The scarcity of electronic components has taken a toll on component manufacturers, distributors, original equipment manufacturers (OEMs) and contract manufacturers (CMs). 2018 was a challenging year with spot shortages that continued to plague customers. As the second quarter of 2019 ramps up, the demand for high capacitance base metal electrode multi-layered ceramic chip capacitors (MLCCs), resistors, semiconductors and graphics cards continues to grow adding extensive lead times on quotes to electronic manufacturers.
This shortage of supply depends upon numerous impending issues, the most prominent of which is the advancement in technology. The 21st century is facing a surge of innovation with prominent industries such as; automotive, defense, mobile, industrial and internet of things (IoT) require more electronic components to meet the market demand. Electronic manufacturers have increased the number of electronic components used inside products which impacts supply and contributes to the scarcity of parts. With the introduction of new inventions every day, existent components are becoming obsolete. This makes it difficult for suppliers to fill demand resulting in some leads times extending to over 12 months. This obsolescence issue virtually impacts all segments of the electronics industry.
Contract manufacturers are estimating that the long lead times and shortages for multi-layered ceramic capacitors (MLCC’s) may extend to four years. This is a sore topic in the industry for with pricing increasing by 60 percent in the last 6 months. Additionally, Infineon has issued an EOL notice for small signal products with an LTB of December 31, 2019. Xilinx and Rohm are also indicating extended lead times, which makes it essential to share long term forecast information with supply chain partners to maintain continuity of supply. Another example of the exponential use of MLCC’s is the iPhone. Newer smart phones models are using far more components on the board with quantities of MLCC’s increasing from 500 to 1000.
Government policies, tariffs and trade agreements are also impacting component pricing and shortages. Tariffs rates in the US on the import of components with the Country of Origin from China, continues to impact the supply chain. This not only adds cost to the product, it continues to create an imbalance of supply versus demand for millions of electronic components
This puts pressure on the planning department to manage resources to minimize loss and get products out the door to customers. Scarce parts can be an opportunity for scammers to introduce counterfeit components in the market requiring buyers and suppliers to have proper controls in place to avoid bad parts. Inland Empire Components inspects, tests and conducts multi-stage inspections using procedures based on AS6081 standards to ensure only the highest quality components are shipped to the customers for counterfeit avoidance.
Distributors and OEMs also report that price increases on legacy parts have increased exponentially over the last few months. In an effort to move customers over to newer technologies, less profitable components continue to be discontinued with suppliers encouraging buyers to move over to new technology. It’s often a challenge to evaluate the cost saving of purchasing legacy parts against the price of a circuit board redesign.
All of these challenges call for a strong sourcing strategy. Extensive lead times require buyers and engineer to find alternative solutions. This may include a complete redesign of a circuit board, last time buys, and sourcing from trusted independent distributors.
About Inland Empire Components, Inc.
Established in 1989, Inland Empire Components, Inc. is a WBENC Certified Platinum supplier and leading stocking distributor with millions of legacy, spare and new electronic components in stock located in their Lake Elsinore warehouse, with billions more available through an exclusive network of quality suppliers. Inland Empire Components, Inc. provides the most difficult to locate board level components to buyes and engineers withing the electronic manufacturing community. The company services OEMs, EMS and distributors globally in the technology sector including aerospace, military, communications, medical, consumer and industrial industries. The company also provides sourcing and procurement and excess inventory solutions to small, medium and Fortune 1000 corporations from their ISO9001:2015 and AS9120B certified facility.
President & CEO