How Electronic Component Supply and Demand is Ruining Your Day
Posted by Jenny Miller on Wed, Oct 13, 2010 @ 08:37 AM
As we look at the electronic component landscape we have two factors at war with each other.
The economy has obviously rebounded, at least in part. Corporate spending is increasing and consumer spending, although not at the same pace, is increasing as well. There are some new products out there that are driving that (think: ipad, iphone). Although things are coming back, on our customers’ side of the ledger there’s an understandable reluctance even now to invest in inventories… which only compounds the problem when demand increases.
On the other side of the equation, Original Component Manufactures (OCMs) are hesitant to invest in additional capacity to produce components because of the shaky ground we’ve come from. We also think there’s some technology switchover going on in wafer size. New technology makes manufacturers able to pack more integrated circuits into a smaller area. What’s put on the wafer is smaller, but the wafers are getting bigger to accommodate more detail they’re able to add. Energy, money, capital and time are needed to make the change, which can be a hard trigger to pull at this point even if the results are worth it.
When you add up these factors, an increase in product demand and a decrease in component supply available on the open market, lag time can be anywhere from 6-18 months for a manufacturer to get ramped up depending on the complexity of the product. According to the Wall Street Journal:
“Nick DeTura, vice president for supply chain and logistics in the Americas for Alcatel, said he began to notice parts including integrated circuits, transistors and power supplies—which are used to make wireless base stations, routers and switches—becoming more scarce in the fourth quarter.
Now, Mr. DeTura said there is a 50% to 150% increase in the time it takes his suppliers to fill orders for certain components. He is looking for additional suppliers, offering to pay higher prices for components, and having parts delivered to him by plane rather than ship, a move that can cost millions of dollars in extra charges over the course of a quarter, he said.”
Read full article at: http://bit.ly/d7rFgtcomponentshortage
In this climate, companies are going to become increasingly anxious to find their parts and that’s when they need to be the most careful. Counterfeiters prey in situations exactly like this, when the market triggers a demand signal and counterfeiters rush in to fill that void…counterfeiters are only going to produce what’s likely to sell on the open market. When the OCM’s and authorized resellers are going to the open market to get parts because the demand is too great, that’s a signal to counterfeiters to get their parts out there.
More than ever our customers need a component supplier that can be trusted. Refer to our previous blog walking you through how you know you can trust your IC supplier, or go directly to our MarketMaker Product Search to access our database and find the parts you need. Our years of experience in navigating the open market combined with our enhanced anti-counterfeiting efforts will provide you with the right products to meet your delivery schedules.
