Front End | Electronic Components Supply Network
completely off the associations charting. This crazy and wholly unsustainable bookings surge is likely to herald a return to the supply problems we had to contend with at the end of the COVID pandemic.
Extending lead times = more order cover needed
All inventory control systems refl ect increases in manufacturer lead-times by proposing corresponding increases in both order cover and safety stock levels. Experience has proven that an effective (not necessarily super-effi cient) operational re-supply pipeline and a little more in-house inventory is a lot less expensive for customers than the alternative of constantly chasing suppliers to expedite delivery and risking the production line stops that lead to an inability to ship their products. But many customers are reacting to the current ‘panic buying’ situation by increasing their order cover on their existing (and new) suppliers way beyond what their organisation requires. In their effort to obtain supply they are also double and even triple ordering, which further skews the market, creates massive disinformation and helps no one at all. If this trend continues and is replicated globally, lead-times will quickly extend further and trigger a vicious circle that will only exacerbate global supply network problems. The ongoing massive memory demands of the hyperscale computing sector, which has already reduced availability of the high volumes of memory devices needed by the
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mobile phone and computing sectors, is forecasted to continue into 2027. On the plus side, many analysts believe that there probably still is suffi cient manufacturing capacity in the global semiconductor market to enable modest 3%-to-5% growth in the professional / industrial / automotive sectors of the global electronic components market in 2026.
In conclusion In these diffi cult times I encourage all partners in the electronic components supply network to actively and positively engage with all of their partners, both up and down their supply network. A greater focus on identifying and honestly reporting ‘real’ customer demand rather than artifi cially infl ating order books will go a long way towards mitigating current problems and minimising the exposure of all to higher levels of risk and pain.
For information
Adam Fletcher is chairman of the Electronic Components Supply Network (ecsn), a business association established in 1970 that today offers support to all organisations with an interest in electronic components throughout their entire lifecycle. He is also chairman of the International Distribution of Electronics Association (IDEA), an association of individual country electronic components associations whose objective is to arrive at and share best industry practice.
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