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Resistors in Short Supply: Blame Cars

8.9.2017
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source: EBN online news

Historically, resistors (and other passives) get little attention, as they are simply a basic building block in every electronic product rather than a strategic design differentiator. However, in the past six months or so, certain types of resistors have be hard to source, and that’s bad news for electronics OEMs.

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Both thick film and thin film resistors are tight. “There are major shortages in thick film chip resisters, spreading now into thin film, and current sense resistors with lead times at 40 plus weeks,” Jacques Hing, corporate vice president at distributor Future Electronics told EBN.

Fortunately, not all resistor types are affected. “There does not appear to be any issue with through hole resistors such as carbon film, metal film, metal oxide or carbon composition,” said Jim Bruorton, vice president, industry statistics and business analytics for the Electronic Components Industry Association (ECIA).

The ECIA has noted that lead times on resistors have consistently gotten longer.

“The industry is seeing lead times extended by certain suppliers…mostly the Japanese suppliers and one major European supplier,” “From what we are hearing from the contract manufacturers and distributors, the Taiwanese suppliers are in decent shape.”

It’s not a global issue currently, since many resistors are made in Taiwan and those suppliers seem to be maintaining capacity, according to the ECIA. “The bigger issue is in North America where the Japanese suppliers and the one European supplier have a greater share,” Bruorton told EBN. “So, while things are tight, largely because of a lack of capacity expansion over the past few years, the current lead time issues with resistors seems to be more of an imbalance than a shortage.”

The shortages became marked early in 2017, and the culprit may be the automotive industry. “It really started with a huge uptick in the automotive market segment with electronic content for each vehicle is up substantially,” Hing said, adding that advance driving assistance systems are a key driver.

Resistor makers are finding that automotive customers are a potentially more lucrative customer. “The automotive industry is shifting significantly to the electronics-based products so demand is sucking a lot of the capacity,” said Rajesh Kalidindi, founder and CEO of LevaData, a procurement analytics SaaS vendor. The high-tech manufacturers are is beating down on pricing and so these component makers are settling on getting higher pricing from the automotive sector and are moving allocation accordingly.”

Industry sources say that the shortages won’t be addressed any time soon, and will probably continue to plague the industry through the middle of next year.  “Even then, added capacity with be far below actual demand,” Hing said. “Lead times will stay well above normal, at least 24 to 40 weeks.”

Some resistor makers are adding capacity, but that won’t impact shortages until late this year or early next year. “Current sensing metal strip type resistors are also tight, but we are hearing quite a bit of capacity is coming on line,” said Bruorton.

Procurement professionals should proactively manage spend on resistors by working closely with suppliers. It may be prudent to consider resistor needs over several quarters, and then put out a request for quote (RFQ) to lock down pricing and quantity now to get ahead of the curve, suggested Kalidindi.

Further, it may be necessary to look to new sources to fill product needs. “Buyers need to be open to being very flexible on getting alternates,” said Hing. “They need to be proactive, especially if controlled by contract manufacturers to ensure that proper actions are taken to mitigate the risks by opening up the approved vendor list (AVL) to suppliers where capacity still exists, although that is quickly changing as well.”

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