Electronic component shortages have been a huge obstacle on booming electronic marketplaces since 2018. While new orders keep on rolling in and manufacturing remains steady, there simply has not been enough capacitors, resistors, and other parts available.
After tariffs were imposed on imported goods from China and most factories were shut down due to the global pandemic. The lead times and component issues have increased, and it is predicted that 2022 is shaping to be another difficult year for the Electronic Manufacturing Industry.
However, there is a bright light at the end of the tunnel. We are now going into the second half of 2021, and life is slowly starting to get back to normal as COVID-19 lockdown restrictions are being lifted around the UK. Unfortunately, getting back to ‘normal’ for the Electronic Manufacturing Industry is not as simple.
The list below highlights what the rest of 2021 has in store for our industry with the latest quarterly roundup of news surrounding the global electronics component market.
Overview
The global supply chain is still being affected after the huge consequences caused by the prolonged safety measures that were put into place around the world. However, we are seeing progress as many countries are learning and adapting how to live with COVID-19, with the UK and several other European countries making excellent progress with vaccination rollouts.
Semiconductor fabrication plants are still struggling to maintain the workload to catch up with the previous backlog, with the ongoing raw material shortages they are having difficulties meeting the current global demand which is leading to worsening global shortages and allocation issues.
A variety of industry sectors that are being affected by the ongoing challenges include: 5G Networks, Automotive, Construction, Mobile Phones, Gaming Consoles, Laptops, and FMCG
Lead-time Issues and Component Shortages
Customers are advised to forecast at least 18 months out and provide scheduled orders to allow EMS providers to secure their place in allocation queues with component suppliers. Many suppliers are reporting being a full order book capacity until the end of Q4. 2021.
Product availability is limited, and the global supply chains have been massively restricted. We are facing lead times up to 52 weeks+ as continued acceleration in demand is causing huge pressure on supplier bases.
Price Uncertainty
The prices for raw materials continue to rise with an upward trend in almost all global commodities supporting the EMS industry including copper, resin, aluminium, and steel.
With ongoing shortages and the demand for raw materials, we have seen instability in manufacturing prices. We expect to see further price surges throughout Q3.
Global Economy
Gold prices have steadily increased since November 2020 and it is now sitting at £1,330,92 per ounce at the time of writing.
Silver prices have climbed up during May 2021 however, it has now started to fall since June 2021 and currently sitting at £18.46 per ounce.
Copper price has been climbing all year and is showing an upward trend. The current price is £6,947,27 per tonne on the LME.
Lead currently sitting at £1.12 per kg.
Many raw materials that are required for Electronic Manufacturing are seeing an upward growth in price globally this includes Copper, Silver, Gold, Aluminium, Lead, Tin, and Nickel. Further growth is expected throughout 2021.
With many component manufacturers at full capacity until the end of the year, and the ongoing raw material shortages there is no quick-fix solution to the present constrained market. However, we may see a reverse of the current situation by the end of 2022, with potential excess stock and oversupply available as the economy steadily recovers.
By Timmy Bubak | 29/08/21