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COVID-19 and its effect on the electronics manufacturing supply chain

Posted: 31st August 2021

COVID-19 and its effect on the electronics manufacturing supply chain The entire electronic component industry has lately been facing exceptional growth across many markets including automotive, telecommunications, 5G infrastructure, smartphones, electric vehicles, plus an ever-growing consumer electronics market of course. But with this surge in the market, what impact does this have on the supply chain?

In our last blog, COVID-19 and its effect on the electronics manufacturing industry, we looked at the impact from an engineering perspective. This time, we will focus on the supply chain side.

At the beginning of COVID-19, original equipment manufacturers (OEMs) reduced their demand and forecasts. This led to cutbacks in capacity and investment at component and raw material suppliers. From a frequency product perspective, since Q3 2020, the subsequent exceptional growth in demand has put an incredible amount of pressure on supply chains for raw materials (including crystal blanks, semiconductors and ceramic packages), final assembly and test capacity. Consequently, this has had a very significant impact on product lead times and product costs, as suppliers struggle to accelerate investment in additional capacity and labour against the backdrop of COVID-19 restrictions. Unfortunately, we have seen the excessive lead times worsen as the market has reacted to the current supply conditions.

For similar reasons, freight is taking longer to move across all industries and countries. Additionally, fewer available commercial flights and port issues are causing delays in product transfers and receipt of materials.

Another major factor that has affected product orders is the factory fire at Asahi Kasei Microsystem (AKM), one of IQD’s raw material suppliers who went up in flames in October 2020. The outbreak affected many IQD products, such as SPXOs, OCXOs and TCXOs. Despite it being ten months since the fire, AKM are yet to fully restore production, and this has forced IQD, as well as its competitors, to find alternate solutions.

IQD is fully engaged in discussions and investigating investments in securing additional capacity. Furthermore, we are initiating new supply lines where possible, to try and minimise the impact of cost increases, product allocations and extended lead times for customers. We have made and will continue to make a significant investment in inventory to try and maintain reliable supply.

For an update on parts that are affected by supply chain disruptions or for urgent support on how to best secure supply for your project, please contact our sales team.