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Component Shortage Electronic Components Future Supply Chain Technology

Electronic component market to see continued growth by 2027

The electronic component market is set to see continued growth over the next five years, with projections estimating greater demand than ever.

Several forecasts have converged with the same conclusion; demand for components is set to rocket as the world adopts more advanced technologies. 

This article will explore the latest research papers and market analysis from reputable sources. We will also explore why the demand for electronic components is set to soar and the supply chain’s challenges. 

Global components market 

The market analysis covered by Market Watch predicts that the global electronic components market will reach USD 600.31 billion by 2027, from USD 400.51 billion in 2020, a compound annual growth rate of 4.7% from 2021. 

Active components market 

Another market report, this time looking at active electronic components, predicts the active electronic components market will reach USD 519 billion by 2027 (£380bn pounds, converted 12/01/22), a CAGR of 4.82% from 2021. 

Passive and interconnecting components market 

According to 360 Research Reports, the passive and interconnecting electronic components market is projected to reach USD 35.89 billion in 2027, up from USD 28.79 billion in 2020, a compound annual growth rate of 3.2% from 2021. 

Semiconductor wafer market 

According to Research and Markets, the global semiconductor wafer market is predicted to reach USD 22.03 billion by 2027, rising at a market growth of 4.6% CAGR during the forecast period starting from 2021. 

Dynamic Random Access Memory (DRAM) market

Market Reports World predicts the global DRAM market will see extreme growth, growing at a CAGR of 9.86% between 2021 and 2027. The market was valued at USD 636.53 million in 2021 and will grow to nearly USD 700 million by 2027.  

Why is component demand set to increase so much?

The world is undergoing an extreme technological transformation that began with the first computers. Today, electronics are everywhere, and they are becoming ever more intricate and complex, requiring more and more components. 

Several technologies are converging, including semi-autonomous and electric vehicles, automation and robotics, 5G and internet upgrades, consumer electronics, and smart home appliances like EV chargers and hubs. 

This is a global transformation, from your house to the edge of the earth. Electronic components are seeing unprecedented demand because smarter, more capable devices are required to power the future. 

What challenges does the supply chain face? 

The two biggest challenges are shortages and obsolescence. 

Shortages are already impacting supply chains, with shortages of semiconductors, memory, actives, passives, and interconnecting components. We are a global electronic component distributor specialising in hard to find and obsolete electronic components. Email your enquiries to us today at Sales@cyclops-electronics.com. Our specialised team is here to help.

As demand increases, supply will struggle to keep up. It will be the job of electronic components suppliers like Cyclops and electronic component manufacturers to keep supply chains moving while demanding increases. 

Obsolescence refers to electronic components becoming obsolete. While some electronic components have lifespans of decades, others are replaced within a few years, which puts pressure on the supply chain from top to bottom. 

In any case, the future is exciting, and the electronic components market will tick along as it always does. We’ll be here to keep oiling the machine.

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Component Shortage Electronic Components Future Supply Chain Technology

A raw materials shortage is set to hit the EV battery supply chain in 2022

The automotive sector is on red alert amid speculation that raw material shortages will impact the EV battery supply chain in 2022.

The lithium-ion batteries in electric vehicles use a combination of rare earth metals like neodymium, praseodymium, dysprosium, and common and uncommon minerals like cobalt and lithium in great quantities.

Bloomberg blew the whistle in July, predicting that raw material shortages for batteries will be the next big test after the semiconductor crisis.

Recent reports back this, with the global lithium shortage giving EV manufacturers pause for concern. Sky News reports the world needs four new lithium mines per year to make supply meet demand, but the pipeline doesn’t come close to meeting this requirement.

Some EV manufacturers are hoarding raw materials, and the world’s biggest electric car maker, Tesla, is moving away from cobalt to LFP chemistry because they consider cobalt to be the biggest supply chain risk for EV batteries.

The EV industry has a battery problem 

Most electric vehicles have a lithium-ion battery pack because Li-ion has a high energy density for its weight and can charge and discharge at any state of charge. The technology is proven, and manufacturing Li-ion batteries is easy.

However, the growing demand for electric vehicles is fuelling demand for EV battery raw materials like lithium, cobalt, nickel, manganese and rare earth metals.

The mines in operation today are not sufficient to make supply meet demand one year from now, which is a cause of great concern in the automotive sector.

Additional factors could confound the problem:

  • Price volatility in raw materials (the price of rare earth metals has exploded, moving nearly 50% higher on average since March)
  • Battery composition changes (while lithium-ion is the top dog today, solid-state batteries use a lot more nickel and cobalt)
  • Trade tensions between countries (China controls 55% of global production and 85% refining output of rare earth metals).

Making supply meet demand

Accurate forecasting is crucial to making supply meet demand. Manufacturers must anticipate fluctuations in the supply chain and make allowances for events.

For instance, no one can predict the next coronavirus pandemic, but a 25% drop in raw material mining output can be incorporated into forecasts.

Manufacturers might also like to look into alternative battery chemistries. As we mentioned before, Tesla is switching the chemistry of its long-range batteries to reduce dependency on cobalt. Other battery manufacturers can do the same to fortify their supply chains.

The downside to switching chemistries is it is only possible following extensive (and expensive) research and development. The world’s leading EV battery manufacturers won’t invest in this area without proof it will turn a profit.

EV battery recycling is another important future step. Swedish company Nothvolt made the world’s first fully recycled EV battery in November. Today, however, Li-ion battery recycling is not economical on an industrial scale.

Another option is limiting EV battery production, either in total volume or in cell volume (installing smaller batteries). With EV batteries becoming more efficient, smaller capacities might not be detrimental to range in the future.

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Electronic Components

Communications including 5G will drive the components market

Communications including 5G will drive the components market

According to IC Insights, the communication sector’s share of integrated circuit sales reached 35% in 2020 and is expected to grow to 36.5% by 2025. For perspective, the automotive sector’s share of integrated circuit sales was 7.5% in 2020 and will grow to 9.8% by 2025 – significantly less than communications.

Industry tailwinds

What’s driving such high demand for ICs in the communications sector?

There are four big tailwinds:

  • 5G
  • Edge computing
  • Internet of Things
  • AI (artificial intelligence), MI (machine learning) and data analytics

5G

5G is the main driver for components demand, with 5G infrastructure rollout happening slowly, but surely. We are nowhere near a complete version of 5G, and networks are in a race against time to deliver a reliable service.

The first step for networks is replacing low-band 4G spectrum, followed by mid-band spectrum that uses 2.5, 3.5 and 4.5 GHz, enabling faster data speeds. The final step is the rollout of millimetre wave, which enables true 5G speeds. Millimetre wave also happens to be a precursor for next-generation 6G.

On top of 5G infrastructure rollout you have more 5G-enabled devices coming to market, such as smartphones, tablets and laptops. Smartphones, in particular, are leading the way for 5G adoption, putting faster data in our hands.

The rapid growth in IC demand in the communications sector also stretches to other components like modems, memory and antennas. 5G isn’t just an IC boon – it’s a boon for all the electronic components needed for 5G. 

Edge computing

Second to 5G we have edge computing, which by a miraculous twist of fate is needed to deliver a 5G experience (and needs a whole lot of components).

Edge computing puts compute capabilities relatively close to end users and/or IoT endpoints. In doing so, it reduces latency, while 5G delivers faster data speeds, providing a seamless experience on certain devices.

Internet of Things

IoT describes a network of connected smart devices that communicate with each other. For example, a vital sign monitor in a hospital could communicate with medicine dispensers and automate medicine dosages for doctors.

The Internet of Things has been talked about as a trend for several years, but we now have real applications that are useful.

AI (artificial intelligence), MI (machine learning) and data analytics

AI (artificial intelligence), MI (machine learning) and data analytics require enormous, powerful data centres to power them. These data centres require significant investment in chips, memory and other electronic components.

Also, AI, MI and data analytics need cloud computing, edge computing and in some cases 5G to deliver a real-time experience.

The future

By 2025, the communications sector is forecast to have a 36.5% usage share of integrated circuits, making it the biggest consumer of semiconductors.

Demand for integrated circuits, discrete circuits, optoelectronics and sensors will grow to an all-time highs thanks to the industry tailwinds in this article. The future is bright, but to stay ahead, a robust supply chain will be needed.

Electronic components distributors like Cyclops are helping supply meet demand, while the communications sector battles to secure chip orders. Call us today at +44 (0) 01904 415 415 or email sales@cyclops-electronics.com 

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Electronic Components

Causes of IC Shortage

IC Components
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Electronic Components

Automotive electronics market set to grow

Automotive

With vehicles getting smarter, more connected and more autonomous, the automotive electronics market looks set to soar.

Future growth in numbers

Back in March, Precedence Research predicted the automotive electronics market would hit around US$ 640.56 billion by 2030.

Then, in July, Global Market Insights released research predicting the automotive electronics market would hit around US$ 380 billion by 2027.

Interestingly, measured across the same period, both research reports (which are independent) predict a similar growth pattern. Global Market Insights predicts a 6% CAGR, while Precedence Research predicts a CAGR of 7.64% over a 3-year longer period.

With two separate reports indicating significant annual growth, the automotive electronics market looks set to boom. But wait, there’s more.

A 9.3% CAGR is expected in the automotive electronics market by 2030, according to research by P&S Intelligence. They predict slightly less growth than Precedence Research to 2030, at US$ 615.3 billion (versus $640.56 billion).

Growth factors

There are approximately 1,400 chips in a typical vehicle today, which each chip housing thousands of components on a semiconductor wafer, creating the integrated circuits that power computing, memory and a host of other tasks.

Those are just the chips.

Cars have thousands of other electronic components, including passive, active and  interconnecting electronic components, from batteries, sensors and motors, to displays and cameras. Oh, and everything is connected.

All told, a typical car today has more than 50,000 electronic components that enable features like in-car Wi-Fi, self-parking technology, adaptive headlights, semi-autonomous driving technology, keyless entry and powered tailgates.

However, cars are getter smarter and more advanced. Electronic components today make up around a third the cost of a car, which will increase over time as more sophisticated and greater numbers of components are used.

Smarter cars need more components  

The future of cars involves electrification, autonomous and self-driving technologies, hyperconnectivity, Internet of Things, augmented reality, artificial intelligence, biometrics and a whole host of next-generation technologies.

How will these be enabled? With electronic components.

Let’s take electrification as an example. An electric car handbook will tell you an electric car has a motor, a battery, an on-board charger, and an Electronic Control Unit (ECU) that controls one or more of the electrical systems or subsystems in the vehicle. Together, these let you drive around, charge, and pop to the shops.

In-between these systems, are hundreds of thousands of electronic components that make them work. You see, an Electronic Control Unit is a single component, containing thousands of smaller components, each performing a critical role.

The automotive electronics market is set to soar because cars and other vehicles will need more components with electrification and next-gen technologies. Sometimes, things can be simple to explain, and this is one of those times.

Meeting demand

The electronics industry is facing a global chip and electronic component shortage which is expected to last 2-3 years. As demand for automotive electronics soars, shortages look very likely for certain components like CPUs and memory.

The solution for many companies will be to use an electronics component distributor, to fill gaps in the supply chain and keep things moving.

Electronic component distributors like Cyclops can source hard-to-procure components because we have relationships with the best suppliers in the industry. Contact us today with your enquiries at sales@cyclops-elecronics.com or call 01904 415 415.

 

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Component Shortage Uncategorized

Chip shortage hitting auto jobs

Automotive Industry

The global semiconductor shortage is hitting automotive manufacturers where it hurts, which will inevitably lead to job cuts across the supply chain.

We are already starting to see this with Stellantis, the car company formed by the merger of Fiat and Peugeot, saying it will cut over 1,600 jobs at its Illinois Jeep plant.

Elsewhere, the first sign of job cuts will be found in production cuts. Ford Motor Co has outlined a series of plant shutdowns due to the chip shortage, with five facilities in the US and one in Turkey affected. They have also cut output in Europe.

Meanwhile, GM has been forced into production cuts and Nissan recorded its worst annual loss in decades because of the global chip shortage.

Volkswagen AG has also sounded the horn, warning that chip shortages will curb output in the coming months of 2021. VW expects worsening production from the chip shortage and for it to affect all their cars groups, including SEAT and Audi.

Billions in losses

Job cuts appear to be inevitable across the automotive industry as manufacturers count the cost of production constraints caused by the chip shortage.

It is estimated the global auto industry will take an £80 billion hit in 2021. Several manufacturers have come forward with their own estimates. Ford says the chip shortage will cost them up to $2 billion in 2021 alone.  

Unfortunately, it is ordinary workers who will be punished. With fewer cars to make, workers involved in the manufacturing of cars will be cut first. We have already seen this with Stellantis. Other manufacturers will likely follow.

Why the chip shortage?

Modern cars have more than 1,000 chips in them and the smartest, most connected models, such as those with ADAS systems, have over 3,000 chips. So, even a small supply constraint can set back production.

However, this is no small supply constraint.

It appears that no auto maker is immune to the chip shortage brought about by cancelled orders at the peak of the coronavirus pandemic.

When the coronavirus pandemic hit, auto makers cancelled chip orders. Electronics manufacturers filled this gap in demand with soaring sales. Now that auto makers need to ramp up chip orders again, they have nowhere to go because most chip makers are running at 98-100% capacity making chips for other booming sectors.

This has caused a global semiconductor shortage that has affected all industries and all players. Even Samsung, who make their own chips, are struggling. The shortage is predicted to last 1-2 years until new foundries become operational.

Looking ahead

The semiconductor shortage won’t last forever, and people need cars. Production will accelerate in the years to come. However, jobs may still be at risk.

Sadly, the chip shortage could accelerate digital transformation in manufacturing facilities, with the displacement of human workers for machines.

This is commonplace, but traditional brands may now seek a permanent solution to job cuts through technology. Automated plants are inevitable.

In any case, the future of the automotive industry is bright so long as you extend your horizon. The chip shortage is likely to last for the next 2 years. If you work in the automotive sector, strap yourself in. There’s more drama to come.

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