The current global semiconductor shortage is causing headaches for just about anyone in the electronics industry. If you manufacture mobile devices, IoT devices, PCs, gaming consoles, industrial or medical devices, automotive applications, you name it, you know exactly what is going on. It is almost impossible to secure the components you need for your ongoing needs in your efforts to keep up with your own growing demand for your products.
How did we get here?
The chip shortage started with strong demand for personal computers/tablets. Next the increase sales of TVs, smartphones and gaming consoles added to the demand. All of this leading to electronics manufactures increasing their chip purchases.
Then factor into that the 2020 COVID-19 crisis. This crisis alone disrupted chip manufacturing and shipments. At the same time, there was an increase in demand due to a massive shift of many people working remotely from home. This caused a spike in the PC market in an effort to fulfill the needs of more PCs and networking equipment.
When COVID-19 lockdowns began to spread, the automotive industry significantly decreased production. Coming in to 2021 automakers went back into production and found themselves coming up short when trying to obtain chips. The chip manufactures reallocated the capacity from the automakers to other segments when the auto manufactures decreased their production. Now the automakers have to shut down production simply because they cannot secure enough chips to produce automobiles.
Add to all this the simple fact that just about everything uses electronics these days. As time goes on, the number of chips used in everything from cars to cell phones and industrial equipment continues to increase. The 5G rollout is putting additional strain as the telecommunication’s companies race to upgrade their networks.
Talk about a mess…
What can you do?
Navigating a market like we have today is not easy. That is for sure. Inventory that becomes available is disappearing at an alarming rate. Making sure you can get the parts you need is critical. Here are a few suggestions on things you can do to make your life a little easier:
- Don’t delay in placing your purchase orders. If you find the parts, even if the price is a little higher than you normally pay, place your order.
- Review your AVL with engineering and add alternate parts for everything on your Bill of Materials. Having options at a time like this is vital.
- Consider placing open orders with trusted suppliers in an effort to capture any material that becomes available. This will help your supplier move quickly to secure inventory in this fast moving environment.
- Strengthen your relationships with your key suppliers. At a time like this, you need a select group of trusted suppliers to work for you.
Let us know if there is anything to we can do for you.