Global shortages of electronic components on the market. Why? How to prepare?

Manufacturers of electronic equipment around the world are faced with a shortage of microchips and other electronic components. The first noticeable signals were back in 2017 when, with a sharp increase in demand, suppliers could not cope with the number of orders. It was not possible to increase production capacity so quickly, and they simply postponed the delivery time.

For some suppliers the deadlines have been pushed back to 20 weeks. Was it possible to predict this? Absolutely not, but one of the key moments occurred back in 2011, when, due to an accident at the Fukushima nuclear power plant, semiconductor manufacturing plants were closed and the total supply of semiconductor wafers from which was about 25%.

The rapid growth of mobile technologies and the Internet of Things, as well as an increase in the purchasing power of the population, provoked a huge jump in demand for which manufacturers of electronic components were simply not ready.

The United States’ political sanctions against China have also had a significant impact. The first sanctions were imposed in 2016 against supercomputing centers; later, in 2019, Donald Trump added more companies to this list.

Let's add to this list the growing popularity of electric cars and tax benefits for their owners around the world. With the growth of urban infrastructure adapted for electric vehicles, the demand for them has, naturally, also increased.

Of course, the last straw was the pandemic. With the arrival of pandemic the intensity of production decreased, and demand continued to grow. With the arrival of lockdowns and the transition to remote work and training, increasing numbers of employees needed new equipment. We have invested not only in personal computers, laptops, and tablets, but the demand for smart home systems, speakers with virtual assistants, and baby monitors has also grown. At the same time, there has been an increase in the prices of components. Copper, for example, has increased by 40-60% compared to 2020, and fiberglass by 25-40%.

Gartner predicts that the situation will improve by the end of 2021, though we should not expect a full recovery before 2022. These forecasts, although they sound encouraging, may change under the influence of the next wave of COVID-19 or other unforeseen circumstances. In the meantime, you need to look for new alternative suppliers, plan your purchases, and be prepared for significant delays in deliveries.