Component Shortages to Last ‘Longer Than Expected' be award of this !

There’s no short-term relief ahead for electronics manufacturers that are scrambling for components. Tight supplies of capacitors and resistors are expected to last into mid-2018-longer than industry experts expected. The dreaded words “allocation” and “double-ordering” are coming up more frequently, meaning OEMs and EMS providers are facing long-term sourcing challenges.

Thick- and thin-film chip resistor lead times are out as far as 52 weeks, according to an industry update from Stifel; in general, passives suppliers are quoting 20-week lead times. There is a particular shortage of automotive-grade parts, the analyst said, which is sending Tier-1 auto subcontractors scrambling for supply. “Lead times [for passives] are not getting better; in fact, we expect them to get worse, even going into next Spring,” said Michael Knight, senior vice president, Americas, for IP&E specialty distributor TTI Inc.

Lead time data published by one global distributor shows that roughly 50 percent of the passive-component products it sells (capacitors, resistors, inductors) saw lead times increase in Q3; it saw lead times extend on 63 percent of its discrete-semiconductor product offerings, and on 70 percent of the memory products it sells. And according to TTI, 22 percent of capacitors are “highly constrained,” meaning lead times of greater than 26 weeks, primarily on multi-layer ceramic capacitors, some aluminum electrolytic and some polymer capacitors. Resistor lead times (thick and thin-film chip resistor) are out as much as 52 weeks-plus for many suppliers. The distributor is also seeing constraints for discrete semis, especially power semis.

Component suppliers typically ramp up capacity when shortages hit; however, that’s not happening in 2017-at least on a wide scale. Some resistor and capacitor manufacturers were planning to add capacity late this year and into 2018. But that’s unlikely to alleviate pressure on lead times, according to Stifel. Moreover, some suppliers are using this opportunity to discontinue product lines that have not been profitable. “Strategically, in this cycle we are seeing suppliers using the opportunity to back out of products where the margins have not been acceptable,” according to an industry executive. “Suppliers have been under constant pressure to take costs out of manufacturing, but eventually those efforts hit a wall,” the executive said. Component makers are using existing capacity to turn out newer, more profitable products.

Component prices have largely remained stable, according to Stifel, with a few exceptions. Several Japanese capacitor suppliers have raised prices as has U.S.-based Kemet. Other suppliers, such as AVX and Vishay, have been more restrained. Industry experts aren’t expecting widespread price hikes—customers have become accustomed to paying low prices, they said.

That’s not the case for DRAM, though: market research firm IC Insights expects a whopping 77 percent increase in the DRAM ASP, which is forecast to propel the DRAM market to 74 percent growth this year. After including a 44 percent expected surge in the NAND flash market in 2017, including a 38 percent increase in NAND flash ASP this year, the total memory market is forecast to jump by 58 percent in 2017.