Component Shortages Define First Half of 2018…& Beyond

Source: EBN article

Hailey Lynne McKeefry, 4/20/2018,

High capacitance base metal electrode multilayered ceramic chip capacitors (MLCCs), resistors, semiconductors, graphics cards: the list of electronics products in short supply continues to grow. Component makers, distributors, and OEMs alike are concerned as industry pundits point to the possibility of shortages lasting years.  

The reasons are myriad. New and evolving markets, including automotive, defense, mobile, industrial, and internet of things (IoT) are creating surges in demand. Those verticals that have traditionally used electronic components are using more, while other markets have started to add electronic component content to their product designs.

The shifting political landscape, where sactions, tariffs and trade agreements are in flux, further complicates planning. Last month, for example, President Trump announced a 25%tariff on imported steel and a 10% tariff on imported aluminum, the New York Times reported. “The real risk isn’t that steel and aluminum are a bit more expensive, though that is likely to be the case. It’s that an entire system of global trade, which the United States helped build, might be undermined,” the Times said.

Price volatility provides another hit to organization’s sourcing strategies. For example, in January, Gartner doubled its 2018 semiconductor revenue forecast to 7.5%, which promises to grow global chip market to $451 billion. The forecast increase can be traced, at least in part, by increase in average selling prices on these chips.

Clearly, a strong sourcing strategy will be a critical part of success over the next several quarters.  With lead times stretching to nearly a year in some cases, everyone is scrambling to find additional supply or new sources. Meanwhile, component makers are researching new sources of raw materials or even new production methods. However, complexity creates a high barrier to new entrants into many of these markets.

The infographic below from distributor Fusion Worldwide drills down into some of the realities of the component landscape.

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