The shortage of components, and therefore their high cost, is hitting the industry hard, and this situation is expected to continue until 2023. With the emergence of new technologies and new products, the pressure is also growing and there is more demand than supply.
The unavailability of raw materials and adversities in the commercial circuits are considered two major problems in the organization of post-pandemic work. As a result, there is an almost daily change in prices and product delivery times.
Considering the technological evolution, it is known that semiconductors are considered to be “the heart” of thousands of products, since they are responsible for performing important functions. It is also semiconductors that, due to their importance and demand, have been affected. It is estimated, in fact, that the lack of semiconductors could severely affect supply chains and limit the production of electronic equipment. These components are the main materials in short supply in the electronics industry.
As supply lines become more constrained, the price of components and international shipping will rise, as well as longer lead times and last-minute delivery delays.
IoT applications, in particular, continue to grow and innovate through sensors and wireless communication, similarly increasing the demand for large amounts of electronic components.
The causes of the global shortage of components
When the COVID-19 pandemic began, people were forced to work and stay at home, so there was a considerable increase in demand for electronic products (computers, tablets, smartphones, etc.) that could be an asset, particularly for remote work. However, the supply was not enough to cover the demand for these materials and the production lines were becoming outdated. This resulted in a slowdown in production.
In addition, manufacturers were affected by a series of events that disrupted supply, namely the disagreements between the US and China. In China, the trade war contributed to a slowdown in the pace of economic and industrial production growth, which was already declining. Many american companies have shifted supply chains to other parts of Asia, bringing fears that the trade war would lead to an economic ‘decoupling’ between the US and China.
These conditions continue to worsen, and there are also greater challenges from reduced air capacity and slowing down ports in Europe and the US, resulting in even more delays and higher prices for shipping by forwarders.
Like other industries, Digital Signage companies have felt this shortage of chips as well as rising prices.
So, the main problems of Digital Signage end up being the large displays and the semiconductors, responsible for the reproduction of multimedia contents in the displays.
Therefore, PARTTEAM & OEMKIOSKS recommends planning ahead, seeking, if necessary, alternative solutions that are viable. The important thing is that there is transparency between companies and their customers and partners.
Although semiconductor manufacturers are now catching up and meeting the needs of demand, this is a slow process that involves building new manufacturing facilities and scaling up production.
In fact, although chipmakers are already investing in new factories, these may take years to build, and semiconductor supply will continue to be restricted in the short term.
Related Article: The impact of COVID-19 on RAW material prices and availability
Given the difficult scenario of component shortages, the solution may involve:
- Place orders in advance;
- Maintain a resilient supply chain;
- Ensure better stock planning;
- Develop more cohesive relationships with suppliers (this communication should reduce problems navigating allocated market conditions).
Besides, it is important to track indicators such as capital investment, stock indices and growth projections for the semiconductor industry so that organizations can stay up to date on this issue and industry developments in general.
PARTTEAM & OEMKIOSKS is closely monitoring the situation with the suppliers of these components and with its partners, and is quick to react when significant changes are felt. This way, we try to make our customers feel as little impact as possible.