Tag: manufacturing

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Electronic Components Supply Chain

Domestic manufacturing increases consumer cost

Since the introduction of the Chips Act increased costs were a cause for concern. Many manufacturers and suppliers have expressed a worry that the various cost increases involved in reshoring production would affect business. The major impact of this would be a raised cost of consumer electronic devices at the end of the road.

The upside

With the Act in place, and export restrictions on China being introduced, the chip industry faces an interesting predicament. On one hand the Act will increase the number of jobs. It could also give the US a more stable position in the global market. Not only that, but it will encourage foreign investment in the US economy and bring consumers to domestic producers.

All in all it is expected to improve the US chip industry hugely, and the profits and products of it will mean America is a real competitor in the market.

The downside

Unfortunately, though, there are a few downsides as well. The cost of most things, including building new fabs and training new staff, is more expensive in the USA. There is currently much less semiconductor infrastructure in place here.

Compared to countries like Taiwan and China, which are already set up for mass production, the US will have to invest a great deal of time and money. Additionally, the labor and equipment is cheaper in Asian countries. Some experts in the industry have predicted the cost of making a chip could increase by 40%

According to one research firm, the cost of a fab in the US can be 80% more than in Taiwan. This isn’t exactly attractive for investors.

The impact on consumers

There has been a massive range of estimates on how much the end-user will be affected by reshoring. One of the most often-discussed products is the smartphone. Providers like Apple and Samsung have had to reorganise thanks to the Act, and change their future plans.

In addition to the chips needed for the phone itself, the cameras also require separate chips and components. The cost of a new iPhone, for example, could increase by $100. Other experts have estimated eye-watering estimates of a $30,000 increase, but this is less likely.

Many companies are expected to try and mitigate the cost passed onto customers. It’s worth noting it won’t be possible, or economical, to do this entirely. There are incentives included in the Chips Act to offset these costs too, but those will only go so far.

A steadfast ally

While the Chips Act might change the chip landscape, Lantek’s stellar service will stay exactly how you like it. With Lantek being a global supplier, we will be able to see which avenue will be more cost effective for your production and guide you in whatever component needs you have. Call us today on 1-973-579-8100, or email us at sales@lantekcorp.com. 

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Electronic Components Supply Chain Technology

New US India semiconductor partnership

The US recently formed a partnership with India with an aim to cooperate in several industries, including semiconductor production. This is
hoped to be a very fruitful partnership, especially since the increase in restrictions between China and the US.

Recent changes

More companies have been investing in India in recent years, including Vedanta-Foxconn, PSMC and Micron Technology. Partly thanks to new government incentive schemes, companies are trying to move manufacturing into the country. More are expected to follow as India increases its funding for semiconductor manufacturing.

The Indian Government and related parties have announced several incentives for incoming companies. One of the largest was that there would be a 50% waiver on the cost of establishing a fab.  

The US and Indian Semiconductor Associations (SIA and IESA respectively) have also formed a taskforce to strengthen collaboration. The taskforce plans to assess the country’s readiness to sustain a semiconductor market and make recommendations to increase its presence in the
supply chain.

But it hasn’t been easy. Many incoming companies have mentioned difficulties with a lack of infrastructure, difficult regulations, and other struggles.

The competition

India could also potentially help in the sourcing of minerals for semiconductor production. Currently much of the world’s supply (72%)
comes from China, which could prove troublesome soon enough. 

However, India is apparently abundant in 49 critical and non-fuel minerals that are used in the industry according to a report by the Council on Energy, Environment and Water (CEEW) and the Ministry of Science and Technology.

Work away

 

Another potential benefit to the States is the new ‘friend-shoring’ location it has unlocked. While the Chips Act attempts to move much of the
process to domestic, this won’t be entirely achievable.

The high cost of labor and the lack of highly-skilled employees within the field will prove challenging. In a collaboration with India, however, it would provide a manufacturing location with manageable labor costs. It could also pave the way for highly-skilled professionals from India
to work in the US.

There are hopes that this collaboration is the next big milestone for the countries since the 2016 nuclear power agreement.

A different kind of partnership

We have a steadfast relationship with all of our customers, thanks to the trust and reliability we are known for. Lantek Corporation can fulfil
all your electronic part needs, all you need to do is contact us. We’re available at sales@lantekcorp.com or call us on 1-973-579-8100.

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Electronic Components

What is fabless production?

What is fabless production?

A fab is short for ‘fabrication’, which is a facility that produces electronic components. When it comes to fabless production, it refers to when companies outsource their manufacturing. The development of fabless production is a pretty recent development, but one that has flourished since its conception.

How did it come about?

Fabless production didn’t exist until the 80s, when surplus stock led to IDMs offering outsourced services to smaller firms. In the same decade the first dedicated semiconductor foundry, TSMC, was founded. It is still one of the biggest foundries in operation to this day.

In the following years many smaller companies could enter into the market as they outsourced manufacturing. More manufacturers, each with different specialities, also came to the fore.

Advantages

One of the original reasons it became so popular was due to the cost reduction it provided businesses. With the actual semiconductors being manufactured elsewhere, companies saved money on labour and space.

With production outsourced, companies also had the ability to focus more on research and development. No doubt this gave way to many advancements in semiconductor technology that wouldn’t have been possible otherwise.

Having a choice of which manufacturers to work with is beneficial too. Depending on your requirements you can choose someone who best suit your needs.

Disadvantages

When you outsource production, you are putting part of your business under someone else’s control, which can be risky. There could be a higher chance of defects if manufacture isn’t being directly overseen.

It also means that, in terms of quantity of product and price of production, you don’t have total control. If a manufacturer decides to change the quantity they produce or the price, customers are limited to their options. They either have to accept the changes, or search for an alternative which, in a fast-paced market, would be risky.

Conclusion/Disclaimer

The fabless business model, as it is known, will probably continue long into the future. TSMC’s continued profit, among other companies, is a key indicator of its success. And with big names like Apple, Qualcomm and Nvidia working fabless, it would be safe to say it’s popular.

That’s not to say that an integrated business model, with every stage of production occurring in-house, is a bad choice either. There are many just as successful IDMs like Samsung and Texas Instruments.

For a ‘fab-ulous’ stock of both foundry and IDM components, check out Lantek. We specialise in obsolete, day to day and hard to find electronic components. Send us your enquiry at sales@lantekcorp.com, or use the rapid enquiry form on our website.

This blog post is not an endorsement of any particular business model, and is purely for informational purposes.

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Electronic Components

US import tariffs on some Chinese components lifted

US import tariffs

Tariff exclusions introduced on a range of imported goods have been reinstated, easing trade and supply chain relations between China and the US.

The import tariffs, originally put in place in 2018 and 2019, were between 7.5% and 25% for the affected products. The reinstatement of exclusions became retroactively effective from October 2021 and covers approximately $370 billion worth of Chinese imports.

The previous administration granted more than 2,000 exclusions to give relief to certain industries, but most expired before the end of 2020.

Several industries were seriously affected by the original tariffs, including the electronic component market. Parts like capacitors, resistors, transistors, PCBs and many more were hit with huge tariffs, which affected the price of end products and even stopped manufacturing in some sectors.

Areas affected

Aside from components falling victim to high tariffs, medical equipment and PCBs featured in X-ray machinery were also impacted. As many of the tariffs were introduced during the pandemic there was already a heightened demand, and the US had to find products in other places, probably also facing higher costs.

PCBs and graphics cards for use in computers ended up being slapped with a hefty tariff too. The computer sector was one that experienced huge sales during the pandemic, which was one of the factors that contributed to the semiconductor shortage.

Alongside the shortage of PCBs and components, there ended up being additional backlog with tariffs being placed on other consumer electronics like phones, laptops and smartwatches.

What next?

The tariffs affecting electronic components, although high to manufacturers, were likely not as impactful for their customers. Even so, there’s a chance there will be an increase in available components and for a cheaper price, which could result in a slightly lower price for consumers as well.

Products, like the x-ray machinery, that rely on entire imported PCBs may see a larger drop in price as manufacturers can once again access cheaper circuitry.

Computer parts like the GPU might continue to be sold at an increased price, both to make up for the astronomical cost they were originally bought for, and because of continued demand. Not only are graphics cards being used for gaming computers and general use but have also had attention from the crypto and data mining market.

Material costs were already raised by the pandemic, but chances are they will remain high for a while despite the tariff exclusions brought in. Manufacturers will probably try to make up for lost time and money by keeping the costs of products high. Especially for parts such as graphics cards, this might continue for quite a while.

Thankfully, Lantek is a supplier who values its customers above all else, and will always find you the best price for your parts. So don’t delay, get in touch today for all your electronics needs. Email us at sales@lantekcorp.com.

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Electronic Components

Upskilling and STEM investment: how to combat the semiconductor worker shortage

Thermal management

Noticed that you’re waiting longer than usual for your electronic parts these days? You’re not the only one.

The lack of chips is considerably noticeable, but it’s also drawn attention to how desperate we are for more electronics workers. There’s a lack of highly skilled people in the tech sector right now, and with the States aiming to increase its share of semiconductor production, we’ll need to fill out this workforce fast.

But the experts have a few ideas up their sleeves, here’s what they think:

It’s a BIG industry

The Semiconductor Industry Association (SIA) released a report in 2021 that said for every US worker directly employed in the semiconductor industry in 2020, another 5.7 jobs were supported. This means that two years ago at least 1.85 million jobs were supported, either directly or indirectly, by the sector.

The 277,000 people that work specifically in the sector, in manufacturing, design, testing and research, are enabling around 300 downstream sectors, according to the report.

Upskilling/Reskilling

As the electronics industry is constantly changing and evolving it might be difficult for longer-serving employees to be equipped with currently relevant skills. The increasing automation of production lines, while efficient for manufacturers, requires highly skilled workers for operation and maintenance. Therefore, the upskilling and reskilling of employees is essential.

In another SIA report, in collaboration with Oxford Economics, the association said that only 20% of employees in the semiconductor industry actually attended university in 2019. To add to this, the higher-skilled members of the STEM sectors were more likely to go on to work for consultancy or investment firms. Giving the current workforce the option to upskill, and the potential extra wages that would come with it, might be an easy and enticing way to bulk up the thin-on-the-ground areas of employment.

Similarly, giving skilled workers the chance to re-specialize within their areas of expertise could ease the shortage relatively simply.

International talent

Joint workforce development may also be an avenue for investment. The US’s international partners could well help bridge the gap in the electronics industry, something that the 2019 European METIS initiative explored.

The electronics industry project, co-funded by the student exchange programme Erasmus+, looked to fund the education, professional mobility and recognition of electronics industry qualifications. The project aimed to encourage international students to study and work in the sector in different countries.

Employees and Incentives

It’s probably no surprise that there are more men in electronics manufacturing, with the US Bureau of Statistics saying that women made up less than 30% of the sector in 2021. The majority of women were white, with approximately two in five women being Asian or Hispanic. Black or African American females were the most underrepresented at about 4%

Students are another source of untapped potential. Thankfully, the new semiconductor legislation that could soon be signed into law will increase funding for STEM students. The US Innovation and Competition Act, passed by the Senate last year, promised $5 billion in scholarships for STEM-specializing students, $8 billion for workforce programs and almost $10 billion for university technology centers and innovation institutes.

These employee groups might be ideal targets for recruitment and development in the industry, and since the CHIPS Act promises so many additional jobs in the next four years, employers better get on it!

But you don’t need to worry until then. Thankfully when it comes to electronic parts, Lantek always has your back. Talk to us today at sales@lantekcorp.com and we’ll help you find what you’re looking for.

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component shortage

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

passive

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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component shortage Electronic Components

Global silicon chip shortage will last until at least 2023

silicon chip

How long will the global silicon chip shortage last? If you were to ask ten CEO’s of leading technology companies, you’d probably get ten different answers.

However, there’s one timeframe most CEO’s quote…

2023 is the date CEO’s are optimistic about 

Intel’s CEO, Pat Gelsinger, has given us a realistic timeframe for the chip shortage to end – he says the chip shortage won’t end until 2023.

“We’re in the worst of it now; every quarter next year, we’ll get incrementally better, but we’re not going to have supply-demand balance until 2023,” Gelsinger told CNBC.

Gelsinger’s thoughts echo those of Glenn O’Donnell, a vice president research director at advisory firm Forrester, who says the chip shortage will last until 2022.

“Because demand will remain high and supply will remain constrained, we expect this shortage to last through 2022 and into 2023,” O’Donnell wrote in a blog in March.

Daimler chairman Ola Källenius also believes the chip shortage could last until 2023.

“Several chip suppliers have been referring to structural problems with demand,” Källenius told reporters during a roundtable event ahead of the Munich IAA car show. “This could influence 2022 and (the situation) may be more relaxed in 2023.”

What will chip demand look like in 2022-2023?

In July, the CEO of STMicroelectronics provided insight into what we can expect in 2022-2023, “Things will improve in 2022 gradually, but we will return to a normal situation … not before the first half of 2023,” he said in an interview.

The global silicon chip shortage has led to car plants shutting down, paused manufacturing lines and delayed product launches. It isn’t a short-term problem, and no one knows for sure when supply will start catching up with demand.

All industries and companies that use chips have been affected by the shortage – even Samsung, the world’s biggest computer-chip manufacturer, has been affected by it, delaying the launch of several Galaxy and Note smartphones.

Most experts agree that 2022 will echo 2021, with moderate-extreme shortages of integrated circuits and chips, as well as certain active and passive components. Prices are also expected to rise in line with raw material costs.

2023 may be the year that supply starts meeting demand, but it will require the mass opening of foundries and factories. Investment in new plants and manufacturing lines is ongoing, with new fabs set to open in the next two years.

In 2023, we hope to see regular chip inventory levels and average delays of about three months to replenish components. At the moment, some components have delays over a year, and inventory supplies for chips are running low.

Keeping supply chains moving

The best way to keep supply chains moving is to partner with an electronic components distributor like us. We can source chips from around the world, tapping into stockpiles and inventory that isn’t available to the average company.

If you are experiencing an electronic component shortage, we can help. Email us if you have any questions or call us on 1-973-579-8100 to chat with our team.

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Electronic Components Semiconductor Transistors

Chipageddon is upon us

Electronic Component

Semiconductors go unseen yet they are at the heart of all our electronics. When supplies run short manufacturing lines slow down and the availability of products is affected. Last year had several examples, some of which may have affected you.

AMD’s Radeon RX 6800 XT GPU was released in December but got nowhere close to meeting demand. Sony’s PS5 and Microsoft’s Xbox Series X sold out immediately and are rarer than hen’s teeth today. Even Apple admitted that the chip shortage affected sales of the iPhone 12 because they had to stagger product launches.

Then, near Christmas, the word “Chipageddon” was used by an automotive industry insider to describe the chip shortage affecting the automotive industry.

Chipageddon

It’s easy to overreact about things, but today’s chip shortage is worth getting in a sweat about. Supply and demand is faltering, and manufacturers are genuinely struggling to get the chips they need to make products.

Supply and demand is a basic economics model linking the relationship between the quantity of a commodity available and the quantity people want to buy to price determination. When supply exceeds demand, prices increase. When the opposite happens, prices decrease. It’s easy enough to understand.  

If you’re still with us, the chip shortage has had two main impacts:

  • Fewer chips are available
  • Prices for chips are increasing

This is a double whammy. It means manufacturers are making fewer products and paying more to make them. These costs DO get passed to you, the consumer. It’s the reason why you see random 10% increases in smartphone prices.

You also have the issue of foundries running at max capacity coupled to the low number of foundries that manufacture the newest wafers.

Industries worst hit

By far the worst-hit industry by a chip shortage is the automotive industry. The world’s largest carmakers are facing a critical shortage of semiconductors at a time when demand is increasing, and cars are getting smarter.

Today’s cars have as many as 50 semiconductors that run a variety of systems. In a few years, this number is expected to increase to over 100. 60 million cars are produced each year worldwide. It means the industry needs 3,000,000,000 semiconductors, an enormous number whichever way you look at it.

Another industry hit hard by a chip shortage is consumer electronics. Smartphone manufacturers like Apple and Samsung are struggling to meet demand because there are not enough semiconductors to go around. Sony and Microsoft can’t manufacture as many game consoles as they need to because of lack of supply.

What’s the solution?

Chipmakers need to expand capacity and build more factories. Manufacturers need to consider alternatives to primary component suppliers. The issue is that chip fabrication plants take two years to set up and a low-quality chip can stop an expensive product from shipping. This is as much a quality demand issue as a supply one.

One way you can make sure you have the chips you need is to partner with an electronic component distributor like us. We specialise in the procurement and delivery of electronic components and parts for a wide variety of industries.

Call: +1 973-579-8100

Email:sales@Lantekcorp.com