The semiconductor industry may soon face price hikes as key metal supplies cannot meet demand. Key metals like copper, gallium, and germanium, which are needed to manufacture semiconductors, have seen significant cost increases.
These increases have been driven by a combination of supply chain disruptions, growing demand, and geopolitical tensions. As these metals become more expensive, semiconductor manufacturers and OEMs (Original Equipment Manufacturers) will soon see an impact across the entire supply chain.
Gallium:
Germanium
Copper
All three metals’ prices have been affected in part by geopolitical tensions. Export restrictions from major producers have reduced availability, leading to price surges that will directly affect the semiconductor industry.
Copper has faced an additional increase in demand due to the continuing rise of electric vehicle production, solar panels and general growth in manufacturing sectors. New industry innovations, combined with fast-advancing AI is further stretching the available supply.
Because of these developments semiconductor manufacturers are facing higher production costs, leading to higher-priced components. The cost increases cannot be absorbed completely by the semiconductor companies, so are being passed on to the purchasers. This, combined with the potential supply chain disruptions, will have an adverse effect on OEMs and Contract Electronics Manufacturers (CEMs).
Since these costs and shortages are mainly affecting new components, some businesses are turning to legacy parts, or sourcing from independent distributors rather than franchise.
Legacy nodes and silicon-based semiconductors are likely to hold their value more consistently since they don’t rely on newer, scarce metals like gallium and germanium. As manufacturers and CEMs evaluate the total cost of production, some may choose to return to established technologies that are less vulnerable to material shortages, which will drive demand in these areas.
As the semiconductor industry experiences rapid changes that can lead to potential cost increases and supply chain disruptions, it is more crucial than ever to diversify your supply chain and partner with a reliable, independent electronic component distributor to navigate supply shortages and price volatility.
At Cyclops Electronics we specialise in sourcing electronic components, from day-to-day components to obsolete, hard to find parts.
If you are affected by prices rises or shortages, our scheduled ordering service can ensure a steady supply of components to you all year round, unaffected by industry volatility.
Contact Cyclops Electronics today to learn more about what we can can support your electronic component sourcing. Call us on +44 (0) 1904 415 415, or email us at sales@cyclops-electronics.com.
