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22 SMT007 MAGAZINE I JANUARY 2019 more components in hybrids, and even more in the fully electric cars from the autonomous features, infotainment, and all of the driver assist stuff that we know and love now. The sensors, cameras, monitors, and consumption of electronics are incredible, and even if the automotive market was flat to down (which they aren't), the consumption rates are up marginally, or they've been up. On top of that is increased content per automobile. So, while that's not a particularly large end segment, we don't ship a ton to tier-one auto- motive. It puts a strain on our suppliers, which has a ripple through effect to the rest of the channel. Johnson: Right. When your suppliers are sell- ing into their very large customers, even Digi- Key starts to look like a middle tier. Doherty: No doubt. And you get into questions such as, "What is the cause and effect, and is this different than in the past?" It certainly feels that that way in both the severity and the longevity of it. I would say that what I find is if supply was instantaneous, you'd never have these disruptions. And even though it's not instantaneous, there's always the ability, as long as there's capital available, to add more foundry and capacity. But there's a little bit more reluctance we're seeing from suppliers to add capacity. The areas that come to the forefront where there are some of the most commodity of areas, like chip resistors, are the MLCCs that we just mentioned. If you look at those industries and talk to those suppliers, you know the usage is measured in the number of units, so that's been increasing for the last 20 years or so. But for almost that same time cycle, their overall resales have decreased, so demand for cost reduction in these areas have made it less desirable for the suppliers to continue to invest ahead of the demand and try to keep with it. That's different than what I've seen in the past with memory crunches or other areas of semiconductors. Johnson: We're hearing a lot of feedback about product teams running into issues where, surprisingly, even standard commodity parts are being obsoleted way sooner than one would've thought. Doherty: Yes, I would say I back that. From my perspective, I think we've seen that as well. I could validate that observation is accurate, and for a lot of these suppliers, it's coming down to economics. If you have a certain amount of capacity and you're not going to expand it, where do you make your margins? That's going to dictate where you're going to put your wafer starts these days. And some of it is the most standard of commodities that have been impacted the most. The prices have been driven down into the mud, and they're asked to produce more and more product each year at less and less total resale. It's a model that's not sustainable. Johnson: Some of the feedback we've heard, as we've been researching this topic, included strategies to start going to the smallest, newest parts that they can use. Doherty: Clearly, suppliers have been putting their focus on smaller case sizes where they can get more units per wafer and then get a little bit more economies of scale. The other is looking at options, especially if you talk about resistors and capacitors; there are a number of different flavors. I know most of the readers are savvy enough to know you can buy some- thing with a higher tolerance that's going to be a better-than part. Put all of those options on your AVL because

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