Issue link: https://iconnect007.uberflip.com/i/1357726
64 SMT007 MAGAZINE I APRIL 2021 Component shortages are now impacting the electronics industry in a significant way. I have seen reports that several automobile manu- facturers have temporarily shut down because of substantial component shortages. I see it as the perfect storm, where it's not caused by one particular reason, but a combination of situa- tions. is was a hot topic at the end of 2019, yet here we are again. I don't think we fully recovered from the initial component shortage as the root causes still exist and have become even more severe. Impact of the COVID Pandemic e pandemic's impact caused a worldwide slowdown of the electronics industry as the massive industrial machine came to a halt. It affected the supply change on multiple lev- els—not just with manufacturers and suppli- ers, but it went so deep that even the mining of raw materials was halted. Nothing like this had ever happened before, and the indus- try was not ready. Everyone wanted to see the industry re-open, but in some ways, this has actually further complicated the issues, and it remains to be seen how the electron- ics industry will operate in the post-COVID economy. The Imbalance Between Supply and Demand But really, the root cause goes back to a more common problem—supply and demand. Even with the slowdown of component supply, the demand still existed or even increased, most notably with autonomous vehicles and the mobile phone industry leading the way. For example, a conventional car with a standard combustion engine uses between 2,000 and 3,000 capacitors, while an electric vehicle uses up to 22,000 MLCC capacitors. Autonomous cars cause an even further drain on the com- ponent stock. But compared to 2019, the sup- ply slowdown has spread to other component types, such as the semiconductor sector. is affects actives as well as passives. Component Allocation e practice of component allocation has made a difficult situation even worse. Basically, an allocation is a practice of rationing the avail- able components to a relatively select few "sig- nificant customers." Depending on the stock availability, some manufacturers and suppliers may not even take on new customers. Addition- ally, when some companies know that compo- nents are hard to get, they double- and triple- book orders, which further increases demand. Impact on the Industry Faster Depreciating of Some Families of Components e component shortage has placed compo- nent manufacturers in the challenging position of making some hard decisions. Some product lines are not selling as fast as others, so those product lines are being re-tooled and moved to more prevalent components, which has caused some entire product lines to depreciate at a much faster rate. An excellent example is with some of the larger discrete components. As the electronics industry shis to smaller devices, the larger-size SMT components are quickly going obsolete. is is a classic case of the tail wagging the dog. Driving the Cost Out of Your Supply Chain Usually, lower supply and greater demand translates to higher prices. at is the unseen I don't think we fully recovered from the initial component shortage as the root causes still exist and have become even more severe.