The Edge Factor


Posted by CGN Team


The electronics industry is having an unparalleled and acute shortage of components (resistors, capacitors, power inductors etc) these days and this is largely due to an unprecedented imbalance between the demand and the supply. The electronic components market is expected to be worth $ 376.9 by billion and is having an impressive CAGR growth of 8.4 % during the period 2015-2023 (Source: Market research report by Transparency Market Research titled “Active Electronic Components Market - Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2015 - 2023”)

Why is this shortage?

The previous year witnessed an exponential increase in unprecedented demands for smartphones, IoT devices, and wireless network infrastructures, resulting in a widespread epidemic of the electronic component shortage across all supply chains. Upward growth of other key market segments such as the automobile, consumer and industrial sectors are also contributing to this.

Other factors like supply chain disruptions, technology migration, inadequate production capacity etc can also result in product scarcity. The occurrence of these cannot be predicted accurately but their ramifications can have a huge impact on the shortage of components.

According to an Indian Brand Equity Foundation (IBEF) report the market is expected to grow to a CAGR of 29.4 percent by the end of 2020. The major industries that are driving this growth are the consumer durables segment, increased broadband penetration due to digitization, LED lighting applications, mobile handsets, high frequency applications, and driverless low voltage direct current (LVDC) operated products.

Total production of electronics hardware goods in India is estimated to reach US$ 104 billion by 2020.

How can the pitfalls of an acute shortage of components be avoided?

Immaculate planning is required to ensure that manufacturers are able to meet their product timelines and design schedules. One way is to constantly monitor the trends going around in the electronics industry. Another way is to enhance the list of approved vendors which will give a manufacturer the much-needed flexibility to procure components from alternate sources.

The manufacturer should build strong relationships with key distributors and have robust agreements in place. At the same time, they should keep an eye on preventing counterfeit or suspect components from coming into the supply chain.

It's advisable to rope in a full-service electronics service provider who is aware of the entire supply list, scope, and your project components. He can help you a great deal in preparing for such eventualities, along with their solutions. With a highly networked sourcing team and an ability to monitor diverse markets in quick time, they can provide you a turnkey solution for urgent procurement of electronic components, regardless of the prevailing market conditions.