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component shortage

The tech industry is bracing for a potential shortage of passive electronic components

passive

Tech industry bracing for a potential shortage of passive electronic components

By now, everyone has heard of the global semiconductor shortage. Still, the tech industry is bracing itself for an altogether larger shortage of passive electronic components that could reduce manufacturing output across multiple categories.

Passive components do not generate energy but can store and dissipate it. They include resistors, inductors (coils), capacitors, transformers, and diodes, connecting to active elements in circuits. Passives are necessary for circuit architecture, so the shortage is bad news for the electronics industry as a whole.

The current state of the passive component shortage 

The truth is there has been a shortage of certain passive components since the coronavirus pandemic hit in 2020, particularly with multilayer ceramic capacitors (MLCCs), which can be difficult to get hold of in large quantities.

Certain diodes, transistors and resistors are also in shorter supply than they were in 2019, partly because of the pandemic and a shift in manufacturing investment for active components, which have a higher margin.

You also need to look at consumer trends (what people are buying). Smartphone and smartwatch sales are higher than ever, and smart ‘Internet of Things’ devices are growing in popularity rapidly, not to mention in availability.

These devices require a lot of passive components. For example, a typical smartphone requires over 1,000 capacitors. Cars are also huge consumers of passive components, with an electric car requiring around 22,000 MLCCs alone.

The trend for next-generation technology adoption is up across all categories, be it the Internet of Things, edge computing, semi-autonomous cars and 5G. Passive components are in more demand than ever at a time when supplies are under pressure.

Price rises are now inevitable 

The price for most passive components has risen by the largest amount in over a decade in 2021, caused by supply and demand economics and a price explosion for common materials like tin, aluminium and copper, as well as rare earth metals.

While some suppliers can afford to take a hit on profits, for most, raising prices is inevitable to ensure the viability of operations.

With higher component prices and greater shortages, it is more important than ever for companies to bolster their supply chains. Complacency is dangerous in today’s market, and no company is immune to disruption.

How to beat the passive components shortage 

The passive components shortage is likely to get worse before it gets better, but there are several ways you can bolster your supply chain:

  • Equivalents: Specifying equivalent passive components is a sound way to keep your supply chain moving. When a specific passive component isn’t available, an equivalent may be available that functions in exactly the same way.
  • Ditch outdated components: Outdated components have limited or no manufacturing output when discontinued. Upgrading to modern components that are manufactured in larger quantities can help you meet demand.
  • Partner with a global distributor: Global components distributors like us source and deliver day-to-day, shortage, hard-to-find, and obsolete electronic components. We can help keep your supply chain moving in uncertain times. Contact us today with your inquiries. 
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Electronic Components

Communications including 5G will drive the components market

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 component demands 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 computing 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 Lantek Corporation are helping supply the demand, while the communications sector battles to secure chip orders.