As we approach the end of 2024, electronic component shortages continue to pose significant challenges. These shortages are driven by global tensions, trade policies, and environmental regulations that are impacting supply chains across the electronics industry. We provide an overview of the key issues and explain why this means you should secure PCB components now for your upcoming projects.
Ongoing Global Tensions and Trade Policies
Global conflicts and shifting trade policies are severely affecting access to critical raw materials and electronic components. Some key issues include:
- Geopolitical Conflicts: Regions like the Democratic Republic of the Congo, a key source of cobalt used in batteries, are experiencing instability. This has led to a 15% reduction in cobalt availability, increasing costs and delaying production timelines.
- Trade Barriers: The ongoing U.S.-China trade tensions have led to tariffs and export restrictions on critical materials for chip production. These restrictions have resulted in a 20% rise in component costs and a 30% increase in lead times, adding uncertainty to the global electronics market.
Environmental Regulations and Production Challenges
Stricter environmental regulations are putting additional pressure on the production of critical components:
- Mining Constraints: Tighter regulations on mining activities have led to a 10% reduction in global copper output, a vital material for PCBs and other electronic components. This reduction is driving up prices and extending lead times.
- Rising Production Costs: Compliance with environmental standards has increased manufacturing costs by 12%. While sustainable practices are being adopted, these changes further complicate an already fragile supply chain.
Memory Market Troubles: Extending into 2025?
Despite growing demand for high-bandwidth memory (HBM) driven by AI applications, the memory market remains volatile:
- DRAM Pressure: Oversupply and weak demand have led to a decline in DRAM spot prices, particularly for DDR4 and DDR5. This oversupply, exacerbated by releases of reball DDR5 chips by major manufacturers like Samsung, is further depressing the market.
- NAND Flash Challenges: The NAND flash market is similarly struggling, with continued price pressures due to sluggish demand in consumer electronics. Experts predict that market recovery may not occur until the first half of 2025, despite strong demand for AI applications.
Capacity and Lead-time Issues
Lead times in the electronics industry remain uncertain, with some critical updates:
- Murata Recovery: After the Anamizu plant experienced damage earlier in the year, production of chip inductors and choke coils has resumed. While lead times are stable for now, they are expected to lengthen as capacity tightens.
- Capacitor Lead-times: Lead times for multilayer ceramic capacitors (MLCCs) and tantalum capacitors have decreased slightly, but some exceptions remain, with lead times extending up to 26 weeks.
- DRAM Shortages: Investments in high-bandwidth memory (HBM) may result in DRAM shortages toward the end of 2024, making early procurement crucial for businesses relying on memory components.
Manufacturer Mergers and Acquisitions
Significant mergers and acquisitions are reshaping the electronic components market:
- Kioxia and Western Digital: While merger plans between Kioxia and Western Digital have resumed, they face opposition from SK Hynix, potentially influencing market dynamics.
- WT Electronics and Future Electronics: Taiwan’s WT Electronics recently completed a $3.8 billion acquisition of Future Electronics, further consolidating the market.
Rising Costs
The PCB market is also facing pressure as demand for copper surges and factory capacity tightens:
- Copper Prices: With copper prices at their highest in years, the cost of PCB production has significantly increased. Rising copper laminate prices are contributing to longer lead times for PCB manufacturing.
Conclusion
The landscape of electronic component shortages in 2024 remains complex, with global tensions, environmental regulations, and evolving market dynamics shaping the industry. By adopting proactive strategies such as supplier diversification, advanced inventory management and technological integration, businesses can secure their supply chains and minimise risks.
Now is the time to act: Secure PCB Components early to ensure your supply lines are unaffected by any external factors or issues.
- Long-term Planning: Companies should secure PCB components by placing orders now for Q4 2024 and 2025 to ensure continuous supply and avoid disruptions.
- Order Management Flexibility: Extending lead times through flexible order management can secure vital PCB components before the market tightens.
