Disruption in the Electronic Component Supply Chain

AERI is seeing increased demand for our hard-to-find and long lead time business sectors, driven primarily by a disruption in the supply chain.  Every business is seeing fairly dramatic changes; fortunately not all negative.  The COVID 19 induced plant closures for some manufacturers in combination with exponentially increased demand for remote work/school items as well as some other niche products is creating havoc for many electronic component types.  Some overall positive examples of broader industries are; home products and furnishings +97%, DIY products +136%, electronics +26.6%, telecom products +18.6 %.  The obvious losers are; automobiles -53%, travel -44%, and retail sales -16.4%.

Deloitte published a report stating that, “COVID-19 might become the black swan event that forces the semiconductor industry to transform its global supply chain model.”  An April survey from the Electronic Components Industry Alliance’s (ECIA’s) Chief Analyst, Dale Ford, showed that concern about the impact on the production of electronic components increased by 12 percent (See article).  The report also suggests that all businesses have been impacted to some degree and that 90 percent of respondents expect a serious to severe impact on their businesses over the next two to three months.

On a brighter note, while the economy is still struggling, data from Luminati Networks and QuickLizard suggests that sales of consumer electronics such as tablets and laptops have increased 900% year-over-year due to the increase in people working and learning from home.  In addition, Apple announced on April 30 that its quarterly earnings miraculously increased by 1% from last year.

In summary, we are finding that it is hard to predict anything these days.  Will there be a massive electronic component shortage due to increased demand from key industries, such as 5G, and IoT, while component manufacturers struggle to keep production up, attempting to maintain safety for their staff?  Or will lack of demand for electronic products due to a recession create a glut of components?  Only time will tell, but don’t just wait around and see.  Although a lot of extra work is required, one has to prepare for all scenarios in these unprecedented times.  It would be prudent to order components now to secure your production schedule, whatever it might be.

To lock in your electronic components to avoid production slowdowns, please contact one of our Search Experts by email; USA calisales@aeri.com, Asia ausales@aeri.com, or Europe uksales@aeri.com.

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