It's common knowledge that components are in very short supply. There simple are not enough chips to go round, and back in July we reported that component shortage was set to last until 2023 - but what is the current situation and how have things changed?
Unfortunately, the scarcity of components is still having a major impact and is not expected to end in the near term. Whilst many manufacturers are working to expand to improve production capacity, it is unlikely to be realised in terms of component production until 2023 at the earliest. Lead-times are still extended, prices are continuing to rise and any grey market stock has been depleted or is exorbitantly expensive. Our manufacturing partners are still being given End-Of-Life notice on components with little or no warning from their suppliers.
Frequently our manufacturing partners are unable to confirm how many parts they can produce as the IC manufacturers are only providing volumes to the factory at the last minute. This is causing huge delays to delivery confirmations and resulting in many last-minute changes to delivery schedules. This in turn makes it very difficult for us to ensure consistent supply to our customers.
Electricity supply adding to the problem
The latest threat to production schedules and increasing prices is the electricity supply status in China. Shortages of coal for domestic use have created vast price increases, resulting in electricity providers rationing supply to industrial areas. This is causing disruption to production lines. The Chinese government is taking the unprecedented step of allowing coal-fired power plants to increase prices, which may well feed through the supply chain. Steps are being taken to boost coal production and manage demand for industrial plants. We await further announcements from the Chinese government.
The impact of this extreme supply and demand shift means that our customers may experience several price rises to one part, extended lead-times and last minute delays to shipments. Its not the way we want to do business, but it really is out of our control.
Through our operations teams in Asia and across Europe, we are very closely monitoring the situation with chip suppliers and our own manufacturing partners and are quick to react when things change to keep disruption to an absolute minimum for our customers.
Contact us here for any questions you have regarding component supply.