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    Crusher at the Wodgina lithium mine in Western Australia. Image courtesy of Mineral Resources.

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Get Ready for Longer Capacitor and Resistor Lead Times

26.9.2017
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source: Electronics Sourcing news

An ominous trend has emerged in electronic component sourcing: lead times are escalating — a fact that will present many challenges for the purchasing community. ECIA looks at how things are changing and why

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For several years, sourcing electronic components simply involved ‘a mouse click’ leading to instant fulfilment. While that may still hold true for some products, today lead times are escalating and stability is not the norm. Unfortunately, there is no one cause. It’s a complicated situation exacerbated by shifts in market demand, allocated capacities, investment constraints, de-emphasized older form factors and regional supply shortages.

ECIA companies provide interesting data on this subject by polling product, market and lead time trends on a quarterly basis in North America. When looking at the multi-year composite, abnormalities such as today’s increasing lead times tend to pop out. So, let’s look at two building-block components: capacitors and passives.

Capacitors

While tantalum and aluminum capacitors experience spotty delivery problems, most concern centers on multilayer ceramic capacitors. Significant market forces are at work here. Automotive demands are escalating across all models and simultaneously, China mobile phone demand is shifting from standard features to smart devices, driving up device content. Unfortunately, MLCC manufacturing capacity was based on conservative forecasts and no volume manufacturer appears to have anticipated the demand surge caused by these two applications.

Demand is extreme for high capacitance MLCC caps. Bearing in mind that it takes more production equipment, floor space and capital to produce these components, margins likely dictated investment in high CV at the expense of standard MLCC.

Another factor at work here is standardization. De-emphasis of outdated form factors, like large case sizes, aligns with market demand where miniaturization drives new applications, however purchasers that need to retain legacy designs could find sourcing a nightmare.

Lead times have increased roughly two weeks on the average. Two factors have contributed to this. Firstly, in tight delivery situations manufacturers tend to supply direct customers first and distribution second, with little to none allocated outside that core. Secondly, at least one distributor took a more aggressive outlook on growth and stockpiled in anticipation. Although kudos is due, this stock only ensures continuous delivery to one company’s core customers.

Resistors

When it comes to resistors, the focus is thick and thin film resistor deliveries. The Asian market is mainly supported by Taiwan suppliers who seem to be keeping up with demand but that is not the case in North America. Dominant suppliers here are Japanese and European who are more capacity constrained. Lead times in North America have gone from 12 to 16 weeks since the beginning of 2017. Historically, slim margins have made new capacity investment unattractive, so, unless, the global capacity is re-balanced, shortages will be here for some time.

Remember, in times of short supply, manufacturers and distributors will serve long-term customers first. Those customers who ‘shop the market’ for price and delivery may find greatly extended lead times and real difficulty filling their production needs at any PPV.

featured image: ECIA president and chief executive officer, John Denslinger

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