Shortage here to stay?

The reality is that almost every company is a high-tech company.

We’ve been talking to you about the semiconductor shortage in this space, and the reality is, it’s not over yet.

Semiconductors are the basic building blocks of the technologies we use today.  They are in everything from cell phones, laptops and washing machines to refrigerators, cars and airplanes, videogame consoles and smart home devices.  According to Falan Yinung, Director, Industry Statistics and Economic Policy, global semiconductor sales increasing by 6.5 percent in 2020.

There are several factors contributing to this shortage:

Changes in Demand

Manufacturers saw the shifting demand and altered their output.

When travel as stopped in mid 2020 due to the pandemic, rental car companies started selling off their inventory in order to increase cashflow and keep themselves afloat. This flooded the market with used cars.  At the same time, many people had lost their jobs so the appetite for new cars dwindled.

But as lockdowns ended and jobs began to come back, so did travel.  Rental car companies began buying up as many cars as they could.  Manufacturers could not get their hands on microchips fast enough, and the demand skyrocketed.

At the same time, the average office worker had begun working from home and suddenly needed a better router, a better webcam, a new monitor, better smart lights.  All these products use chips and semiconductors, and the problem was just exacerbated.

Shift Offshore

In order to remain competitive, producers of semiconductors microelectronics moved offshore much of their production offshore. In 1990, nearly 40% of chips were made in American factories. By 2020 that number had declined to just 12% with manufacturing now concentrated in Taiwan, South Korea and China.

Shipping

Shipping has become an issue too.  With greater demand in the west for all these products, as well as furniture, construction supplies, and clothing, shipping companies are having a difficult time balancing as well.  Events such as the Ever Given incident in the Suez Canal last spring again added to the delays.  Hundreds of ships containing millions of tons of products were delayed and the domino effect is still being felt. Now shipping companies that usually only sent a fraction of their empty shipping containers across the ocean are required to send more and more of then just to be able to meet the demands of European and North American consumer.  This has driven up shipping costs and increased shipping times drastically.

Who can help?

In short, we can.  A trusted partner that plans for eventualities like chip shortages, is someone you want to work with.  At a time when the shortages of historic proportions, it’s even more important.  We have stock in PCBs, crystals, semiconductors, transistors, and all the components you’re looking for, from all the major suppliers.  Give us a call and we can help you out.

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