February, 2019 Continued from page 65
tional internal combustion engines use between 2,000 and 3,000 capacitors. As automakers pack more electronics into vehi- cles to enhance the connectivity and func- tionality that consumers demand, the num- ber of capacitors per car will continue to rise. Sales of autonomous and electric vehi-
cles (EVs) will also drive growing demand for electronic components. Compared to conven- tional internal combustion engine vehicles, EVs require a significantly higher number of capacitors — as many as 22,000 MLCCs per vehicle. Advances in EV technology and self- driving cars will only multiply this demand. Electrification is not limited to automobiles either. Electric trucks, trains, and other on- road and off-road vehicles all require elec- tronic components. Compared to the automotive
and smartphone sectors, demand for electronic components from the IoT is small. That may be about to change. Gartner predicts the IoT market will grow by more than 100 percent in the next two years as sensors and connec- tivity are added to household appli- ances, packaging, medical devices, industrial equipment, and many other analog products. Of course, the IoT will also contribute to the demand from the smartphone and transportation sectors.
Supply Opportunities Spell Risks
The market forces described
above would put enough strain on elec- tronic component suppliers. The smartphone, automotive, and cloud and datacenter sectors, however, are driving demand for a wide variety of technologies. They are fueling growth in next-generation components, with potentially higher profit margins. Not surprisingly, many suppliers are shift- ing production away from mature tech- nologies to support demand for these newer devices. MLCCs typify this trend. Many
suppliers have increased production of new, small-case-size parts in favor of older, large-case-size devices. As a result, existing MLCC product lines are not only seeing supply shortages, but price increases and longer lead times as well. Further complicating things on
the supply side are a flurry of macro- economic factors. Foremost among them is the massive wave of merger and acquisition (M&A) activity that
The top 20 semiconductor suppliers now account for 74 percent of the global chip market.
swept through the semiconductor industry over the past three years. The result is that the top 20 semicon- ductor suppliers now account for 74 percent of the global chip market, up from 64 percent in 2015. As the number of suppliers in
the electronic components market narrowed, so did the availability of parts. Further, the M&A trend led to a consolidation in capital invest- ments among component suppliers, leaving them unable to meet increas- ing demand even with new capacity coming online. Another factor is the dynamic
nature of today’s global economy, which has traditionally increased competitive demand for the raw materials on which electronics sup- pliers rely. OEMs that withstood
www.us-tech.com
Page 67 Understanding (and Surviving) the Components Shortage
sharp price increases in 2017 have already experienced price volatility throughout 2018. The ongoing trade issues between the United States and China have only contributed to this volatility in metals prices. China itself represents another factor
in supply. One of the world’s major electron- ics manufacturing regions, the country con- tinues to struggle with labor shortages that make electronic components more expensive to produce, while also reducing their avail- ability. Shorter supply chains can reduce some of these landed costs. But China is not the only manufacturing center that is seeing increasing labor rates.
Complicating the component shortage is a wave of
mergers and acquisitions, which have strongly affected the semiconductor industry.
Survival Tips OEMs cannot afford to simply wait for
Continued on page 74 WINNER Best Product Americas
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