Will there be a component shortage?
Passive components include resistors, inductors, capacitors and transformers. They are among the most abundant electronic components in the world, but demand could start to outstrip supply this year in some industries, causing component shortages.
To help you grasp the exponential growth of the passive component market, the market was valued at USD 30.98 billion in 2020 and is estimated to reach 39.59 billion by 2026 (Mordor Intelligence). That research cites the automotive industry as the key industry driver and Asia-Pacific as the biggest growth market.
Fact is that the world is getting more technologically advanced. Demand for passive components is only going to increase. You could draw a line now and skip five years from now. The line would shoot up. We’d bet money on it.
A short history of passive components
In 2017, a major surge in demand for standard passive components coupled with raw material shortages led to strained capacity. Resistors and transistors were badly needed, and suppliers were quoting 20-30 weeks.
In 2019, demand balanced out, and for the first few months of 2020 demand and supply were perfectly balanced. Then the COVID pandemic hit.
COVID-19 caused supply chain problems as component manufacturers scaled down operations. Meanwhile, as industries absorbed the effects of COVID-19, demand increased, and this put the industry in a sticky situation.
Today, demand for passive components has never been higher. The predicted softening of the market some people made in 2020 has not happened. 2021 is set up to be a boom year for passive components. This could cause shortages.
Why is demand so high today?
The reason for this high demand is investment in new technology. Whether it’s electric cars and charging infrastructure, 5G infrastructure, wireless backhaul, IoT or UAVs, demand for certain components is increasing and factories are struggling to keep up.
The good news is that with increased demand comes new investment in factories and manufacturing output. The risk is that the demand for passive components outstrips supply by such an amount that innovation stagnates.
We don’t think this will happen. However, this may force manufacturers to turn to outdated, legacy components. They can get away with this during prototyping. However, consumer-facing products will need the newest components. This will require a good supply of passive components in 2021 and beyond.
To meet this challenge, inventory management is key. However, sourcing components among fierce competition is a difficult task. You can be outbid and outmanoeuvred when sourcing components. This makes who you know key.
How to deal with the passive component shortage
If 2021 does bring about a passive component shortage, it’s a good idea to have an electronics component supplier like us.
With large stock holdings, global distributor reach, and a sophisticated electronic component search database, Cyclops Electronics can find and deliver day-to-day, shortage, hard-to-find components, and obsolete electronic components.
You can buy passive electronic components with confidence from us. Get in touch if you would like a chat about how we can help you. Our team specialises in sourcing electronic components and we work with all manner of customers.