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component shortage Electronic Components

Automotive electronics market set to grow

Automotive Electronics Market set to grow

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 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 Lantek can source hard-to-procure components because we have relationships with the best suppliers in the industry. Contact us today with your inquiries at sales@lantekcorp.com or call 1-973-579-8100

Categories
component shortage Electronic Components

Perfect storm’ creates electronic component shortages

Perfect storm' creates electronic component shortages

A perfect storm has hit the electronic components market, creating supply chain problems that will be felt for several years.

The perfect storm

Even before the COVID-19 pandemic, most electronic component manufacturers were running at 95-98% capacity.

This high demand for electronic components was fuelled by growth in technologies like automation and the Internet of Things – technologies that are only in their infancy now but will mature in the next decade.

This high manufacturing output was felt across all types of components, especially chips (semiconductors, memory) and integrated circuits. It was even difficult to get a hold of some active and passive components in 2019.

Then, in 2020, the COVID-19 pandemic hit. Car manufacturers and other manufacturers affected by shutdowns paused orders for electronic components. Meanwhile, manufacturers benefitting from lockdowns scaled up.

Now, with the development and roll-out of COVID-19 vaccines, industries that shut down have opened up again. But there’s a problem – demand for electronics has not wavered and there isn’t enough manufacturing capacity to serve everyone.

Quite simply, there isn’t enough bread to go around.

Demand is ramping up

We are now in a situation where electronic components manufacturers are running at 99-100% capacity. Demand has soared for all types of components, from chips and memory to diodes and displays. This is squeezing most supply chains.

There are so many contributors to this squeeze. Emerging technologies like AI, automation, virtual reality, augmented reality and machine learning are fuelling demand for smarter chips and data centre modernization, while technologies like 5G and Wi-Fi 6 are demanding infrastructure rollout, which requires a significant effort.

When it comes to chips, however, cars are the biggest users. Cars can have as many as 22,000 multilayer ceramic capacitors (MLCCs) each. This will increase as cars get smarter (a self-driving taxi sounds great, but it’ll need around 30,000 chips).

Suppliers are slowly adapting

There has been years of under-investment in new foundries and plants. This under-investment has affected manufacturing capacity today.

To their credit, most manufacturers are looking to expand capacity by setting up new foundries or acquiring plants. Trouble is that most plants take years to set up. Some plants that started a build in 2017 are still being built.

Staffing is also an issue. The biggest challenge suppliers face is social distancing and COVID prevention policies, which have reduced staff numbers in many factories.

You can’t automate every process in a factory, so it is a given that having fewer staff will increase lead times. Some manufacturers have been harder hit than others with this, but all will experience staff shortages during the pandemic.

In addition to this, freight has become more challenging during the pandemic. Things are taking longer to move and there are fewer commercial flights. Global shipping rates have skyrocketed during the pandemic because of this. Higher shipping rates have contributed to price increases for most electronic components.

Weathering the storm

We predicted the electronics component shortage in early 2020 following the USA’s national lockdown. We knew supply chains would be squeezed and stretched due to changes in economic output and industry trends.

The best way to weather the storm is to work with us or another reputable electronic components distributor. We focus on delivering outstanding service, with industry leading quality and dependability. Call us at 001 973 579 8100 to chat.