Why ‘riding out’ the electronic components crisis is no longer an option

The electronic components shortage is continuing to take its toll on the electronics manufacturing sector. Many multilayer ceramic capacitors (MLCC) lines remain on allocation. Chip resistors are seeing extended lead-times. And the availability of semiconductors and memory have also been flagged as problem areas. As market demand outstrips manufacturing capacity, the fallout from the components crisis is now predicted to extend well into 2020, and beyond. And it’s a problem which Original Equipment Manufacturers (OEMs) can no longer hope to simply ‘ride out.’ The advice from distributors? It’s time to act now or risk being left behind. The current situation Pricing and product availability remain two of the biggest challenges, fueled in large part by the increased demand for smaller electronic devices and the shift towards sensor and wireless technology. Alongside this, we’re inevitably going to see price rises - which means securing stock is going to be even more crucial. Capacity issues The limited return on capacity investment combined with a shift in strategy towards smaller, more economical, case sizes has seen some larger component manufacturers choosing to limit production of less profitable commodity items - or remove them altogether. Obsolescence Industry experts are now predicting some items could be made obsolete as early as the end of this year, with one manufacturer alone recently increasing its list of ‘end of life’ (EOL) products from 500 to 20,000 showing signs of a strategic move away from legacy products. Many larger case size MLCC’s (0603, 0805,1206 etc) are now being flagged as ‘not recommended for new design' with the shift in focus towards small case/high capacitance parts. Taking action So what steps can OEMs take as the electronics component crisis rumbles on? We’ve written previously about the ways OEMs can work with their EMS partners to make the best of a bad situation - most specifically by sharing demand forecasts as far out as possible; avoiding placing artificial demands on your contract manufacturing provider and being responsive to price and lead time issues. And now the advice from distributors is equally decisive - accept that things need to change, consider your options and act quickly. But just what are the potential solutions? According to industry experts, there are four suggested routes - seek an alternative manufacturer, consider a product upgrade, downsize your components or undertake a redesign. 1) Should you look for an alternate manufacturer? If the answer is yes, then it’s going to be a case of qualifying other manufacturers immediately to ensure they can offer you the appropriate levels of stock you need and that the specifications of the parts meet your design requirements. 2) Should you consider a product upgrade? Could you accept a higher voltage part? Could you take a tighter tolerance part? Is a flexible termination product required? 3) Can you make do with a smaller package? With MLCC shortages predicted to extend for years to come, a number of manufacturers are looking to invest in smaller device capacitors such as 0201, 01005 and 008004 case sizes. Where possible, can you look to downsize the components that you've got listed on the Bill of Materials (BOMs) to a smaller case-size - and ideally using a pad layout that can accommodate 0402 or smaller? 4) Perhaps it's time for a redesign? If changes in manufacturer, product upgrades or downsizing components aren't viable solutions then it may be time to consider a product redesign, that can either incorporate smaller pads or that can enable you to take advantage of alternative technology. While many OEMs may have been tempted to hold off on making these type of decisions, the advice from component distributors right now is that this needs serious consideration to avoid being caught - the problem isn’t going to go away anytime soon. Whatever route you choose to take the message is clear - it’s time to ‘buy into’ the severity of the electronic components crisis, assess your options and take action.

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