Issue link: https://iconnect007.uberflip.com/i/1392944
JULY 2021 I PCB007 MAGAZINE 23 cators, or the largest PCB assemblers or semi- conductor fabricators who are very big and important customers of their suppliers, and they're going to be prioritized in how they get the important raw material inputs they need to build their end-products. at's certainly true for us. We're able to source raw materials from our suppliers better than some of our smaller competitors. I think just having scale and scope will help those customers. We do see a little bit of very conservative order patterns where cus- tomers are buying significantly more than they need in the short term. at's a little concerning because it simply adds to an already disrupted supply chain. It causes us to carry more inventory. It causes our customers to carry more inventory, and that is adding pressure to pricing in the supply chain. With that in mind, we do our best to stay far out in front of potential supply disruption for all our products, and we work hard to commu- nicate that very effectively to our customers. We also have the benefit of being a large glob- al company, so if we have supply constraints in a particular geographic area, we can work to source raw materials or finished goods from other areas, and ship them to where they're most needed. I know many of our customers have a similar ability to do that. I know that there are other supply chain constraints in the industry for printed circuit board fabricators, assemblers, and semiconductor fabricators. e news around semiconductor chip short- ages is well-documented. ose customers are working closely with their critical raw materi- al suppliers, but we're further down their list of concerns than possibly if you were manu- facturing ABF film, glass cloth, or any num- ber of other elements that are very tightly con- strained right now. We also benefit from a relatively low capital intensity in manufacturing, and we're able to react very quickly to changes in underlying de- mand at our customers, and to keep them ade- quately supplied. I don't think we're their big- gest concern in supply right now. Johnson: Do you think this current situation is as bad as it's going to get, or are there tighter constraints still to come? D'Ambrisi: It depends on the segment of the electronics industry. For our semiconductor fabricators, I'm not sure that we've seen the worst yet. Semiconductor fabrication demand continues to increase. ere will be a signifi- cant amount of additional capacity coming on- line, in both 200-millimeter and 300-millime- ter wafer lines, and that will add significant ca- pacity. If some of these other supply chain con- straints are not sorted out by then, things could potentially get even tighter. From a printed cir- cuit board fabrication and assembly perspec- tive, this issue will last well into Q4 but should start to mitigate by the end of this year and the beginning of next. I expect the seasonality demands that we typically see in Q3, and the industry will cer- tainly be challenged by that seasonal increase in demand. I think it will be less of an issue on the chemistry and materials side, still an issue on the transportation side, and something that the semiconductor industry will be dealing with well into 2022. Johnson: In North America for example, there are a few very large shops, and a lot of small shops. inking back to your "bigger is better" observation, how does a small shop navigate this? How does one survive? I expect the seasonality demands that we typically see in Q3, and the industry will certainly be challenged by that seasonal increase in demand.