The shortage of electronic components has been a significant global problem for some time, affecting supply since 2018.
Numerous crises, particularly the Kovid-19 epidemic, coupled with changes in consumer demand, have exacerbated the problem, leading to paralysis in many areas, from the technology industry to the automotive industry.
In this article, we take a closer look at the reasons behind the global shortage of electronic components, which helps us to provide some industry insights into a problem that affects all of us.
Lockdown
The lockdowns that have occurred around the world in response to the epidemic have created a huge demand for consumer technology. People who could not leave their homes for the foreseeable future looked to buy new technology-based entertainment solutions, ranging from televisions to new game consoles.
As a growing number of businesses have completely switched to remote and hybrid work models, a significant portion of the workforce has had to turn their homes into offices, buying new computers, headsets and other items. The industry struggled to hold on by creating a huge pressure on the supply of silicon chips, which continues to this day.
The automotive industry
The automotive industry has been particularly affected by the global shortage of electrical components. Auto production was suspended across the board in 2020 due to the epidemic, which caused carmakers to drastically reduce their orders for Chinese-made computer chips. Those suppliers take turns selling those chips to other buyers, especially in the technology industry, temporarily allaying supply chain concerns.
As automated production has resumed, efforts have been made to return to normal as the economy opens, and semiconductor supply problems have once again come to the fore. Previous suppliers have in many cases been unable to supply the required amount of chips, if any. The impact on the automotive industry has been pronounced, with Ford saying it has stopped production at one of its German plants in an effort to recover.
Similarly, Audi has announced a slowdown in production as a result of the shortage of semiconductors. The company will have to keep 10,000 workers in Farlow as a result of the need to reduce production of 10,000 cars every quarter.
What can business do?
While the effects of these deficits are inevitable in some cases, there are steps that businesses can take to reduce these risks. Relationships with suppliers must be built and maintained, as communication continues. Many providers are offering customer programs of choice for customers who are committed to a long-term relationship.
In some cases, this may mean signing longer contracts, however, these longer contracts may help provide more stability for future delivery. The different parts from which it originates can also help; It is dangerous to have all your eggs in one basket in one market, showing such instability is dangerous, and can have devastating effects on different companies.
Read more:
https://www.instituteforgovernment.org.uk/publication/supply-chains/causes
