The tech industry is bracing for a potential shortage of passive electronic components

nanoguy

Posts: 1,020   +14
Staff member
In brief: The tech supply chain is still coping with the perfect storm of factors that has led to jammed up ports and severe bottlenecks in the flow of raw materials and components needed to build products with electronics inside. Production slowdowns in China and other Asian countries due to energy restrictions and Covid-related lockdowns are already impacting suppliers of passive electronic components and chips, but some are hopeful about their ability to navigate the coming months without any major disruption.

By now it’s no secret the tech supply chain is experiencing the cascading effects of material, component, and shipping container shortages, as well as increased energy prices, Covid-related factory lockdowns, rapid shifts in environmental policies, unrelenting demand for electronics and semiconductors, the rapid digitalization of companies and public institutions around the world, and a slew of other factors.

The chip shortage has been a lot more prominent in the news over the past year, but other essential components have also been in short supply. Passive electronic components like resistors, capacitors, and inductors were already a bit hard to come by in late 2020, and the situation could get worse towards the end of this year.

Back in December, Walsin Technology reopened its manufacturing plant in Malaysia after several disruptions related to lockdowns in the region. However, just one month later, a fire hit Taiwanese’s multilayer ceramic capacitor (MLCC) factory in Dongguan, China, raising concerns around the supply of MLCCs and chip resistors.

By April, those fears had mostly been put to rest. Large passive component suppliers like Yageo, Walsin Technology, Chilisin Electronics, ABC Taiwan Electronics, and Tai-Tech Advanced Electronics were optimistic about their ability to supply passive components for their clients in the second and third quarters, with capacity utilization sitting at around 80 to 90 percent.

Fast forward to August, and renewed lockdowns in Asia were yet again threatening production of passive components. Last month, the effects of the summer restrictions came into focus as Japanese suppliers of aluminum capacitors were forced to operate at a greatly reduced capacity and lead times skyrocketed to more than six months.

Towards the end of September, China implemented an energy crunch that forced several suppliers for tech giants like Apple, Tesla, and Qualcomm to reduce or even halt production. As we enter the fourth quarter, Taiwanese companies are concerned about these disruptions, and the most optimistic among them expect to, at most, maintain the current level of production throughout the rest of the year.

For instance, Yageo believes it will be able to satisfy demand for MLCCs from automakers and other industrial clients, as its factories are located outside of the areas in China that have been subjected to power cuts. At the same time, Walsin’s progress on building a new plant in Kaohsiung, Taiwan, is well underway, which is going to aid the supply of MLCCs and chip resistors in the coming months. This is good news for automakers in particular, which have been the hardest hit industry so far.

Image credit: Andrey Metelev

However, China’s aggressive power cuts still have the potential to create problems, as we’ve seen with the massively reduced output of high-purity silicon from the region. This has sent prices through the roof compared to just a year or even a month ago, and the same happened for rare earth metals and other raw materials like copper, tin, aluminum, and cobalt, which are used for chip packaging, mounting and connecting electronic components on printed circuit boards, and more.

Some suppliers will be able to take a hit on their profit margins, but most will feel compelled to hoard components and raise prices, which in turn could lead to higher retail prices for all electronics as soon as next year. Coupled with an acute shortage of skilled workers, this could have ripple effects on several industries. The cherry on top is a shipping crisis that will make this year’s holiday shopping season a nightmare for people who don’t plan ahead or are unwilling to consider locally-produced goods.

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pcnthuziast

Posts: 1,205   +972
Class heirarchy is being reconfigured globally. That the poor we shall always have with us is something the ruling class is actively responding to along the lines of 'not if we have anything to do with it'.
 

maxxcool7421

Posts: 65   +89
Very true. And Trump would have done those things. But we got a president who can't think his way out of a popcorn bag.

Nope. Bringing up a FAB to 'full capacity with >>qualified<< production levels' takes 4 years or more. Never would have worked.

And after this magical fab was up and running the market would have recovered and demand for said chips would drop so low that paying for manufacturing chips in the US would not be economical as compared to foreign manufacturing.

There is a reason for the last 25 years it has been cheaper to build and import cpus, gpus, ASIC, FPGA..
 

Aceseven

Posts: 122   +179
Nope. Bringing up a FAB to 'full capacity with >>qualified<< production levels' takes 4 years or more. Never would have worked.

And after this magical fab was up and running the market would have recovered and demand for said chips would drop so low that paying for manufacturing chips in the US would not be economical as compared to foreign manufacturing.

There is a reason for the last 25 years it has been cheaper to build and import cpus, gpus, ASIC, FPGA..
But wouldnt just having the place up and running even if it just sold expensive chips beat not having anything? aka be prepped for the worst.
 

Crinkles

Posts: 181   +172
But wouldnt just having the place up and running even if it just sold expensive chips beat not having anything? aka be prepped for the worst.

Who's going to pay for all that prepper stuff? If leaning on Intel - they'll probably say they're doing enough, they've (somewhat) committed to spend around $100 billion for expansions now. If a backup 'safety fab' were to strip sales from company A , seems like they'd want compensation, perhaps existing manufacturers or new government consortium run it? But the US the government isn't even allowed to be in business. Everything would probably need to be split; raw materials, people, utilities, employees, new buildings, etc. This not an easy solution, it looks to be fraught with problems..duplicating huge factories is problematic. It's probably best to let existing companies work on it. [deleted a smiley face]
 

johnsonlam.hk

Posts: 12   +4
Time to fix it!

1) Bring the manufacturing of these components to America.
2) Stop instituting the worthless lockdowns! You cannot hide forever from the China Virus. It's now with us FOREVER.

You know the right way, but someone is deeply benefit from the cash rebate, that's why they won't allow this, even spent a millions to stop this.
 

yRaz

Posts: 3,900   +4,145
Who's going to pay for all that prepper stuff? If leaning on Intel - they'll probably say they're doing enough, they've (somewhat) committed to spend around $100 billion for expansions now. If a backup 'safety fab' were to strip sales from company A , seems like they'd want compensation, perhaps existing manufacturers or new government consortium run it? But the US the government isn't even allowed to be in business. Everything would probably need to be split; raw materials, people, utilities, employees, new buildings, etc. This not an easy solution, it looks to be fraught with problems..duplicating huge factories is problematic. It's probably best to let existing companies work on it. [deleted a smiley face]
Only reason stuff coming out of China is so cheap is that it's being made with what is essentially one step about slave labor. You can't be competitive with slave labor. We all turn a blind eye because we want cheap electronics but there is a real human cost associated with it. When I say only I mean the ONLY reason I supported Trump was his stance on China. It might cost more to make products in the civilized world but atleast I would have a clear conscious knowing that 99% of what I'm using wasn't made with Chinese child slave labor.
 

Theinsanegamer

Posts: 2,842   +4,492
Who's going to pay for all that prepper stuff? If leaning on Intel - they'll probably say they're doing enough, they've (somewhat) committed to spend around $100 billion for expansions now. If a backup 'safety fab' were to strip sales from company A , seems like they'd want compensation, perhaps existing manufacturers or new government consortium run it? But the US the government isn't even allowed to be in business. Everything would probably need to be split; raw materials, people, utilities, employees, new buildings, etc. This not an easy solution, it looks to be fraught with problems..duplicating huge factories is problematic. It's probably best to let existing companies work on it. [deleted a smiley face]
We waste so much money on a government level it would be trivial to fund something like this by simply cutting pork, if a single politician actually cared about the country over their nepotistic backers.
Only reason stuff coming out of China is so cheap is that it's being made with what is essentially one step about slave labor. You can't be competitive with slave labor. We all turn a blind eye because we want cheap electronics but there is a real human cost associated with it. When I say only I mean the ONLY reason I supported Trump was his stance on China. It might cost more to make products in the civilized world but atleast I would have a clear conscious knowing that 99% of what I'm using wasn't made with Chinese child slave labor.
And I mean, for all the whinging about "OMG stuff would be expensive", look at the GPU market right now....hell look at the entire market right now. Being in china isnt making anything cheap anymore. That was always a line used to undermine american employment efforts, because if they started employing americans again it might underline how underpaid people were and how much money had flowed to the top.

As a moderate let me state that Trumps own Republican party fought him on most issues during his first two years when they had the power to act and actually do something about it. They chose to keep taking corporate and foreign government lobby money instead. Biden had nothing to do with the failure of Trumps early Republican controlled Congress. The stink is too deep to even be able to smell how to crawl out of this hole as long as the same people keep getting elected. I agree that Biden has been in the thick of things for too long to introduce initiatives to fully support new industrial infrastructure to build efficient megaplants that mimic what China does.
It's a real shame. The establishment politicians will never leet the status quo change, they make WAY too much money from it.

Trump had some good ideas, and rather then filter them into being more sensible the establishment just outright refused to work with him and jammed the system up for YEARS. The only time they didnt was when they were working to screw over common americans MORE, like with repealing the pre existing condition clause or enlarging the patriot act.

Now they have the freedom to spread social contagion to cover up how bad the class issues that are destroying the country have gotten, and have driven such fervor against trump (and any future populist canidate) that any hope fo the system being fixed has been pushed another 2-3 generations back.
 
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