AutomotiveComputers and Technology

Electronic parts chip and sensors shortage

Nothing has changed regarding electronic parts shortage and demand for electronic devices products needing semiconductors is not helping as its keeps increasing year on year. In 2020, worldwide chip demand increased by 19% and in 2021 the latest trends data show that we are on route for another double figure increase in demand by another 12.5% which bring the market value of chips to more than $0.5 Trillion US dollars.

This increase has been attributed to the increase of people wanting to be connected even more as lifestyle changes become the norm including working from home, reduced travel thus requiring more connection. According to Goldman Sachs, the shortage of chips and sensors has affected 169 industries and directly in the electronic and components parts we have seen lighting fixture manufacturing, electric lamp bulb and LED lighting components, small electrics, amongst others affected.

According to electronic parts search engine oemsecrets.com, searches on their platform for semiconductors and ICs have increased with numerous requests every day from companies around the world asking for parts to meet their production capacity.

6 Industries highly affected by components shortage

A lot of semiconductor chips especially computers currently don’t have any available substitute or related products, and as a result of this and if for any reason the output was to decline proportionately, the effect on the GDP would be around 1%, which is a huge figure based on the figures show above.

Below are some of the industries affected and this reasons behind the shortage in those industries.

  1. Automotive
  2. Personal Computers
  3. LED lighting
  4. Consumer electronics
  5. Wearable Devices
  6. Home Appliances

Why Is Automotive Industry the worst hit?

Back in 2011, Toyota faced a terrible disaster after the Tsunami hit both its assembly plant and Renesas. It took Toyota half a year to get back on its feet and 3 months for Renesas electronics to get back into production. Ever since that day, these two companies have created systems to ensure they never fall into the trap of stopping production due to uncontrolled variable like Covid-19 which they have done successful to the amazement of the industry that claims to have been burnt by the chip shortage mainly due to how the supply chain works. Since most automakers run on JIT approach, they have suffered a great deal as they have not proofed themselves with adequate resource planning like Toyota has been doing since 2011 when they methodically went through key semiconductors (1500) they needed and had plans in place to ensure production never grinds to a halt whilst keeping costs down. We know that when the pandemic began in early 2020, vehicle makers, figured that demand for vehicles would decline so where their orders and because they ended up cutting down on their supplies, they are now having to play catchup as other industries got hold of the capacities they needed and now when demand has gone up again for cars, parts critical to a good experience like driver assisted technologies(DATs), GPS trackingdevice connected to your phone apps, systems, infotainment systems to high-end DATs.

Other industries like the personal computers went into overdrive and this is one of the main reasons for the surge of semiconductors. In 2020, data from suppliers showed 17% increase in comparison to 2019 and this was driven by companies allowing people to work remotely and schools pushing hard to deliver their education content 100% online.

According to Carol, editor of Rangersdog.com, pet gps tracker sales went up by nearly 60% even as we saw consumers at home increasingly turn to digital on-demand services like Netflix in their homes and leisure time. More chips we needed as the desire of game consoles, headphones mainly wireless and smart watches that are used for fitness and health purposes.

The are where most demand for semiconductors was in the mobile industry with, the introduction of 5G technology. Another win for the chip industry as growth in this industry is expected to be over 20% in 2021 to reach nearly $150 Billion US just on 5G capable phones.

Conclusion

Chip shortages will most definitely affect the electronic components and OEM parts cost and the availability of the final products. However, it is good to see the industry is bullish and grow fast.

 

Article written by: electronicscomponents.co.uk editor – James May

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