Issue link: https://iconnect007.uberflip.com/i/1447212
42 SMT007 MAGAZINE I FEBRUARY 2022 nite demand. ere's the internet of things, the "connect everything" mentality, that's driv- ing a ton of activity. ere is transportation as a service—more on the commercial realm of the automating every type of transportation— that is booming. Medical and defense are still strong as well. We can't get any components because they're getting gobbled up into every nook and cranny of our lives. ere's an atti- tude that "if you can get the product to market, somebody's going to buy it." Matties: Is this rate of increase sustainable, or do you see it flattening out? O'Neil: No, it's not sustainable. But I think some of the trends are going to continue. We print a lot of money and put it out there. I don't think anyone's surprised that we're going through some inflationary periods. But in terms of sup- ply chain—the behaviors of double, triple, qua- druple ordering—will lead to something like the telecom bust. e distribution and visibil- ity throughout the supply chain should keep the bubble from getting too big before it needs to release, but that correction will happen. You're not going to get back to a vehicle with less than 25,000 electronic components in it. But when we were forecasting that they were going to have 2,500 and they have 25,000, that can cause a definite ripple in the supply chain. We will get back to some rationality. When times are good, you look at the distribution guys and ask, "Why are they making more mar- gin than the PCB fabricators, the EMS provid- ers, or even the OEMs?" ey're just providing a pass-through service, right? In most cases, they don't even touch the component. Well, right now they're earning their money and they're going to have to get us out of this mess. Johnson: If this cycle isn't sustainable, and we're working toward a bubble, what is the best way to manage these costs? Do you start from an offensive or a defensive strategy? How do you approach the situation so you're as pro- tected from the bubble as you can be? O'Neil: at's a great question. I think some OEMs and some EMS companies look at it like a boxing match. Others look at it like a mar- riage. ose companies have different sourc- ing. We've approach it as, "We're partners here;" if 10 of our customers catch a cold, we're going to be the ones that get sick and die. Con- versely, if they have 10 suppliers, their top 10 suppliers catch colds, they're going to get sick and die, so we had better make sure we're both healthy. We ask, "How are we going to get through this together? What are the options on the table? What are the possible levers that can be manipulated?" It puts us both on the same side of the table, which is where the fun is. When you can later say, "Remember when we had that big problem and we figured it out