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Category: Component Shortage

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Component Shortage

How are semiconductor companies dealing with current industry challenges

Semiconductor industry challenges

There are many challenges facing the chip industry, despite
the semiconductor supply chain no longer being in crisis.

Semiconductor industry challenges

Focusing on high-demand products

The semiconductor shortages are much more under control than they were between 2020 and 2022, but the effects can still be felt. There are various components that are in more demand, like surface mount devices (SMDs), multilayer ceramic capacitors (MLCCs) and SMD resistors. There are also whole industries taking a big hit, like the automotive
industry and consumer market.

Many companies have switched to manufacturing these higher-demand products to optimise production and profit during these shortages.

Capacity expansion

Some fabs are still dealing with manufacturing delays due
to closures and lockdowns. Although most of these facilities have reopened this year, but since lockdowns began several manufacturers have expanded their operations
in other countries.

There have also been several new initiatives to increase
domestic production and reshoring introduced recently. These include the US CHIPS Act, and the European
Chips Act, both of which aim to bolster their countries’ places in the global semiconductor market. With these expansion plans manufacturers’ capacity and ability to cater for customers has also increased.

New technologies and Industry 4.0

Advancements in robotics, AI, and digitalisation have greatly
improved the efficiency of the industry. As semiconductors and microchips have gotten more powerful but smaller, it has given rise to a new generation of technology. This, if implemented in a fab setting, can increase output and
improve speed without the need for more facility space.

Optimisation of current facilities might be expensive, but will benefit companies with a more immediate effect than building new fabs, which would take years.

There are many other initiatives that companies that can adopt to optimise in the wake of the supply chain chaos, including expanding their customer base and collaboration with other companies.

We’ve got you covered

Throughout the semiconductor shortages Cyclops has been
ensuring that its customers get the electronic components they need with the shortest lead times possible. 

No matter what the circumstances, our impeccable customer support will never change. To see our expertise first-hand, contact us at sales@cyclops-electronics.com or call us today on +44 (0) 1904 415 415. 

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Component Shortage

Australia’s semiconductor industry

Chip production

Australia is not a country known for its chip production, but it felt the shortages as much as the rest of us. Despite the shortages being less severe for the country, however it still mostly relies on imported semiconductors.

The current semiconductor industry is quite small, consisting of local companies and branches of some larger manufacturers.

One report from 2020 gave a blunt prognosis of how the Australian chip landscape looked, and how it could improve:

How it is

According to the report there are ‘pockets’ of talent all over Australia, and the potential for it to grow substantially. However, the report authors said the sector lacked the depth and coordination it needed to grow.

The ever-increasing need for electronic components globally means that every country needs to step up their game. Australia is no different. Although total self-sufficiency would be unattainable, that is the same for even semiconductor superpower countries. They do, however, need to increase their capacity for electronic component development and manufacturing.

Following establishing domestic sources of semiconductor components, Australia needs to tackle market sectors relevant to them domestically. This way, it is dealing with both the strategic and economic aspects of the shortages.

How to do it

The report details several steps to help the Australian semiconductor market grow and prosper. The first piece of advice is to attract established chip manufacturers to start setting up shop domestically. After that, home-grown chip companies need a boost to expand. The final recommendation is to establish new semiconductor companies.

Australia has been looking into all 3 of these methods, and some international companies have shown interest in recent years. But when it comes to the huge funding needed to finance the moves, international partners have been less keen.

Time and money

Because there’s currently such a lack of a domestic market, and other markets are so far removed for Australia, there’s some hesitation. This could change in the future, if Australia can garner more interest and, more importantly, funding.

The 2020 report recommended the Australian government invest $1.5 billion to establish domestic industry.

Australia faces many obstacles including financing, a lot of them time-sensitive. The next few years will be crucial for the country, and the world will be watching.

Choosing certainty

There are few things that are certain in this tumultuous industry, but there is one thing that’s reliable: Cyclops Electronics is there for you. We have a sales team here to solve all your stocking and sourcing needs. Not only that, but we have a broad range of stock ready for you, all you need to do is get in touch. Contact us at sales@cyclops-electronics.com or call us on +44 (0) 1904 415 415.

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Component Shortage Electronic Components Supply Chain

Chinese New Year shipping delays

The earlier-than-usual Lunar New Year celebrations may cause more disruption than normal, according to shipping experts.

Lunar New Year took place between January 22nd and February 5th 2023. The festival is well-known for causing shipping delays and supply chain disruption. The effect this year, however, may be exacerbated.

Not only have factories been affected since early January, but there has also been several Covid outbreaks causing factory lockdowns.

Planning ahead

Normally staff begin taking leave a couple of weeks before so they can travel home. This means even late December saw a chaotic rush of exports and manufacturing. According to a survey of supply chain professionals, almost three quarters (73.5%) thought the festivities would cause delays.

The survey, conducted by Container xChange with 2,300 respondents, with 55% saying they had planned ahead for New Year.

The factory closures are predicted to continue for some time, well beyond the end of celebrations in China.

The previous decrease in demand meant there had been several blank sailings from Asia. This is when an ocean freight operator cancels or alters routes.

However, the combination of New Year, Covid and the already disrupted supply chain could limit shipments able to leave China.

A different climate

Compared to previous years there is a lot of inventory currently. This leads to a whole array of other issues, including port congestion and capacity management. Usually there is a small surge pre-empting New Year, which hasn’t really occurred this time around.

Freight rates are the lowest they have been since 2019, and
prices to the East Coast are 83% lower than last year.

Many supply chain professionals are concerned there will be a second wave of shutdowns after New Year. Since so many people are gathering and meeting, there could be enough infections to once again halt production.

Further down the line this would add to the workforce shortages affecting the already congested ports.

Much of the stock is sitting in the port for a prolonged time, and while plenty of containers are available, there are fewer transport trucks. 

Don’t worry…

When it comes to electronic components, Cyclops Electronics is an efficient and reliable provider. We have more than 30 years’ experience in this industry, and we’re sure we can provide what you need. Get in touch today at sales@cyclops-electronics.com, or call us on +44 (0) 1904 415 415.

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Component Shortage Electronic Components Supply Chain

Cyclops Electronics – Looking back on 2022

Cyclops Electronics has had a monumental year. With a hugely successful Electronica, an exciting business acquisition, and plenty of special team moments to remember. 2022 has made its mark in style.

 

Team wide fun and games

This year we have initiated a weekly delivery of fresh fruit for all of the office to enjoy. It has proved to be a big hit and a great boost of natural goodness into the working day. It’s the perfect antidote to our regular pizza days.

For Stress awareness month in April, we organised picnic lunches for everyone and raffled off a wellness hamper.

At Halloween we stirred up a right cauldron of treats, a quiz curated by a staff member, and a Mummy wrapping game to get everyone in the spooky spirit.

We also celebrated Valentine’s Day, Wimbledon, and most recently the World Cup with full office decoration and goodies on tap. To mark the festive period hot chocolate and mince pies are now a permanent fixture in our kitchen.

Christmas fundraising has been great fun, supporting ‘Save the Children’ with Christmas jumper day and producing a sizeable contribution to a worthy cause.

 

Halfin

In April the Cyclops Group officially announced the acquisition of Belgium-based company Halfin Electronics. Shared values of collaboration, family values and dedicated professionalism made it a natural fit for the Group.

Halfin has enabled Cyclops to add Belgium to its list of international offices, including USA, China, Canada, Italy and Portugal.

The business was established in 1946, and has since built a global clientele and a speciality in vacuum tubes and other niche electronic products. It has been a wonderful addition to the Cyclops family.

Electronica

Electronica was the event of the year for all of us here at Cyclops. A team of nine staff from a range of departments attended the event. Aside from meeting a plethora of new customers, we also caught up with a lot of returning customers. The event was very important to us, since there hasn’t been an in-person Electronica since 2018. We were eager to reconnect with clients and businesses.

Not only did the team make lasting connections with businesses there, but were able to bond as a team and successfully run a trade fair stand. We’re so proud of them for continuing a Cyclops tradition that has been in place for decades.

And finally… 

A few words from our Sales and Marketing Manager, Ros Shaw:

“2022, what a year it has been… looking back at heatwaves, weather extremes, component shortages, supply chain disruption, political turmoil, economic uncertainties and more shortages, it’s been another eventful one. But one constant remains and that is that the Cyclops Team have delivered, day in and day out.

It was a real highlight of our year to chat with many of our appreciative customers at Electronica in Munich. Sharing plans for the New Year, developing strategies for sourcing in 2023 and discussing upcoming projects has enabled us to prepare. And that’s what it’s always been about, preparing and equipping the business to best serve the needs of our customers. Now more than ever we strive to adapt, evolve and innovate to keep stride with this fast-paced world.

We look forward to ranking highly on your ‘most useful’ list this time next year. Thank you for including us in your team. Here’s to 2023 and all of its adventures.”

 

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Component Shortage Uncategorized

How electronics shortages may affect Christmas

Christmas Shortages

Christmas is just around the corner, and while many shortages have calmed there are some that persist and will have an impact on the usual holiday festivities.

Despite reports that shortages are ending, more than half of semiconductor industry leaders (56%) are expecting them to continue into 2023.

There are shortages that we have been prepared for as the months counted down to the holidays. However, other shortages may catch some unawares.

Much of the news regarding shortages has revolved around the difficulty producing new, smaller nodes. These are the semiconductors going into new consumer electronics, often purchased as Christmas gifts.

What was expected:

As semiconductor shortages persist, next-gen consumer electronics will be in limited supply. Demand always spikes around the holidays, as consumers prepare for the gifting season. But some will be out of luck since electronics have also been affected by the shortages.

While consumer electronics, including smartphones, smart home devices, and games consoles have become slightly more stable, there will still be shortages in the face of holiday buying and events like Black Friday.

This also affects the manufacture of new cars, both fuel and electricity-powered models. Many car companies have lowered the number of vehicles produced. Although they haven’t been able to meet the increased demand, semiconductor shortages mean they cannot produce more.

What you didn’t expect:

New electronic components are not the only ones that are in short supply. Older components and obsolete electronic parts have also become scarcer.

Embedded flash microcontrollers are one component that has long been used in automotive manufacture. Most of the ones used are still using older nodes, like 90nm. So while new cars are being affected, older cars in need of repair will also be impacted.

Industrial electronics are also at risk due to shortages, since they similarly rely on legacy nodes. Traditionally these would be the more stable of options for electronic components. However, the reserves that have taken years to build are now being drained.

Although companies are planning on investing in legacy nodes, the shortages are expected to last until at least 2024, if not 2025.

The shortages show no sign of stopping, and manufacturers will be dealing with the effects of it for years to come. There are surely plenty of electronic components and markets affected that have not been mentioned here, so this overview is by no means exhaustive.

What to expect

As shortages persist, there’s no better time to get in touch with us.

Cyclops Electronics have an extensive supply of day-to-day and obsolete electronic components. If you have been struggling to source components elsewhere, Cyclops Electronics is there for you.

Let us provide your Christmas miracle this year, call us on +44 (0) 1904 415 415 or email us at sales@cyclops-electronics.com.

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Component Shortage Electronic Components Future Supply Chain Technology

Procurement executives concerned about digital innovation

Manufacturers are using digital advancements to battle current supply chain disruptions.

Almost all (97%) of those surveyed said they had significant disruptions in their direct materials supply chain.

67% said they were not confident that the technology can cope with the current or near-future challenges.

The most significant technology disadvantages seem to come with lack of visibility into supplier, ‘disjointed’ source-to-pay process with multiple systems, and a lack of spend reporting.

Even more (87%) said modernising the manufacturing procurement and supply chain takes precedence, and it is their biggest challenge yet. A further 92% said avoiding disruptions to their supply chain is their main goal for this year.

Among the main concerns for modernising the supply chain are potential disruptions during implementation, skills shortages, and scale and challenge of change management.

Around half of those surveyed (44%) predicted that the supply chain crisis would begin to calm by 2023. Significantly less (18%) thought it would reduce by the end of this year.

The study surveyed 233 senior procurement executives from US and UK manufacturing companies. It was commissioned by Ivalua, a spend management cloud provider.

See the original press release from Ivalua here.

While Covid-19 was seen as a factor in the supply chain instability, it was not the only culprit. Global supply chains had already been in a vulnerable position, partly due to factors like too much outsourcing and an overreliance on ‘just-in-time’ supply management.

What some are calling ‘outdated technologies’ are slowly being replaced in Industry 4.0. However, the implementation of tech like IoT, AI, machine learning and cloud computing is not a quick process.

The issue may be that this transition period would only further add to the current shortages rather than solving them in the short-term. Most companies are being deterred by this potential loss, and have been avoiding the change for as long as possible.

Whenever digital innovation comes, it will be a gradual and time-consuming process, but businesses will be better off for it.

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Component Shortage Electronic Components Supply Chain Technology

Chip shortage impact on electric car sales

Many renowned car companies have, by this point, tested the waters of the electric vehicle (EV) market. However, thanks to the roaring success of electric car sales last year, and governmental and environmental incentives, the EV market is about to shift up a gear.

Global shortage

The vehicle market was not able to avoid the semiconductor shortage that has been prolific for the past few years. Safety features, connectivity and a car’s onboard touchscreen all require chips to function.

This, combined with the work-from-home evolution kick-started by the pandemic, meant that car sales decreased, and manufacturers slowed down production. New car sales were down 15% year-on-year in 2020, and the chips freed up by this ended up being redirected to other profiting sectors.

Even without the demand from the automotive industry, it has not been plain sailing for chipmakers, who not only had to contend with factory closures due to COVID-19, but also several natural disasters and factory fires, and a heightened demand from other sectors. Needless to say, the industry is still catching up two years later.

The automaker market

Despite new car sales having an overall decline in 2020, EV sales had about 40% growth, and in 2021 there were 6.6 million electric cars sold. This was more than triple of their market share from two years previously, going from 2.5% of all car sales in 2019 to 9% last year.

Part of the reason why EV sales were able to continue was due to the use of power electronics in the vehicles. While there is a dramatic shortage of semiconductors and microelectronics (MCUs), the shortage has not affected the power electronics market to the same extent. That is not to say that an EV doesn’t need chips. On the contrary, a single car needs around 2,000 of them.

It begs the question, how many EVs could have been sold if there weren’t any manufacturing constraints. Larger companies with more buying power would have been able to continue business, albeit at an elevated cost, while smaller companies may have been unable to sustain production.

Bestsellers

The growth of the EV business in China is far ahead of any other region, with more EVs being sold there in 2021 than in the entire world in 2020. The US also had a huge increase in sales in 2021, doubling their market share to 4.5% and selling more than 500,000 EVs.

In Europe last year 17% of car sales in 2021 were electric with Norway, Sweden, the Netherlands and Germany being the top customers. Between them, China, the US and Europe account for 90% of EV sales

Predictions and incentives

Several governments have set targets to incentivise the purchase of electric cars, and to cut down on CO² emissions caused by traditional combustion engines. Many of these authorities have given themselves ambitiously little time to achieve this, too.

Biden announced last year that the US would be aiming for half of all car sales to be electric by 2030, and half a million new EV charging points would be installed alongside this. The EU commission was similarly bold, proposing that the CO² emission standard for new cars should be zero by 2035, a 55% drop from the levels in 2021.

Companies are also setting EV targets and investing in new electronic models. Some manufacturers are setting targets as high as 50% of their production being electric within the next decade, while others have allotted $35 billion in investment in their pursuit of EV sales.

Possible pitfalls

Aside from the obvious issues there have been with semiconductor production and sourcing, there are also other factors that may make the future of EVs uncertain. One of the essential components of an electric car is its battery, and the materials that are used are increasing in price.

Lithium, used in the production of lithium-ion EV batteries, appears to be in short supply, while nickel, graphite and cobalt prices are also creeping up. However, research is underway for potential replacements for these, which may help for both supply times and the associated costs.

The shortages are affecting everyone, but thankfully Cyclops is here to take some pressure off. No matter what electronic components you are looking for, the team at Cyclops are ready to help. Contact us today at sales@cyclops-electronics.com. Alternatively, you can use the rapid enquiry form on our website.

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Component Shortage Electronic Components Future Supply Chain Technology

Ukraine – Russia conflict may increase global electronics shortage

Ukraine and Russia conflict may increase global electronics shortage

Due to conflict between Russia and Ukraine, both of whom produce essential products for chip fabrication, the electronic component shortage across the globe may worsen.

Ukraine produces approximately half of the global supply of neon gas, which is used in the photolithography process of chip production. Russia is responsible for about 44% of all palladium, which is implemented in the chip plating process.

The two leading Ukrainian suppliers of neon, Ingas and Cryoin, have stopped production in Moscow and said they would be unable to fill orders until the fighting had stopped.

Ingas has customers in Taiwan, Korea, the US and Germany. The headquarters of the company are based in Mariupol, which has been a conflict zone since late February. According to Reuters the marketing officer for Ingas was unable to contact them due to lack of internet or phone connection in the city.

Cryoin said it had been shut since February 24th to keep its staff safe, and would be unable to fulfil March orders. The company said it would only be able to stay afloat for three months if the plant stayed closed, and would be even less likely to survive financially if any equipment or facilities were damaged.

Many manufacturers fear that neon gas, a by-product of Russian steel manufacturing, will see a price spike in the coming months. In 2014 during the annexing of Crimea, the price of neon rose by 600%.

Larger chip fabricators will no doubt see smaller losses due to their stockpiling and buying power, while smaller companies are more likely to suffer as a result of the material shortage.

It is further predicted that shipping costs will rise due to an increase in closed borders and sanctions, and there will be a rise in crude oil and auto fuel prices.

The losses could be mitigated in part by providing alternatives for neon and palladium, some of which can be produced by the UK or the USA. Gases with a chlorine or fluoride base could be used in place of neon, while palladium can be sourced from some countries in the west.

Neon could also be supplied by China, but the shortages mean that the prices are rising quickly and could be inaccessible to many smaller manufacturers.

Neon consumption worldwide for chip production was around 540 metric tons last year, and if companies began neon production now it would take between nine months and two years to reach steady levels.

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Component Shortage Electronic Components Supply Chain Technology

The global electronic component shortage – what happened?

Arguably the biggest ongoing crisis in the tech industry is the global semiconductor shortage. You can’t go far online without seeing news about it, and many people have seen it firsthand when trying to buy a brand-new car, or a recently released games console.

When did it start?

The obvious factor contributing to the shortage is COVID-19. The virus infected millions and sent the world into lockdown, which then led to the housebound masses logging in and going online.

At the start of lockdown in March 2020, 60% of 18-24-year-olds were increasing their use of home delivery instead of leaving the house. Amazon’s revenue also rose at a quicker pace than in previous years, with the company making $88.91 billion in Q2 2022.

Alongside the increase in online shopping came an increase in other digital activities like PC and console gaming. In the last quarter of 2020 desktop, notebook and workstation sales rose to a record 90.3 million units. Tech company Sony saw 25% of its revenue come from game and network services, and around 18% from electronics products and solutions.

In another case of bad timing, both Microsoft and Sony were about to release their next generation of game consoles, and Nintendo Switch sales were booming. All of this meant demand for components was skyrocketing.

This then led to delays in car manufacturing. Why? Because all the available chips were being bought up by computer and electronics manufacturers, so there were none left for the automotive industry. A car part may need between 500 and 1,500 chips, and are used for many parts including the dashboard display and to control the airbag.

There were other elements that contributed to the shortage before this: The US and China had been imposing increasingly high tariffs on each other for the past two years, and natural disasters and fires took out several factories in Japan, Taiwan and China.

When will it end?

The comeback from the semiconductor shortage will not be quick. Some factories that were shut down by natural disasters are still repairing the damage and trying to reopen production. But as the demand is staying high, there will need to be new facilities created to cater for the increase in demand.

The time, expertise and money needed to start a new factory will be too much for smaller firms to manage, so then the hole in the market needs to be filled by larger corporations like Intel and Samsung. Both companies currently have plans to open new fabs in America, but it will be a while before they can start production.

Intel’s ambitious plan to construct the one of the largest chip factories ever in Ohio would alleviate demand, but is not due to start production until 2025. Similarly, Samsung’s Texas fab will not be operational until 2024.

Despite smaller factories opening, the substantial backlog will not be solved by these alone. There will need to be a combination of an increase in production, time efficiency and, with the pandemic in mind, automation to decrease person-to-person contact. There will also need to be a stock of chips manufactured to avoid shortages in future.

Europe and America have both put an emphasis on increasing their domestic chip production in the next decade, in the hopes that this will prevent importing issues in the future.

The speed at which technology is currently being developed also puts manufacturers in a tight spot. Not only are more electronic devices being produced all the time, but the technology of the components within them is also advancing quickly.

While it is difficult to forecast entirely, experts say the shortage could last a few more years. Hopefully with the opening of the larger plants estimated for approximately the same time, the chip shortage might be mitigated by 2025.

We can help

The market is currently just as competitive in the case of other electronic components, but Cyclops can help. With our extensive stock of day-to-day and obsolete components we can supply you when others cannot.

For all your component needs, contact Cyclops Electronics today at sales@cyclops-electronics.com. Or submit a rapid enquiry through our website.

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Component Shortage Electronic Components Future Supply Chain Technology

The European Chips Act and its impact on electronic component sales

Semiconductors are vital for our day-to-day life. They are in all the electronics you own but are also in your kitchen appliances, your car, your electric shower and many more. But what if we lost access to these components?

The huge reliance on imported semiconductors was made abundantly clear last year. Europe’s current share of the global semiconductor market is only about 10%, and the continents is otherwise dependent on supply from abroad.

The need for independence and autonomy in the European chip market has been made very apparent due to factors like Brexit and COVID-19.

The European Chips Act was first mentioned in the EU’s 2021 State of Union Letter of Intent, calling the act a key initiative for 2022. The EU created the Industrial Alliance for Processors and Semiconductor Technologies alongside it, to plan and oversee progress on the act.

One of the aims of the alliance is to increase Europe’s share in global chip production to 20% by 2030, but they will first have to identify issues with the market and map out a way to improve design and production.

During the ‘State of the World’ Special Address by European Commission president Ursula von der Leyen on January 20, the chips act was mentioned once again, and they announced draft legislation for the chips act is due in February of this year.

The European Commission president said that there would be five steps taken to improve the chip sector, and that they would focus on research first, then design and manufacturing. After these there would be an adaptation of state aid rules to increase provisions in case of shortage.  Lastly, she said the EU would work to support smaller, innovative technology companies.

In 2020 the United States accounted for the largest share in the semiconductor industry, with 47%. Following the US was South Korea with 20% of the market. China’s share has also increased quickly in recent years, putting it narrowly behind Korea. Despite Japan previously having a larger share in the market, they are currently on equal footing with Europe with a share of around 10%.

Despite no longer being a member of the EU, and therefore not directly signing the Chips Act, the UK could also have the potential to increase its standing in the global semiconductor race.

According to some UK-based chipmakers, the country has an advantage in the area of research and development. If research facilities like the University of Manchester were given the right attention and funding, they could develop sustainable resources like graphene to replace mined silicon in processors.

The UK electronics sector will always be considerably smaller than huge countries like China and America, but with significant investment they would have the ability to make a difference in the current chip shortage. And Cyclops is a perfect example of a smaller company making a big difference.

Cyclops is an electronic component distributor with a wealth of contacts from all over the world. With unrivalled stock and suppliers, Cyclops will put you ahead of your competitors. Contact us today at sales@cyclops-electronics.com.

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Registered Office: Titanium 1, King’s Inch Place, Renfrew, PA4 8WF

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