With the COVID-19 pandemic came several changes for the electronics market. Some items, like automobiles, saw an abrupt decline in their needs for semiconductors due to a lack of sales. Other products, like personal electronics, suddenly were in high demand and required more components than ever before. Then the unexpected happened. Like the auto industry, many of these struggling markets recovered sooner than expected, leaving the chip makers struggling to keep up with demand. Even now, as new chip foundries come online, the demand for semiconductors continues to outpace production.
What electronics manufacturers need now is help with component sourcing and a new perspective and approach on how to stay clear of all of the supply chain wreckage. Fortunately, there are some effective methods that OEMs can use to avoid electronics supply chain problems and keep their production on track. Here we’ll examine some of the supply chain problems facing manufacturers and an electronics supply chain strategy that can help.
Industry Changes and Electronics Supply Chain Problems for OEMs
The semiconductor industry’s current state is vastly different from how it used to be, and chip makers now find themselves in a unique position of power over their customers. Here are how some of these industry changes are affecting semiconductor clients:
- The lead time on some of the more popular microcontrollers has now stretched out to more than a year.
- Chip prices have gone up, with some distributors reporting drastic increases.
- Some of the larger markets, such as automobile makers, now work directly with chip manufacturers instead of their regular distribution channels.
- Component availability is becoming a more prominent factor in the purchasing of semiconductors than prices and performance.
- Chip manufacturers are coming up with new sales solutions, such as offering shipping priority with an order of a full year’s supply that can’t be canceled or rescheduled.
On top of these changes, semiconductor customers still have to deal with the same problems that sprung up when the pandemic first started. These problems include shipping problems due to congested shipping lines, clogged ports, and understaffed land transportation. Additionally, the overall problems in the electronics industry have also encouraged the increase in counterfeit parts and other unsavory practices.
Here are some ideas that can help you design an effective electronics supply chain strategy.
Electronics Supply Chain Strategy for Effective Solutions
There are several ways to approach the electronics supply chain problems, and we’ll break them down into a few key areas.
When a design is being developed, step outside the usual way you approach your part selection. Do some additional research and look for different parts or combinations that will give you the functionality you need if component replacements are required. When possible, don’t limit yourself to unique parts that will be hard to find. Give yourself some flexibility in your part sourcing. Additionally, look for alternative circuitry configurations to avoid components that are in high demand.
Align yourself with a circuit board manufacturer with the following capabilities:
- Knowledgeable component engineers
- An experienced procurement team
- Demonstrated expertise in working within the component supply chain
A manufacturer with these capabilities will give you the most flexibility in building the board to prevent slowdowns due to component availability problems. It is also essential to work with your manufacturer as soon as possible in your design cycle so their teams can begin the component sourcing process. They will filter your parts’ list for those that are difficult to procure and recommend replacements or design changes to work around the problems. You may also find it advantageous to alter your design to adapt it to different chipsets to keep the project on schedule.
Many designs built overseas have run into supply chain problems that end up impacting their manufacturing schedules. Not only are the shortages and expense of their parts a problem, but difficulty in shipping the final products back home can also increase the overall cost in time and money. To avoid electronics supply chain problems like these, design teams find it expeditious to develop domestic manufacturing partnerships. Not only will this give you a reliable backup in case of problems with your overseas manufacturers, but domestic manufacturing often ends up being more cost-effective in the long run.
Engaging with a Reliable Manufacturing Partner
The best method of working around the current electronic component supply chain problems is to develop a good working relationship with a reliable local PCB contract manufacturer. Their engineering staff will find creative alternatives to avoid high-demand parts, and their procurement team will find the best components at the best prices. Additionally, you need a quality-driven production team that is committed to building your boards correctly to operate the way you designed them too.
At VSE, we have the attributes you need in a circuit board manufacturer and have worked with the electronics design community in Silicon Valley for over three decades. We have a staff of engineers ready to help you work through any design problems. Our procurement team has built an extensive network of component manufacturers, distributors, and brokers to find the parts your project needs.