{"id":1434,"date":"2020-03-25T01:42:00","date_gmt":"2020-03-24T20:42:00","guid":{"rendered":"https:\/\/a2globalelectronics.com\/?p=1434"},"modified":"2021-04-22T17:59:50","modified_gmt":"2021-04-22T21:59:50","slug":"why-do-electronic-component-shortages-happen-heres-how-you-can-be-prepared","status":"publish","type":"post","link":"https:\/\/a2globalelectronics.com\/ja\/shortage-mitigation\/why-do-electronic-component-shortages-happen-heres-how-you-can-be-prepared\/","title":{"rendered":"Why Do Electronic Component Shortages Happen? Here\u2019s How You Can Be Prepared."},"content":{"rendered":"

Knowing how to handle and effectively mitigate electronic component shortages is crucial for any supply chain business. <\/h2>\n\n\n\n

The fact is, another component shortage like the 2018 passives shortage will<\/em> happen again. Understanding the causes and best practices for preparation will significantly help your supply chain to run smoothly during any market condition. Let’s look at why electronic component shortages happen and what you can do to best prepare. <\/p>\n\n\n\n

A prominent cycle in the electronic components industry, shortages can severely disrupt the supply chain. In fact, the past two decades brought several waves of global component shortages, which significantly challenged OEMs and EMSs to keep their production lines running.  <\/p>\n\n\n\n

You may ask \u2014 what causes shortages and how I can plan for them? Here\u2019s some insight based on our decades of experience mitigating electronic component shortages<\/a>.<\/p>\n\n\n\n

3 reasons electronic component shortages happen <\/h2>\n\n\n\n

1. Natural disasters<\/h3>\n\n\n\n

The massive globalization of the electronic industry renders it vulnerable to any major natural disasters throughout the world. Take the 2011 flood in Thailand as an example. <\/p>\n\n\n\n

Thailand is known as the global manufacturing center for hard drives. But flooding from months of unusually heavy rainfall seriously impacted factories, causing a 30% drop in hard drive supply<\/a> in the last 3 months of 2011 and into 2012. The price for hard drives increased from $80 per unit to $140 per unit, and supply was very limited.  As a result, major electronics companies \u2014 such as Acer, Lenovo and Apply \u2014 struggled to find enough hard drives for their planned production and had to pay far above the market to secure inventory. 
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2. New technology<\/h3>\n\n\n\n

Ever-changing technology is shaping the electronic industry faster than ever before. Since 2015 alone, the significant jump in demand for MLCCs in the mobile handsets and automotive sectors is putting severe pressure on the supply chain. <\/p>\n\n\n\n

The number of MLCCs increased from around 500+ pieces to over 1,000 pieces from iPhone 6s to iPhone X. <\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

Data Source: KEMET Financial Presentation Feb 2018- page 18<\/a><\/p>\n\n\n\n

Furthermore, electric vehicles require 4 times more MLCCs than the traditional internal combustion engine (I.C.E.) automobile. See the comparison below: <\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

Data Source: KEMET Financial Presentation Feb 2018- page 18<\/a><\/p>\n\n\n\n

Hideki Maruyama, president of Murata (China) Investment Co. Ltd<\/a>, also confirmed that alternative fuel automobiles and ADAS autopilot supporting systems are developing much faster than they originally anticipated, and are thus consuming a large portion of MLCC supply in the market. This is one of the main reasons behind the 2018 MLCC shortage<\/a>. <\/p>\n\n\n\n

3. OCMs shifting production to high-margin products <\/h3>\n\n\n\n

After years of development, manufacturers of electronic components \u2014 especially passive components \u2014 have created somewhat of a monopoly in which a small number of large factories control the market. Instead of expanding market share with broad product lines, these manufacturers are seeking higher margins and sustainable development. They are switching their focus from low- and medium-priced products to auto-rated and industry-rated products with higher margins.<\/p>\n\n\n\n

Let\u2019s look at an example: Kyocera<\/a> discontinued 104 and 105 specifications for 0402 and 0603 sizes of MLCCs at the end of February 2018. These specifications are widely used in almost all products and are the most demanded MLCC in the market. 0402 is popular among high-end smartphones and LCD TVs, while 0603 is found in motherboards and notebook computers. This is a clear example of how the 2018 MLCC shortage impacted almost all sectors in the electronics industry. <\/p>\n\n\n\n

How can you prepare for the next shortage? <\/h2>\n\n\n\n

For the electronics industry, it\u2019s all or nothing. An end-product can\u2019t ship if one single component is missing, whether it\u2019s the CPU or a tiny MLCC capacitor. This makes electronic component shortages a critical issue for supply chain professionals. <\/p>\n\n\n\n

In today\u2019s complex and globalized electronic supply chain, how can you prepare for the next shortage? Here are three strategies you should consider to protect your business down the road.<\/p>\n\n\n\n