The Problem
The current shortage of Electronic Components is a known ongoing problem that companies need to act on to avoid considerable losses. Currently, some of the hardest-to-find items are Semiconductors, Microcontrollers, and ICs. These shortages affect various industries such as Automotive, Tech, and Consumer Electronics, to name a few. In a recent report on "Supply Chain Resilience in a Post-Pandemic World," Jabil says about two-thirds of surveyed OEM's lost $50 million or more because of these shortages. About one-third lost more than $100 million, and about 8% lost more than $500 million. In addition, automotive semiconductor supply shortages will cost the automotive industry an estimated $110 billion in lost revenue.
This problem was not solely because of the Pandemic. The demand for these electronic components has rapidly increased over the years with the advancement of technology. Supply issues first became apparent in 2018, a little under two years before the first cases of COVID-19 were ever reported. With the cracks already forming, the shutdown resulting from the Pandemic only exasperated the problem.
The Solution
With supply down, it is becoming increasingly harder to find the needed electronic components. Companies need to expand their reach to new suppliers, ones that specialize in finding those necessary hard-to-find components. Doing nothing and waiting the estimated 44 to 66 weeks for components, the current wait time for Intel and AMD data center and server ICs, is not an option.
When working with an expert in finding hard-to-find components, such as DEX, companies can be confident that the vendor has the means and connections to get what's needed, saving companies from further losses.
However, one must be careful when looking at new suppliers. Microchip counterfeiting has been on the rise recently due to the demand. The ERAI recently reported that one scam artist defrauded OEMs, CMs, and EMS companies out of over $110,000 since the component crisis began. Fraudsters are pushing firms to abandon their vendor verification procedures to gain access to these badly needed supplies.
There are many ways to avoid fraudsters and fake parts. First, buyers should research the online presence of a potential new vendor. If they say they are a 50-year-old company, but they only registered their website a month ago, a business can identify that red flag and avoid scams. Additionally, buyers can obtain references before doing business with a new supplier.
For example, looking at DEX, Data Exchange Corporation has been in operation for over 40 years. DEX's website was registered in 1993, clearing DEX in the first test. Additionally, customer and partner information are readily available on the website, allowing businesses to know some companies they can contact for reference information.
The Future
As for when this supply shortage will end, many Electronic Industry Leaders and analysts state that we will continue to see massive deficits up through 2023. In April, Intel CEO Pat Gelsinger commented that it would take "a couple of years" for the chip sector to rebound from this shortage, as these supply and demand issues precede the COVID-19 Pandemic.
It is for this reason that companies cannot wait for this problem to resolve itself. We are in for a long haul, and companies must find new vendors that can find the components they need to avoid further losses.
If you are interested in learning more, DEX is a vendor that specializes in hard-to-find electronic components such as: Semiconductors, Microcontrollers, ICs, etc. You can contact DEX here to discuss your needs and how DEX can find what you need.
