms are 11 internationally recognised rules that define things like who is responsible for managing shipment and who is responsible for customs clearance. The aim is to enable smooth trade and transactions.

This article will provide an explainer of the 11 Incoterms.

Incoterms for Any Mode of Transport

There are seven Incoterms for Any Mode of Transport:

  • EXW (Ex Works)- This Incoterm makes export clearance the responsibility of the buyer, except when the country overrules it by law (such as the U.S.).
  • FCA (Free Carrier)- The seller is responsible for making the goods available at its own premises or at a named place. The seller is responsible for export clearance and security.
  • CPT (Carriage Paid To)- The seller clears goods for transport and delivers them for shipment, assuming responsibility for delivery to the named destination.
  • CIP (Carriage and Insurance Paid To)- The seller is responsible for delivery and insurance of delivery, after which risk transfers to the buyer.
  • DAP (Delivered at Place)- The seller bears all risks associated with delivery but not unloading.
  • DPU (Delivered at Place Unloaded)- The seller bears all risks associated with delivery and unloading.
  • DDP (Delivered Duty Paid)- The seller bears all risks associated with customs duty and delivery, as well as unloading.

Incoterms for Sea and Inland Waterway Transport

There are four Incoterms for Sea and Inland Waterway Transport:

  • FAS (Free Alongside Ship)- The seller clears goods for export and delivers them for shipment alongside the vessel, after which the buyer assumes responsibility.
  • FOB (Free on Board)- The seller clears goods for export and delivers them for shipment on the vessel, after which the buyer assumes responsibility.
  • CFR (Cost and Freight)- The seller clears goods for export and assumes responsibility up until the goods are loaded on the vessel.
  • CIF (Cost, Insurance and Freight)- The seller clears goods for export and bears the cost of freight and insurance. Buyer assumes responsibility for unloading.

Understanding Incoterms 

Incoterms are designed to clearly define who is responsible for goods at different points of importation and exportation.

When explicitly incorporated by parties into a sales contract, Incoterms become a legally enforceable part of that sales contract.

In each Incoterm, a statement is provided for the seller’s responsibility to provide goods and a commercial invoice. A corresponding statement stipulates that the buyer pay the price of goods as provided in the contract of sale.

The limitation with Incoterms is they do not address all conditions of a sale, and they do not address liability or dispute resolution. Instead, they are a framework that importers and exporters can use to ensure smooth transactions.

To find out more about Incoterms, the ICC has an explainer article, or you can download the ICC’s free eBook for a detailed guide.

Tags: incoterms trade rules cross-border trade internationally recognized rules customs clearance exw fca cpt cip dap dpu ddp fas fob cfr cif importation exportation.


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