Severe Electronic Component Shortages Forecasted for 2018

It’s been several years since the last major component shortage
and now electronic manufacturers are feeling the pinch. Demand is outweighing supplies and in some cases, customers have reported lead times of 24 months or longer. As distributors and component manufacturers issue Product Change (PCNs), End-of-Life (EOL) and Life Time Buy (LTB) announcements, buyer and engineers are scrambling to meet quarterly goals and production demands. With hundreds of thousands of electronic components, semiconductors and finished good products going obsolete every year, the 2018 component shortage is adding to the challenges facing the electronic part supply chain.

Another situation causing pressure on the supply chain is the fact that silicon wafer foundries have announced a planned 20% price increase for 2018 and possible shortages out to 2021. This is compounding the sourcing problem for electronic buyers.

Manufacturers GlobalWafers and SUMCO, who produce the majority of the worlds silicon wafers used to make electronic components including CPU’s and DRAM inside computers, site a shortage of 12-inch, 300mm wafers for the price increases.

A number of factors are causing the 2018 electronic component chip shortage including new industries such as the Internet of Things (IoT) and cryptocurrency mining  which is causing the shortage of graphics processing units (GPUs) and spotty availability of raw materials.

It is always recommended that electronic product design and engineering teams review bill of material (BOM) parts so they can be purchased from multiple manufacturers to avoid an interruption in the supply chain.

Dana Jiron
Inland Empire Components, Inc.



Electronic Components Shortages in 2017

The EPSNews Electronics Purchasing And The Supply Chain is reporting that obsolescence, mergers and acquisitions and an unexpected increase in demand for electronic components is causing component shortages up and down the supply chain.

As the supply of electronic components swings from too much inventory to extended lead times and ever increasing part obsolescence, distributors are reporting long lead times increasing across multiple products categories including: memory, discretes, IGBT, logic, optos, LEDs, MCUs, and mosfets.

“Demand is starting to outpace supply which is causing pressure on pricing and extending lead times” says, Dana Jiron, President and CEO of Inland Empire Components, Inc. “We’re advising our customers to consider last time buys now to avoid the high cost of circuit board redesigns”.

It is recommended that buyers and engineers have a conversation with their suppliers regarding capacity, lead times and product End-of-Life (EOL) and Product Change Notices (PCN) to determine the best actions to take to avoid emergency shortages.

Dana Jiron
Inland Empire Components, Inc.


How We Find Components

How We Find Components

Let me be blunt. If you are the one assigned to find components at your facility, your job may be challenging to say the least.  Everyday we talk to buyers and engineers who are frustrated with having to find components.

Here is a great real life example of what I’m talking about. First, I will leave the name of the customer anonymous for obvious reasons. Several months ago, one of our OEM customers approached us about their need to buy an obsolete part. The part is a popular programmable logic device that went end-of-life.  Our customer made a business decision and decided not to purchase the parts which were announced obsolete.

The result was that our customer ended up needing a significant quantity of the parts. First they went to their original supplier who said  some version of “sorry…no more parts”. Next, they came to us for help.  They called us to find components for them. Flash forward 5 months later…our customer did not purchase the parts quickly when they were quoted and our vendor sold them elsewhere.

Independent Distributors operate from a different business model then say…Avnet, Arrow (which got into the business when they bought Converge), Digikey, Newark and Future Electronics.  Our business model requires us to find components in a fast moving marketplace devoid of scheduled orders and 20 week lead times.

Although we advice our customers to place their orders immediately and not wait, often they have to get multiple signatures just to get the parts purchase. where the franchised and authorized distributors offer new parts directly from the manufacturer.

We continue to source parts for the customer and as we sift and sort the good parts from the questionable, our customers frustration mounts. They operate under the constraints of a bureaucracy that it slow and cautious. We operate from a volatile marketplace sometimes akin to the stock market.  It’s the wild west when you have to find components that are either obsolete or back ordered for 40 week.

Recently a customer asked us to source a very difficult part.  We subscribe to multiple online electronic component trading platforms.  The annual investment to belong to these services is significant.  We have multiple OEM customers who act as vendors when they wish to sell off some of their inventory. We re-market these electronic components when we are confident that the product meets the customers expected standards.

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