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EDA: ByteSnap


Will supply chain issues caused by the pandemic continue to be a worry for the electronics industry, or not?


By Dunstan Power, director, ByteSnap Design


Has the change that electronics design companies went through as a result of supply chain pressures remained the same or changed again this past six months? Pressure has certainly increased over the last six months. So, 2021 is seeing sort of unprecedented supply chain issues, particularly around semiconductors. In the past, we’ve had issues around memory parts in particular, but this time around the disruption in supply chains has affected everything from raw materials right through to high tech semiconductors.


Previously, a typical lead time would have been about 12 weeks, but now lead time on some components is reported as two years, which is nonsensical, as you can’t run a business where the product you have is one that customers can’t actually buy for two years. So, what we’re seeing now is very much a seller’s market, with prices going up sharply. There’s a lot of activity in the grey market with reselling. Unfortunately, that has created a great opportunity for people who do fake or clone parts to take advantage of the situation. The main problem for companies


38 July/August 2021


trying to build products they might have been building for years is that they are fi nding they just can’t get hold of one of the two or more components so they are having to redesign the product.


Has the electronics design industry recovered from the disruptions that the pandemic brought to supply chains?


At the moment, there’s a huge amount of allocated stock, as companies are overbuying raw materials and goods to try and cover supply chain disruption. There are still massive disruptions to supply chains globally, so no, the industry is not yet recovered and it may be some time before it is. While our recent industry research has shown a lot of resilience in the UK electronics design industry, currently, supply chain issues are being felt keenly. If you had an electronics industry that was depressed rather than doing well, we wouldn’t have a problem with component suppliers, as nobody would be buying anything. So, in many ways, it’s quite a good time to be in electronics and high tech, because there’s a lot of development going on.


Components in Electronics


Are your former recovery predictions the same for the industry to get back to normal by summer 2022?


I certainly don’t have a crystal ball on this, and it takes a very, very long time for any capacity to come online. A lot of new capacity is being added, outside of South East Asia - in the US, in particular, but it could take years to get up and running. I can imagine there’s going to be disruption throughout 2022. However, I do think everyone’s hoping that by this time next year, lead times on components will have decreased and some sense of normality will start to emerge. The disruption was caused by a number of things including COVID shutdown, coupled with an increase in demand during the crisis, and more people spending money on products rather than on services. Although there were other incidents, such as factories burning down, a higher demand in goods coupled with shut down supply – both caused by COVID - were the two main factors contributing the supply chain issues.


COVID is clearly going to be around for a long time, in some form or other, and


it’s going to take years for the world to get vaccinated. There’s going to be disruption, on supply from COVID for years, but companies will learn to cope with it better and put extra capacity into their supply chains to ensure minimal disruption moving forward. In terms of demand, I would expect a decrease as the West, which is more highly vaccinated, effectively exits COVID required lockdowns and life returns more to normal. But who can say? Particularly with things like EVs replacing petrol cars and having a higher amount of electronics. That will increase demand so in essence, I expect there will still be some supply chain disruption in 2022, but I’d hope that by this time next year, there will be a bit more certainty.


Are there any supply chain processes/measures that will never return - which ones and why? I think it’d be bold to say, “things are never going to return”, and I wouldn’t go as far as that. The main issue has been the lack of stock being held in the supply chain due to Just In Time systems. That system originated with Japanese auto companies and, up until


www.cieonline.co.uk


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