After starting in the first quarter of 2017, the difficulties in obtaining ceramic capacitors are getting worse. Experts believe the crisis will extend to 2020. You can act on several levels to counter the shortage: improve customer-supplier relations, adopt virtuous behaviour and, above all, seriously consider moving to other technology.
Of previously unknown intensity since 2000, the current shortage of components especially impacts power components, memory, sensors and ceramic capacitors (MLCC). Subcontractors suffer all the more from the shortage as it corresponds to a period when orders are coming in.
What caused this electronic component shortage?
At a macro level, the sudden and unforeseen growth in the global component market (+ 20%) caused an imbalance between supply and demand. The automotive industry and smartphones seem to be the main sectors at the origin of the increase in demand. But that’s not the end of the story: we’re seeing a strong increase in new applications for which the quantity of materials and the electronic parts built into them is not well identified: the internet of things, connected vehicles, drones, wind farms, the Smart Grid, etc.
In fact, every link in the supply chain also has its share of responsibility: some component manufacturers have multiplied obsolescence notices, and some customers issue double orders and over-stock.
Why didn’t we see it coming? Opportunistic purchasing behaviour is partly a result of a lack of reliable sufficiently long term forecasts by electronic equipment manufacturers. On the other side, traditional subcontracting customers provide ever decreasing purchase forecasts, while public order-givers provide none at all.
The especially critical situation for MLCCs (Multi-Layer Ceramic Capacitors)
The general context is amplified when we look at the specific case of ceramic capacitors:
• An electric vehicle has four times more ceramic capacitors than an internal combustion engine vehicle, and the inclusion of true digital tablets in all new vehicles does nothing to help;
• The iPhone X has twice as many MLCCs as the iPhone 6S, and the expansion of Chinese smartphone manufacturers has increased demand even more.
Analysts are blaming the shortage of ceramic capacitors on 3 main causes:
• The general increase in the demand for components;
• The conversion of Japanese manufacturer production to products expected by the automotive, industry and smartphone markets, which generate better margins, to the detriment of the general market;
• The difficulty in quickly increasing production capacity to meet demand: delivery lead times for equipment needed to manufacture MLCCs are from 8 to 12 months.
How to manage this severe ceramic capacitor shortage
As OEMs, the decisions you make today will be decisive in the survival of your business. This type of crisis may force you for struggle for many years to reach your production targets if you don’t seriously deal with the situation, and if you don’t adapt to technological evolution!
Here are a few tips:
• Don’t artificially boost your orders;
• A new generation of passive components provides alternatives to ceramic capacitors; you will find MLCC equivalents and, when applicable, can adapt your designs accordingly;
• Take into account your suppliers’ technological and production road maps;
• Diversify your sources: find new suppliers other than those you have already referenced;
• Flee components that depend on a single supply source;
• To keep good visibility, improve collaboration between designers, buyers and the supply chain. Good Customer-Supplier relations based on mutual understanding, communication at all levels and a certain degree of transparency can prevent many issues. The creation of solid partnerships will contribute to better securing future supplies.
How Proto-Electronics is dealing with the crisis
Our engineers have developed a new feature to deal with the global shortage by helping you when passive components are out of stock.
Feel free to test our solution, and if you have any questions, you can contact our customer department as usual from Monday to Friday and from 9 am to 7 pm by email, phone (+33 3 67 10 48 87) or live chat.