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component shortage Electronic Components Lead Time

Electronics Counterfeiters Capitalize on Component Shortages

Electronics Counterfeiters Capitalise on Component Shortages

Electronics Counterfeiters Capitalize on Component Shortages

The electronics industry is experiencing a components shortage which is bad news for everyone except counterfeiters who are seeing greater demand than ever.

The total available market for counterfeit electronic components is billions of pounds, so it makes no wonder this illegal activity is seeing rapid growth.

What is a counterfeit part?

A counterfeit part is an unauthorized copy, imitation, substitute, or modification of an original component. Counterfeit components are a misrepresentation of the real thing but can be extremely convincing they are legitimate.

Giveaways that components are counterfeits include:

  • Color variances
  • Misspellings and incorrect labeling
  • Mismatched date codes
  • Duplicate date codes and labels
  • Missing items
  • Poor packaging and quality control
  • Font variances
  • Country of origin problems
  • Signs of “resurfacing”
  • Failure in tests and performance issues
How are counterfeiters capitalising on component shortages?

Electronics counterfeiters are capitalising on component shortages by penetrating weakened supply chains, taking advantage of inadequate quality control processes and taking advantage of inadequate reporting.

Demand is exceeding supply for many electronic components, exasperating the issue. The semiconductor shortage is the current big one.

As lead times get pushed out, buyers are faced with a dilemma: should they stick with trusted suppliers and put up with delays or look for another supplier? The risk is the ‘other supplier’ being a counterfeiter or not having the necessary controls in place to ensure that shipments do not get intercepted and changed.

This dilemma is when counterfeiters strike to take advantage. The wrong decision can have significant financial and economic consequences.

Another area of focus for counterfeiters is the scarcity of parts caused by end-of-life designations. There is significant demand for end-of-life components, but they can be very hard to find. Counterfeiters pray on this weakness with illegitimate copies.

There’s also a grey market for used electronic components that are refurbished or reconditioned and sold as new. The danger with this is using components that are spent and not repaired properly. When you buy “new” the components should be exactly that. Buying used is never a good idea, unless you want used parts.

How can I protect myself from counterfeiters?

First of all, you should read our 8 Step Guide To Buying Electronic Components With Confidence and Avoiding Counterfeits.

Secondly, you should only work with electronic component suppliers who have a compliance program in place. A good benchmark is suppliers who are ERAI (Electronic Resellers Association International) members. We are ERAI members, so we are on the ERAI database and use ERAI supply chain risk mitigation solutions.

Secondly, it’s really important that you have an adequate inspection and testing processes in place to verify the components you receive. If your supplier tests components for you, what testing facilities do they use, and which services are performed?

Summing up

Electronics counterfeiters are capitalizing on component shortages by taking advantage of inadequate quality control and reporting processes and weakened supply chains.

A robust supply chain and trusted parts suppliers are the two keys to protecting your organization. If you are concerned about counterfeit components in your supply chain we’re happy to provide advice. Call us on 01904 415 415 for a chat.

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component shortage Electronic Components Lead Time

Why We’re Facing a Global Semiconductor Shortage

semiconductor

Why We're Facing a Global Semiconductor Shortage

The world is experiencing a semiconductor shortage at a time when demand for semiconductors is at an all-time high. Manufacturers can’t make enough of them and we’re now seeing this affect the availability of products. You probably remember last year Sony released the PlayStation 5 and Microsoft released the Xbox Series X. AMD released the Big Navi GPU (RX 6000) and Apple released the iPhone 12 range. What all these products have in common is they were all directly affected by the semiconductor shortage. Demand well and truly exceeded supply.
What’s causing the shortage?
A perfect storm has hit the semiconductor market. It isn’t one thing but a combination of different things that’s causing the shortage today.
The COVID-19 pandemic
When the COVID-19 pandemic hit, car and commercial vehicle sales took a hit. Estimates suggest that sales fell by 50% or more within a single month. In response, car manufacturers scaled back orders for semiconductors and other parts. At the same time, demand for electronics chips soared as more people spent time working from home and on furlough. Laptops, smartphones, drones, smartwatches, tablets, kitchen appliances – everything has a semiconductor nowadays. Then you have IT, data centres, internet infrastructure and cloud and edge computing. All are powered by semiconductors. And so, the factories that were at capacity making semiconductors for cars switched to making semiconductors for electronics. This was a blessing in disguise for factories because semiconductors for electronics have a higher margin. However, it has caused a problem for car manufacturers who now need to ramp up production. The situation now is this – car sales are picking up and car manufacturers are fighting for orders against electronics manufacturers. Factories are at capacity and can’t make enough to go around. This is feeding through to nearly every sector. Ultimately, this is the result of poor planning from car makers who cut orders too deeply last year at the beginning of the COVID-19 pandemic.
Manufacturing limitations
Even before the COVID-19 pandemic hit, there weren’t enough factories to meet semiconductor demand. There were long lead times in 2019 because semiconductor demand outpaced the ability of factories to make them. This problem has persisted through to 2021 and has been compounded by the COVID-19 pandemic. With most factories running at 99-100% capacity, there is very little room for boosted output. You would think that the solution is to build more factories, but this would not solve the problem today or even a year from now because semiconductor fabs take at least a year to build with another 6-12 months in setup time. Semiconductor manufacturers are investing in new factories, expansion and more efficient technologies, but short-term solutions these are not. The US is attempting to bring semiconductor manufacturing to US soil to remedy this or at least reduce dependency on foreign suppliers.
US and China trade war
Calls for domestic manufacturing are heating up in the US and China, the result of a trade war brought about mostly by supply chain disruptions related to the COVID-19 pandemic. Reports in May 2020 that the Trump administration was in talks with Intel, TSMC, and Samsung about building US chip factories proved true. In 2021, with a new president and Biden administration, these talks are persisting. The reason a technology trade war broke out between the US and China is because the US imposed a 25 per cent tariff on $34 billion of Chinese imports in 2018. There has been bad blood ever since with threats and action on both sides. This eventually affected the semiconductor supply chain because in 2020 the US turned to export restrictions targeting the semiconductor supply chain to safeguard critical infrastructure in the telecommunications sector. This followed a 2019 ban on the Chinese company Huawei for “national security reasons”. For example, one of the consequences of export restrictions was that American firms were cut off from chips made by China’s Semiconductor Manufacturing International Corporation – the third largest chip maker in the world with 11% market share.
Local production problems
Factory shutdowns due to natural disasters, bad weather and the COVID-19 pandemic have caused semiconductor supply chain issues. Most of the world’s semiconductors are manufactured in Taiwan. Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, has a 28% market share. The second largest, UMC, also based in Taiwan, has a 13% market share. Taiwan is experiencing serious water droughts in 2021. Millions of tonnes of water are required to manufacture semiconductors every week. Taiwan Semiconductor Manufacturing is having to bring water in on trucks and UMC are doing the same. This has caused significant drops in manufacturing efficiency. The US is also experiencing shutdowns. NXP Semiconductors had to shut its plant in Austin, Texas, due to winter weather in February 2021. Factory shutdowns cause order backlogs and extended lead times. Orders persist and pile in whether a factory is down or not. This squeezes supply chains, causing a shortage.
How long will the semiconductor shortage persist?
We expect the semiconductor shortage to persist through 2021 but ease towards the end of the year as demand for electronics chips decreases as COVID-19 lockdowns end. This will cause a shift in supply from electronics semiconductors to automotive semiconductors which will provide the industry with a much-needed equilibrium. The world’s largest semiconductor manufacturers – TSMC, UMC, SMIC, Samsung, Intel, SK Hynix – are investing in increased output. Many investments were in the pipeline as early as 2019 and are expected to yield results at the end of 2021. Right now, there is a serious imbalance in the demand for semiconductors, one that our existing infrastructure is not built to cope with. This imbalance will ease over time.
How can supply chains continue to meet demand?
If you have been impacted by the semiconductor shortage you can meet demand by partnering with an electronics components distributor like us. We specialise in the procurement and delivery of semiconductors and parts for a wide variety of industries from the world’s leading manufacturers. You can find out more about what we do here.
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Demand Electronic Components Lead Time

MLCC supply is beginning to tighten?

MLCC supply is beginning to tighten?

Memory suppliers to benefit from strong demand and supplier shortages

Multilayer ceramic capacitors (MLCCs) are used in many electronics from smartphone screens to laser guidance systems. There was a prolonged lull in demand for MLCCs stretching from 2019 through to 2020, however supply is now tightening and lead times for new components are extending.

This has caused some concern with those who use MLCCs to manufacture products. Will supply continue to tighten? When will it let up? These are good questions. The answer lies in understanding why supply is tightening.

Demand for MLCCs is tightening for several reasons:

  • Demand from the automotive sector is increasing
  • Demand from the communications and transport sectors is increasing
  • Global inventories are depleting
  • Supply chain challenges due to the coronavirus pandemic
  • Manufacturing bottlenecks due to facilities running at maximum capacity
Increased demand

The main reason for supply tightening is an increased demand from the communications and transport sectors. These sectors consume over half of the world’s MLCC supply and the rollout of 5G is accelerating demand.

The global automotive market is also a big consumer of MLCCs. MLCCs are being used extensively in modern cars. Applications include in battery management, chargers, heater controllers and energy converters. Electric cars use MLCCs because they are reliable and can be surface mounted directly to boards.

Inventory depletion

Inventory management has been a difficult task what with 2020 throwing COVID-19 into the works. This hit the MLCC supply chain like a train. Demand dropped off. This led to suppliers correcting inventory levels and sometimes overcorrecting. When demand increased towards the back end of 2020, supply chains got exposed.

It is difficult to correct inventory when not enough MLCCs are being made. For every 10 that are made 8 get put into use immediately. This leaves little fat left.

Increasing lead times

All of this means increased lead times for MLCCs. Many electronic components suppliers and distributors have them on back order. Some types of MLCC have lead times extending over several months (a long time in a supply chain).

For example, large case (≥ 0603) low-CV commercial grade MLCC lead times are around 22 weeks. This is a very long time. The only units that are in good supply are small case size (≤ 0402) low-CV commercial grade MLCCs which are available now.

How can you meet demand?

As 2021 gets underway, we predict that MLCC supply will tighten. Inventories will get stretched and manufacturers will struggle to get a hold of the components they need. Now that you know this, you can prepare.

The best way to assure a healthy MLCC supply is to work with a global distribution partner like us. When you need to source hard to find electronic components quickly because of allocation, long lead times, obsolescence, or quality issues, Lantek is here to help. We will work with you to source the MLCCs you need. View our home page to use our component search tool and enquire with us today https://www.lantekcorp.com/

We work with all industry sectors, including the communications, transport and automotive sectors, to source electronic components. We specialise in the procurement and delivery of electronic components and parts with on time delivery.