The Electronics Market Growth & Supply Chain Issues
When the global pandemic hit in March last year, manufacturers in the Far East had to reduce staff numbers or close completely. Further-more, part requirements dropped significantly in the first quarter of 2020, due to lockdowns and decreases in consumer sales.
Availability of many parts that would normally be exported from China dramatically dropped due to localized lockdowns and logistics issues. Wuhan, where the virus outbreak occurred was a known home of auto plants for major automotive companies and the production of parts was severely impacted, the total loss of revenue is still unknown.
Longer-lead Times and Price Increases
Demand for electronic components soon began to grow again due to the shift in home/study working devices and consumer buying patterns returning, retailers adapting to the new-norm of COVID-19, and whilst they could not open their doors to shoppers, click and collect options were made available. Requirement for networking, communication, and data processing applications dramatically increasing to.
However, since then, stock levels have struggled to regain pace with demand, and we have seen an increase in supplier lead times for many components. Continuous demand for devices to support remote working, and ongoing COVID-19 restrictions within the workplace, that permit less staff onsite. Combined, with the ongoing post-Brexit border controls and increased checks, are placing significant strain on the supply chain.
Electronic Component Growth
The electronics market saw significant growth during the last two quarters of 2020, and the ability to work remotely combined with development of new and emerging technologies has put it in even better stead for 2021. This increase in remote devices has led to strong growth in CPUs, NAND flash and DRAM, the semiconductor market growing 7.3% in 2020. Memory being the best performing device category, due to increased server build and network requirements. This year we will continue to see developments in Artificial Intelligence (AI), Virtual Reality (VR), Digital Medical Equipment, Speech and Gesture recognition.
All in all, 2020 was a world-wind of a year for the electronics industry, first we saw uncertainty, then increase in demand, and now a struggle to keep up with orders. It is important now more than ever that supply chains are managed well, additional planning to protect project timelines and finances is essential. As we continue to see developments in emerging technologies its important that focus on parts that will be required to manufacture them are prioritised to ensure we do not see future shortages.