Tag: Raw materials

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Electronic Components

Price hikes in the electronics industry

More price increases announced

Chip prices will continue to increase, despite some component lead times improving. This is due to inflation, labour shortages, and scarcity of raw materials, among other things.

Intel was the latest company to announce price increases, which it will supposedly introduce at the end of this year. It joins firms including TSMC, Samsung, and Texas Instruments in raising the cost of its products.

As has become very clear, the pandemic contributed to supply shortages the world over. However, there have also been issues with labour shortages, material sourcing and the increasing costs of everything.

Reverse psychology?

Processors are increasing in price at Intel and other companies. It has been suggested that this actually may be due to oversupply. If the cost of the components is increased vendors are more likely to buy the stock before it occurs. As they stock up, Intel’s supply levels will decrease. This may lead to shortages in the long-term.

These increases are due to be introduced at the end of 2022, but people are suspicious it may happen sooner. If prices are instead increased in autumn, they can be discounted for events like Black Friday and Christmas.

War and price

Inflation is causing the price of materials to increase also, which inevitably would be passed down the supply chain. The price of raw materials was always going to increase over time, but the conflict in Ukraine has exacerbated this. Gases like neon, which is used in semiconductor production, is almost wholly (70%) sourced by Ukraine. Similarly, 40% of krypton gas is also from Ukraine, which is in conflict with Russia.

Aside from these materials, the price of lithium, cobalt and nickel, used for EV batteries, is also rising. The EV industry already had price hikes when the pandemic began, when the chip shortage took its toll. Now, following the 15% increase in 2021, automakers are facing another potential price increase.

Expansion

One of the largest players in the industry, TSMC, announced its price increases would take place in 2023. Despite not being as severe as first speculated, the 6% price increase will be enough that customers will notice.

Aside from the cost of raw materials, electricity and labour expenses, TSMC is also expanding. To fund this expansion it is increasing the price of fabrication.

Could we have stopped it?

Years before the pandemic, as far back as 2017, there were signs that a shortage was on its way. New technologies were mounting and other geopolitical difficulties were afoot. Even then, the best way to avoid this would have been to redesign the tech and improve the fabrication process. This would have been a time-consuming and expensive process, and whenever it happened it would result in delays and losses.

Conclusion

The amalgamation of all these factors will lead to lasting price increases for electronic components. Even if these prices are discounted in peak times like Black Friday or Christmas, suppliers will still have to deal with inflation and material shortages.

The expansion plans of some of the industry’s big players, and the cost of the tech to sustain them will also lead to price increases. How long the effects of these will last, we’ll have to wait and see.

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Electronic Components

What are GaN and SiC?

What are GaN and SiC?

Silicon will eventually go out of fashion, and companies are currently heavily investing in finding its protégé. Gallium Nitride (GaN) and Silicon Carbide (SiC) are two semiconductors that are marked as being possible replacements.

Compound semiconductors

Both materials contain more than one element, so they are given the name compound semiconductors. They are also both wide bandgap semiconductors, which means they are more durable and capable of higher performance than their predecessor Silicon (Si).

Could they replace Silicon?

SiC and GaN both have some properties that are superior to Si, and they’re more durable when it comes to higher voltages.

The bandgap of GaN is 3.2eV and SiC has a bandgap of 3.4eV, compared to Si which has a bandgap of only 1.1eV. This gives the two compounds an advantage but would be a downside when it comes to lower voltages.

Again, both GaN and SiC have a greater breakdown field strength than the current semiconductor staple, ten times better than Si. Electron mobility of the two materials, however, is drastically different from each other and from Silicon.

Main advantages of GaN

GaN can be grown by spraying a gaseous raw material onto a substrate, and one such substrate is silicon. This bypasses the need for any specialist manufacturing equipment being produced as the technology is already in place to produce Si.

The electron mobility of GaN is higher than both SiC and Si and can be manufactured at a lower cost than Si, and so produces transistors and integrated circuits with a faster switching speed and lower resistance.

There is always a downside, though, and GaN’s is the low thermal conductivity. GaN can only reach around 60% of SiC’s thermal conductivity which, although still excellent, could end up being a problem for designers.

Is SiC better?

As we’ve just mentioned, SiC has a higher thermal conductivity than its counterpart, which means it would outlast GaN at a higher heat.

SiC also has more versatility than GaN in what type of semiconductor it can become. The doping of SiC can be performed with phosphorous or nitrogen for an N-type semiconductor, or aluminium for a P-type semiconductor.

SiC is considered to be superior in terms of material quality progress, and the wafers have been produced to a bigger size than that of GaN. SiC on SiC wafers beat GaN on SiC wafers in terms of cost too.

SiC is mainly used for Schottky diodes and FET or MOSFET transistors to make converters, inverters, power supplies, battery chargers and motor control systems.

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Electronic Components

How Can Companies Combat the Electronic Components Shortage?

Electronic Components Shortage?

How Can Companies Combat the Electronic Components Shortage?

Electronic components shortages show no signs of abating, fuelled by growing demand for electronics, limited availability of raw materials, soaring manufacturing prices, and lingering COVID-19 disruptions.

Shortages have hindered manufacturers since 2018, but things came to a head in 2020 with the COVID-19 pandemic disrupting supply chains.

The pandemic created an imbalance in supply chains, with demand for many components, from chips to actives and passives, outstripping supply. The question is, how can companies combat the electronic components shortage?

Partner with a distributor 

Electronic component distributors occupy a unique position in the supply chain, representing the manufacturer and customer. Distributors work for both parties to move components up and down the supply chain.

The benefit of working with a distributor is that your company will be in the mix for components not available through traditional channels.

For example, we specialize in the procurement and delivery of electronic components and parts for a wide variety of industries from the world’s leading manufacturers. We can help you beat allocation challenges and long lead times.

Diversify suppliers

Diversity is the key to strengthening your supply chain. You need multiple sources for electronic components. It’s a good idea to have retail and distribution channels, so you have several routes should one supplier channel fail.

Diversity can also be found in geography. A supplier in your home country is essential, but so are suppliers close to the manufacturing source.  

Expand storage capabilities 

If your company can expand its storage capabilities for essential components, this is the simplest way to combat shortages. By storing large quantities of components, you create a supply separate from the chain.

The risk with expanding storage is procuring more components than you need, resulting in oversupply problems that incur heavy losses.  

Source equivalent components  

When components are unavailable, you can specify equivalents that meet your performance and financial specifications. Equivalent components perform the same job as your original components, but another company makes them.

A simple example is Samsung, which uses its own Exynos chip or a QUALCOMM chip in the same smartphone model depending on where the smartphone is sold.

Visibility and proactive planning 

Supply chains are complex beasts that require visibility to manage. Monthly stock updates are no longer sufficient; to combat shortages, you need real-time supplier updates and an inventory catalog to keep track of supply.

You can proactively plan component shipments and tap into price dips and new inventory when you have visibility over total supply.

Predict obsolescence

When electronic components become obsolete, manufacturers who haven’t planned for it scramble to find components that will work. This inevitably creates bottlenecks in the supply chain as many big companies compete for orders.

Obsolescence is predictable because all electronic components have a run date, and manufacturers update lifespans with inventory cataloging. You can avoid shortages and soaring prices for rare parts by predicting obsolescence.  

Have shortages? Speak to us

We’re here to help you deal with electronic component shortages. Contact us here.

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component shortage Electronic Components

Causes of IC Shortage

silicon semiconductors

There’s a serious shortage of integrated circuits affecting every corner of the electronics’ world. Discrete circuits, optoelectronics and sensors are also experiencing shortages, putting pressure on supply chains from top to bottom.

What are the causes of IC shortages? This article will explore the main causes, so that you can understand what’s going on.

Reshaped demand

The Coronavirus pandemic reshaped demand for semiconductors, shifting automotive demand to device demand (car plants shut down, while demand for electronic devices soared with stay at home and remote working).

Now that automotive production is ramping back up, there aren’t enough ICs to go around, causing a shortage across all industry sectors.

The pandemic also caused short-term, unplanned plant shutdowns and labor shortages, reducing the number of ICs manufactured.

Logistics

The logistics industry is still recovering from COVID-induced shutdowns and travel restrictions. While air and sea freight is running at good capacity, road transport is proving difficult across borders, creating supply constraints.

In 2020, air cargo capacity saw a 20% decline. In 2021, it’s back to normal, but you still have the problem of moving components on the ground.

In the USA, there is also a serious driver shortage underway that is affecting everything from electronic components to supermarket shelves.

Lead times

The amount of time that passes between ordering semiconductors and taking delivery has increased to record levels. In July 2021, it surpassed 20 weeks, the highest wait time since the start of the year and eight days longer than June.

Longer lead times can be caused by a variety of factors, but in this case it’s caused by factories running at capacity with no room for acceleration. Labor shortages and problems getting hold of materials are exasperating the problem.

Raw materials

A shortage of raw materials is causing big problems for semiconductor manufacturers, who can’t get the materials they need to meet demand. Shortages of raw materials and high raw material prices are combining to squeeze production.

The soaring price of raw materials is also increasing the prices of ICs, with some components seeing a yearly price increase up to 40%. These costs will eventually be passed on to the consumer who will have to stomach higher prices.

Stockpiling

Whether we’re talking about the communications, automotive or consumer electronics sector, IC stockpiling has exploded. The world’s biggest manufacturers have stockpiled huge quantities of components for themselves.

This hoarding of components by nervous manufacturers eager to secure inventory takes a significant volume of components off the open market, squeezes the supply chain, and gives the biggest players an upper hand over everyone else.   

Trade sanctions

For all their bad press, China makes a lot of chips – around a billion a day. Their biggest chipmaker, SMIC, was hit by US sanctions in late 2020, eliminating SMIC chips from the US market. You’d think this would mean more chips for the rest of the world, but China recoiled and went defensive, keeping most of the chips for themselves.

US sanctions twisted the global supply chain out of shape, creating volatility in an industry that was already in turmoil from the pandemic.