When Apple has to delay the release of a product due to “supply constraints”, you can bet the rest of the industry is feeling the impact, too.
The electronics industry is facing a components shortage, the likes of which we haven’t seen in over a decade. By all accounts, it’s a perfect storm, as “capacity constraints, merger and acquisition, obsolescence and higher-than-expected demand is creating component shortages across the supply chain.”
Both the Electronic Components Supply Network (ECSN) and the Semiconductor Industry Association report that demand is on the rise, up over 20 percent in the last year alone. As a result, the ECSN is urging electronics buyers “to review their outlook on lead times for components amid surging global demand and reports of allocation risks on certain products.” As a designer, developer and manufacturer of electronic products, Etratech relies on these supplies, so this lengthening of lead times affects us – and our clients – directly.
ECSN expects extended lead times for manufacturers will continue through the year as a result of continued demand and strong growth in the Asia-Pacific region. While that growth sounds like it’s a positive thing, the supply simply hasn’t caught up with the demand yet.
This could lead to a number of industry-wide issues that could have a huge impact on the industry moving forward. One concern is counterfeiting. Relabeled, out-of-date parts could enter the supply chain and cause a world of problems. (Since we have such stringent sourcing requirements, counterfeiting is less of a concern for Etratech customers.)
An even bigger concern is allocation, wherein short-handed suppliers “allocate” only a percentage of an order to manufacturers. Essentially, the components producer is dividing the inventory it has among its customers, since the demand has exceeded the supply. Allocation is already a factor with some components, and some manufacturers are exacerbating the issue by double- and triple-booking orders.
For now, Etratech is making every effort to stay ahead of this problem. We’ve been aware of the shortage for some time, and we’ve planned accordingly. That said, we can’t avoid longer lead times. Shortages are affecting several industries, automotive, consumer electronics and industrial among them.
While we’re not especially concerned about allocation at this time, it’s a possibility — particularly if demand grows as predicted. At any rate, lead times won’t be decreasing, so if you have any requirements, we request that you forward them to us as soon as possible. The sooner we can begin the process on our end, the faster we can work within the current environment to get your project started.
Meanwhile, we continue to proactively address any supply chain disruptions as they relate to ongoing production. We work directly with our customers, distributors, manufacturers, reps, the spot-buy market, production scheduling, and any other parties required to minimize or eliminate any impact to delivery schedules. This activity is part of the value Etratech’s supply chain capability provides to our customers.