The global electronics industry has been seriously affected by the shortage of electronic components. The most surprising thing is that this crisis will extend beyond 2023. Multiple factors, such as high demand, lack of production capacity, and global supply problems, have caused this situation.
Companies are improvising as they go. It is more frequent to see how companies have delays in production, increased costs, and loss of income and customers. Despite this, the demand for electronic products is growing, but effective and reliable solutions are needed.
Sectors such as telecommunications, computing, and automotive are the most affected by this crisis. This publication will delve into the factors that have triggered this situation. In addition, we will propose what actions you can take to mitigate the impact of component shortages in 2023.
What is expected regarding the shortage of electronic components in the year 2023?
The Covid-19 pandemic contributed to the development of this crisis. The suppliers of electronic components need help to satisfy the existing demand. The increased demand for electronic equipment exerts constant pressure on the supply chain. In addition, the availability of parts is less and less.
Low production capacity is another critical element that contributes to shortages. The electronic component manufacturer needs capital, technology, and infrastructure to guarantee the quality of the product.
Many industries have been hit with component shortages. However, they have several key factors that prevent them from meeting customer requirements:
Delivery times have been seriously affected by the low availability of electrical components. It limits companies’ response capacity to meet their customers’ needs.
The law of supply and demand establishes market prices. As there is little availability, the cost of the component is increasing. This factor impacts the profit margins of companies.
Lost revenue and customers
Companies lose customer credibility and reputation when they cannot fulfill orders. It generates dissatisfaction in the client and, in some cases, the termination of commercial relations with the company.
The black market has fueled the shortage of counterfeit electronic components. Using counterfeit semiconductors is a hazard because they risk the product’s quality and safety.
Purchasing counterfeit components is a severe drawback. The Semiconductor Industry Association (SIA) estimates that the semiconductor industry loses $7.5 million annually due to counterfeit parts.
How companies can anticipate and prepare for the shortage of electronic components in the year 2023
The lack of parts during the pandemic, such as silicon wafers, is high. For this reason, we consider it essential that companies adopt a strategic vision to reduce the impact of component shortages. Faced with this situation, we present some actions that you can replicate in your company:
Strengthen business relationships with suppliers of electronic components
This measure prioritizes and guarantees the dispatch of your company’s raw material over others. Business relationships will help you ensure components’ availability when needed.
Depending on one provider
Supplier diversification minimizes supply chain disruptions. In this way, waiting times for a dispatch are reduced, and the continuity of production is guaranteed.
Get a stock of the most critical components
Knowing the impact of the shortage of electrical components, it would be favorable to have a stock of essential elements for production. It will allow you to make adequate estimates to balance inventory and the company’s needs.
Counterfeit monitoring and detection
Companies must have technology and processes capable of verifying the authenticity of electronic components. In the same way, you can have the support of other companies that guarantee the veracity of these pieces.
Set project priorities
The current situation has forced companies to prepare for adaptation to the shortage of components. According to the initial phases of your project, focus on what you need. Certain companies have yet to be aware of this situation, and the components they had in stock became obsolete.
It is essential to have quality raw materials and electronic components. Out of desperation, many companies turn to unreliable providers. Here is the importance of having a component marketer that offers all the guarantees for the continuity of production.
Marketing services apply strategies to identify solutions to a problem. The impact of the shortage of components has contributed to many companies hiring the services of a marketer. These companies can help perform the following functions:
- Regular shipments in a short period
- Obtention of scarce electronic components
- Safeguard a stable supply of electrical components
- Increasing the possibility of accessing international trade in electronic components
- Adaptation of your marketing strategy to the needs of today’s world
One of the most promising markets is the manufacturing of electric cars in Mexico. A marketing service company will guarantee you high-quality electronic components. For example, I am getting high-performance lithium batteries. It, in turn, ensures product quality and reduces manufacturing costs.
Other approaches to mitigate the impact of the shortage of electronic components
We have seen ways to reduce the absence of electronic semiconductors. However, if we want to be more efficient, it is necessary to create solutions focused on innovation and shortage of components. In this sense, it is required to evaluate certain aspects:
- Automation can be the starting point to take advantage of resources and reduce the waste of electronic components
- Identify which aspects limit the production process to use the components in the correct way
- Acquire components that best suit your production process.
- Work with suppliers to get viable component options.
According to estimates by the Gartner Consulting firm, global semiconductor revenues will decrease by 3.6% in 2023. However, something indicates that the shortage of semiconductors and chips will continue. If you know the trend in your industry, it will be easier to make decisions and maximize your financial resources.
How to mitigate the shortage of electronic components
The need for more electronic components will continue to challenge the industrial sector. However, the right approach will allow for finding opportunities amid the crisis to mitigate risks. These actions will help companies not stop their production and continue advancing in a competitive environment.
At AMN, we care so that our clients are never deprived of raw materials. Our business alliances have supplied the Mexican electronics industry with proven quality components.