OSDA Blog
Apr
4
Component Shortages Update
As you are probably all aware, we, and every other CM are experiencing severe shortages on most components. Something we haven’t seen on such a broad scale in years! Passive lead times are being quoted 30 weeks or more.
In view of this we are suggesting reviewing your orders and when possible place new orders, sooner than later. As your supply chain manager, this would give us a better chance of placing orders in a more timely manner, and avoid you missing shipments to your customers. ‘The following is a brief outline on what is going on with a link to the original article.
Excerpted From EPS news
Component shortages are not just about increased demand. Any number of factors – production capacity, supply chain disruptions, obsolescence and technology migration – can contribute to product scarcity. For 2017 and 2018, supplier merger and acquisition (M&A) activity can be added to the causation list.
The current component shortage is now expected to last through 2018. Passives lead-times are stretching to 30-plus weeks, or more In the chip industry, mergers have created mega-suppliers with considerable clout. The market is beginning to see price increases for the first time in years. Buyers are anxious to book their business before prices go up, thus creating further demand.
Technology migration, particularly within the already-volatile memory market, has a domino effect on availability. “There’s a shift in flash from 2D to 3D technology and flash is the key component in SSDs. That shift is driving shortages in both SSDs and flash memory and is continuing. That, in turn, has put pressure on mature technologies such as DRAM. DIMM modules for servers are in short supply and the cloud has driven demand for server production.”
Manufacturers have been disciplined with their capital investments, according to Forbes. Estimated DRAM capital expenditures for 2017 will grow by 24 percent year-over-year, well below their 2015 peak, despite the fact that prices have been trending up significantly. Companies are focusing their investments on technology transitions rather than outright capacity expansions.
“With lead times still extended across standard semiconductor products, including passives and memory, the commodity space seems to be the most volatile.”
It takes awhile for capacity to catch up to demand and expansion requires a significant investment in time and equipment. Paul Romano, of Fusion Worldwide says. “We’re now seeing shortages across a wide range of products — in passives, MLCCs and tantalum; and some resistors and diodes.
“In my experience it takes six to 12 months to bump up fab capacity and get back to balanced supply and demand,” said Damon Puoya, COO for hybrid distributor.
Suppliers and distributors are allocating products, using customers’ buying history as a baseline. In past allocation cycles buyers have turned to the open market, populated by independent distributors that generally do not carry authorized lines. The authorized supply chain maintains buyers have a high risk of procuring counterfeits in the open market.
The current component shortage is now expected to last through 2018. Passives lead-times are stretching to 30-plus weeks, or more In the chip industry, mergers have created mega-suppliers with considerable clout. The market is beginning to see price increases for the first time in years. Buyers are anxious to book their business before prices go up, thus creating further demand.
Technology migration, particularly within the already-volatile memory market, has a domino effect on availability. “There’s a shift in flash from 2D to 3D technology and flash is the key component in SSDs. That shift is driving shortages in both SSDs and flash memory and is continuing. That, in turn, has put pressure on mature technologies such as DRAM. DIMM modules for servers are in short supply and the cloud has driven demand for server production.”
Manufacturers have been disciplined with their capital investments, according to Forbes. Estimated DRAM capital expenditures for 2017 will grow by 24 percent year-over-year, well below their 2015 peak, despite the fact that prices have been trending up significantly. Companies are focusing their investments on technology transitions rather than outright capacity expansions.
“With lead times still extended across standard semiconductor products, including passives and memory, the commodity space seems to be the most volatile.”
It takes awhile for capacity to catch up to demand and expansion requires a significant investment in time and equipment. Paul Romano, of Fusion Worldwide says. “We’re now seeing shortages across a wide range of products — in passives, MLCCs and tantalum; and some resistors and diodes.
“In my experience it takes six to 12 months to bump up fab capacity and get back to balanced supply and demand,” said Damon Puoya, COO for hybrid distributor.
Suppliers and distributors are allocating products, using customers’ buying history as a baseline. In past allocation cycles buyers have turned to the open market, populated by independent distributors that generally do not carry authorized lines. The authorized supply chain maintains buyers have a high risk of procuring counterfeits in the open market.
