Global Component Shortage (Part 1)

Posted on July 02, 2018
by Ian DeGraff

Understanding Component Scarcity

Responding to the Global Component Shortage

For the past year, Pro-Active Engineering has been actively monitoring and working to mitigate delays caused by a Global Component Shortage. While we had hoped this component shortage would start to ease, we are seeing these shortages continue for the foreseeable future. Even components that have historically never had availability issues are vulnerable to this shortage. 

What Components are Affected?

Passive Components
Multi-Layer Ceramic Chip Capacitors (MLCCs)
Other Capacitors
Resistors- Thick and Thin Film Chip Resistors
Inductors
Diodes
MOSFET
Transformers

Other Components Experiencing Shortages
NAND Flash Memory
DRAM & SRAM
DIMM Modules
Graphics Cards

What is causing this Component Shortage?

A multitude of factors have contributed to a “perfect storm” of conditions that have created a component shortage. A combination of a strong economy, increased demand, emerging markets, trade tensions, and decreased supply. 

Smartphones

While it is no surprise that smartphones rely heavily on passive components and flash memory, the increased complexity of smartphones has significantly contributed to the component shortage. To more illustrate this point, the best-selling smartphone on earth the iPhone 8 uses 125% more passive components than its two-year-old sibling the iPhone 6.

Smart Automobiles

Our vehicles are getting increasingly sophisticated with infotainment systems,  smartphone integration, electric cars, and the self-driving car have all significantly increased the demand of electronic components. 

The Internet of Things & Smart Home

Every appliance, heating & cooling system, automobile and smartphone networked and speaking to each other this is the Internet of Things. The Internet of Things give homeowners the ability to remotely control and optimize every appliance, every light, and every aspect of one’s home or business. 

Cryptocurrency
 

With the meteoric rise in the value of cryptocurrencies like Bitcoin adjacent industries have developed nearly overnight designed to cash-in on this new gold rush.  Graphics cards, DRAM & SRAM, DIMM Modules have all seen an exponential increase in both demand and price.

Other Significant Threats to Part Availability

Global Trade Tensions

Trade tensions and tariffs between America, China, the European Union and South America have sharply escalated increasing the price of raw materials while creating uncertainty and instability in the electronics global supply chain. 

Decreased Supply

After the Great Recession of 2008, component manufacturers were burned with large inventories and little demand. These suppliers have lagged behind the demand for components as they neither prepared for the rebound in the economy nor prepared for new and increased demand from emerging markets.

In our next Blog Entry we will discuss what can be done to avoid slowdowns from these shortages. 

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