Navigating the Hot Topic of Electronic Component Shortages in 2024

May 6, 2024
29I3gP4

The electronic components industry has been centered around a recurring hot topic in recent years: component shortages. While some signs of stabilization are expected in 2023, it is clear that in 2024 the industry is still grappling with challenges that continue to impact production lines around the world. At DRex Electronics, we are closely monitoring these developments to help our customers in industries such as telecommunications, automotive, aerospace, and consumer electronics respond to the changing situation.

 

Current Industry Overview

Key Problem

Supply Chain Disruptions: The COVID-19 pandemic has triggered widespread supply chain disruptions, and despite various strategies to increase supply chain resiliency in 2022 and 2023, these challenges remain. Ports are still not fully operational, logistics problems remain and geopolitical tensions are complicating international trade.

Rising Demand: Demand for electronic components is mainly driven by emerging technologies such as 5G, Internet of Things (IoT) and electric vehicles (EV). These technological advancements are putting supply chains under pressure, with original equipment manufacturers (OEMs) and contract manufacturers (CMs) all competing for the same critical components.

Geopolitical Tensions: The U.S.-China trade dispute and concerns about Taiwan’s semiconductor industry have affected the supply of key components. Restrictions on certain technologies also limit global access to critical components.

 

Significant Impact

Price Rise: Component prices rise significantly as demand exceeds supply. Semiconductor chip manufacturers have been forced to raise prices due to rising costs, affecting the entire supply chain.

Extended Lead Times: Lead times for components like FPGAs and microprocessors have increased dramatically. In some cases, deliveries have been delayed for months, severely impacting production schedules.

Counterfeit Components: Desperate OEMs turn to unauthorized dealers, leading to a surge in counterfeit components. This requires enhanced quality assurance and procurement reliability.

DALL·E-2024-05-06-15.14.34-A-5G-telecommunications-network-hub-glowing-with-interconnected-server-racks-and-advanced-antennas-highlighting-the-surge-in-demand-for-communication

DRex Electronics: Your strategic sourcing partner

Amid this uncertainty, DRex Electronics stands out as a reliable partner, ensuring a stable supply of electronic components through a globally integrated supply chain. Here’s how we’re helping our partners navigate volatile situations:

Quality Assurance
We prioritize sourcing from ISO 9001 certified manufacturers and authorized dealers to ensure component authenticity and reliability. This reduces the risk of counterfeit components getting into the product.

Strategic Partnership
Through close partnerships with industry giants such as Intel, AMD, Nvidia, Xilinx, Altera and Texas Instruments, we provide a wide range of components for advanced electronic applications.

Inventory Management
Our strategic inventory management approach ensures supply of high-demand components such as FPGAs, SoCs and microprocessors, reducing lead times and mitigating supply chain disruptions.

 

Industry Prospects in 2024

Trends to Watch

  1. Supply Chain Diversification: The company will continue to diversify its supply chain and leverage a multi-region strategy to increase resiliency.
  2. Onshore and Nearshoring: More OEMs will explore manufacturing near their key markets, especially in North America and Europe, to reduce dependence on Asia.
  3. Emergence of New Suppliers: New suppliers from regions such as Southeast Asia and Eastern Europe will become alternatives to traditional giants.

5R6TD2gPp

Key technologies driving demand

  1. Electric Vehicles: The adoption of electric vehicles continues to accelerate, driving demand for power electronics, lithium batteries and sensors.
  2. 5G and Future Communication Technologies: The deployment of 5G networks and preparations for 6G will promote the demand for faster and more efficient communication components.
  3. Artificial Intelligence and IoT: The AI and IoT revolution requires specialized processors, memory chips and sensors, which will see demand rise.

 

Conclusion

The electronic components industry will continue to receive attention in 2024, with stakeholders dealing with ongoing shortages and the changing geopolitical landscape. However, with strategic sourcing partners like DRex Electronics, OEMs can confidently source high-quality components.

Whether you need strategic advice on inventory management or direct access to critical components, contact us today to stay ahead of the competition.

 

Related Resources