Front End | Electronic Components Supply Network
to languish in the doldrums as organisations defer investment until greater market certainty returns. Many of the electronic components required by this sector are typically older, legacy devices and surprisingly are currently available at lead times around sixteen weeks, despite being produced in lower volumes and in smaller batch sizes. This could be worrying, however, as when (or if) demand returns, commercial imperatives will compel manufacturers to shift production away from these devices, since the revenue they generate is dwarfed by the returns from producing the huge volumes of components required by the mobile phone market.
Call to action
The current geopolitical situation is causing price rises for almost all electronic component types and further extending manufacturer lead-times. In a normal market scenario, the demand for electronic components is highest in Europe, North America and Japan in the fi rst half of the year transitioning to Asia in the second half of the year, a historical demand cycle that has the effect of smoothing out overall market demand. However, even a slight improvement in the global economic situation is likely to trigger a simultaneous rise in demand for electronic components
in all geographic markets (as happened at the end of the COVID lockdowns), creating a ‘demand spike’ that manufacturers cannot hope to meet. In the face of these challenges, I urge ALL organisations across the electronic components supply network to periodically review their ERP systems and when necessary, update them with the latest manufacturer lead-time data for the electronic components their organisation is likely to require in 2H’25 and into 2026. System integrators should be placing longer term (12 month) scheduled order cover with their suppliers. It is a much more stable solution than panic buying and goes a long way to ensuring continuity of supply by giving components manufacturers a valuable indication of likely future demand.
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sales@fclane.com Concluding thoughts
I can’t promise that taking the actions I’ve recommend will eliminate the risk of future component shortages and extended lead times, but they might help to avoid a repeat of the mass shortages the global electronic components market experienced in 2022/3. Further, future supply and demand imbalances may well be mitigated if all organisations in our industry participated and contributed to the collaboration and communication process that is currently gaining traction up and down the supply network. When well- managed, industry interaction offers great returns for the time invested yet adds very little to money overhead.
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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