What’s Driving the Global Demand for Electronic Components?

Electronics are everywhere. Look at your desk—you’re bound to find an assortment of small components like resistors or capacitors scattered throughout your table. While these components may seem insignificant to you, they’re integral to running an electronics-based business that accounts for millions of dollars in sales annually.

Engineer and electronic components

By understanding what’s driving the global demand for electronic components and which devices use them most frequently, you can better position your company as an industry leader in the electronic field.

Read this article to learn more about what’s driving the global demand for electronic components!

Impact of New Product Development

A significant contributor to the scarcity of components has been the unprecedented rise in consumer demand for different electronics. As soon as any new device or product is released, there’s an exponential increase in consumer demand—which can strain manufacturers of these products.

Additionally, after being relatively stable for many years, semiconductor manufacturers are just now trying to catch up with this sudden shift by investing and increasing production capacity. Moreover, when multiple companies compete for the same limited supply of products, franchise distributors and component manufacturers will prioritize their most valuable clients.

But what has also become clear is that nobody is immune to this.

Even a company like Apple which possesses incredible resources already has fallen victim to the effects of what they describe as ‘supply constraints’, with their market share taking an overwhelmingly publicized hit last year after announcing the delayed release of their iPhone 8.

Also, the automotive industry deals well with sporadic production shutdowns when there are shortages of microchips or other needed parts. Technological advancements within the automotive industry have greatly influenced electronic component supply, as car manufacturers are looking to innovate new electronics-based products (sensors) into their vehicles.

From wearables and intelligent meters, all the way to innovative cement – every product contains some form of electronics.

Safeguarding Your Supply Chain

So, the question is then: what should OEMs and EMS providers be doing to safeguard their supply chains and ensure they always have enough of the parts they need when they need them? 

Suppose you’re an OEM who has chosen to outsource your entire end-to-end electronics manufacturing process. In that case, the responsibility falls squarely on your partner’s shoulders to manage any supply issues for you. They’ll already have well-established relationships with distributors and robust supply agreements in place so that you can access necessary levels of stock at all times.

In this age of component scarcity, it will also be more critical than ever to ensure that suspect or counterfeit components are kept out of the supply chain. Your EMS provider will have strict processes – from painstakingly selecting and auditing their suppliers to creating and managing a reference database (and thoroughly inspecting all products upon arrival).

One way top-notch providers can distinguish themselves is by insisting on a two-step inspection and verification process – one performed by the component supplier before shipping them; and another completed after they arrive at the EMS provider.

It may seem unnecessary, but we urge you to do your part too:

  • Respond quickly if there are any pricing issues or production lead times.
  • Ask for input from your engineers about possible alternatives whenever you need new parts.
  • Share your demand forecast as early as possible.

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