Components Shortages and Other Challenges Face the Electronics Manufacturing Industry Today
One of the results of the pandemic is that the intricacies of the global supply chain have been thrust into plain view of the public. Whether it’s the empty shelves in grocery stores last spring, hard-to-find bathroom tissue and disinfecting wipes, or the frustrating pace of vaccine rollouts, the fundamental concepts of supply and demand, production lead time, and manufacturing capacity have been very evident, even to the uninitiated.
2021 will present a set of unprecedented challenges to the electronics manufacturing industry. Limited availability of key semiconductor components, such as microprocessors, has been very well documented in the press recently, as this shortage has impacted the automotive and consumer electronics sectors, to name a few. The issue is serious enough to have triggered a U.S. Presidential Executive Order to review the semiconductor supply chain. The general consensus is that there will be no quick/miraculous fix, and that it could be into 2022 before normalcy is re-established in the supply line.
This leaves PCBA manufacturers in the precarious position of being forced to deal with extended lead times from the semiconductor suppliers, if delivery commitments are being made at all. With some microprocessors having been put on allocation, even with sufficient orders in place, delivery status can be a total unknown. As stock and supply from normal channels dwindle, you need an electronics manufacturing partner ready to pull out all the stops to find parts to keep your lines up. This includes scouring the broker market for parts, which requires intensive analysis and local presence to ensure that these parts are genuine and of an acceptable quality level.
Even in cases where a supply line is still available, a trend to higher component prices has been amplified in the past quarter. This trend has not been limited to the semiconductor industry. Skyrocketing copper prices, exchange rate changes, and disruption to the petroleum industry due to recent cold snap in Texas (affecting supply of PVC used in wire insulation) are driving near-immediate increases in transformer, power cord, wire harness, plastic housing, and LCD glass costs.
One positive, compared to this time last year, is that the re-start of production after the Lunar New Year break is appearing to be on par with pre-2020 standards. Last year’s extended post-holiday capacity restrictions due the COVID-related lockdowns are not in play this year, although strong demand from the OEM’s is keeping things very busy for offshore factories.
Avnan is ready for the challenge of navigating through these difficult conditions to help customers maintain continuity of supply. We have many tools, techniques, and relationships at our disposal to manage and mitigate rising component costs. If you’re feeling the pain of unstable supply and rising costs, reach out and talk to us to see how we can help you get through the year and position you for success.