-
- News
- Books
Featured Books
- smt007 Magazine
Latest Issues
Current IssueComing to Terms With AI
In this issue, we examine the profound effect artificial intelligence and machine learning are having on manufacturing and business processes. We follow technology, innovation, and money as automation becomes the new key indicator of growth in our industry.
Box Build
One trend is to add box build and final assembly to your product offering. In this issue, we explore the opportunities and risks of adding system assembly to your service portfolio.
IPC APEX EXPO 2024 Pre-show
This month’s issue devotes its pages to a comprehensive preview of the IPC APEX EXPO 2024 event. Whether your role is technical or business, if you're new-to-the-industry or seasoned veteran, you'll find value throughout this program.
- Articles
- Columns
Search Console
- Links
- Events
||| MENU - smt007 Magazine
Finally, Some Good News About Supply Chain
September 26, 2022 | Nolan Johnson, I-Connect007Estimated reading time: 3 minutes
In this follow-up to his recent interview on the Q4 2022 outlook, Shawn DuBravac, IPC chief economist, provides an update on the incoming supply chain for EMS providers. Naturally, this conversation centers on component availability, where the supply crunch is easing, and by how much. It doesn’t seem we’ll be seeing any across-the-board relief for some time to come, but Shawn’s higher-altitude perspective brings insight to your daily planning.
Nolan Johnson: Shawn, while things may be easing up in the component supply chain, it’s still spotty.
Shawn DuBravac: Yes. There are still broad shortages in the market. We aren’t seeing a rapid reduction in lead times, but there are variables that point in the direction of healthier supply chains. For example, we’ve seen costs come down quite significantly, even falling rapidly, though they also rose rapidly. Shipping costs, for example, for a 40-foot container from Shanghai to Los Angeles are off about 32% over the last year. They shot up significantly, and now we’re seeing them come back down.
Johnson: I’m guessing that 32% decrease is not back to what it once was.
DuBravac: Correct. We’re not back to pre-pandemic levels yet, but we are getting there and that will continue. We have data through the end of June for motor vehicle assemblies, and this tells us about domestic production in the United States. In the last three months, we’ve had an annualized rate for auto production of over 10 million units. We’re not back to pre-pandemic levels, but we’re about a million to a million-and-a-half units higher than the beginning of the year. At the low point in September 2021, we assembled just about seven and a half million units on an annualized basis.
We are 30% up from September 2021, and there are several contributing factors. We saw in the most recent GDP report—which wasn’t very good—that both consumer demand for goods, and business investment and equipment, were all down. Anytime you see demand easing, it provides some breathing room for the supply chain to recover. Now, it isn’t necessarily great that demand is waning—these are two sides of the same coin. There is risk, but these factors contribute to the improvement of supply chain dynamics.
Johnson: How does this relate to semiconductors? If the supply chain is easing, that’s good. But I have recently spoken with a number of EMS companies and each one has shared some flavor of, “We can get most of the parts, but all it takes is one part that we can’t get and we’re stuck; the availability is not consistent.” What insight does IPC have about component availability?
DuBravac: You’re right, all it takes is one part to be out of stock or one part to have an inaccurate delivery date. EMS providers have been dealing with that for two years now. They place an order, think they have an accurate delivery date, and it ends up delayed two, four, eight weeks, or more. It will take some time for that to heal and for us to see those types of delays become less severe.
I know everyone wonders about the timing, but you must see it as a process—something that will continue through 2022. Will we see these issues next year? Definitely, in some instances. Certain components will still have low stock availability. There will be prolonged lead times. Some companies will try to work around that. For example, we hear of OEMs that have engineered out some of these components when they can.
Johnson: What other coping strategies have you heard about?
DuBravac: It’s many of the normal ones you would expect. I mentioned engineering out components that are in short supply, but it’s also stockpiling, or ordering based on anticipated needs, not just what you need today. Some companies have at times been able to find other sources as well.
However, we don’t get the sense there has been a lot of stockpiling. We don’t get the sense that there is excess inventory sitting out there which could come back to haunt the industry later. If you have excess inventory and your company decides to get rid of that, then you could see excess availability and prices dropping. In this environment, we probably won’t see that. Certainly, companies that were holding onto any excess inventory would have been selling it into the market when prices were elevated, so I think most people were holding stock for things they wanted and needed to use.
To read this entire conversation, which appeared in the September 2022 issue of SMT007 Magazine, click here.
Suggested Items
Real Time with… IPC APEX EXPO 2024: My Role as a Technology Solutions Director
05/02/2024 | Real Time with...IPC APEX EXPOPeter Tranitz, senior director of technology solutions at IPC, shares insights into his role as the design initiative lead. He details his advocacy work, industry support, and the responsibilities of the design initiative committee. The conversation also covers the revamping of standards, the IPC Design Competition, and the implementation of design rules in software tools.
HQ NextPCB of HQ Electronics Debut on the International Stage for Electronics Manufacture at IPC APEX 2024
05/01/2024 | PRNewswireHQ NextPCB of HQ Electronics, a leading Chinese-based multilayer PCB manufacturer and assembly house showcased its industrial prowess on the international stage for the first time at the IPC APEX Expo 2024.
IPC's Vision for Empowering PCB Design Engineers
04/30/2024 | Robert Erickson, IPCAs architects of innovation, printed circuit board designers are tasked with translating increasingly complex concepts into tangible designs that power our modern world. IPC provides the necessary community, standards framework, and education to prepare these pioneers as they explore the boundaries of what’s possible, equipping engineers with the knowledge, skills, and resources required to thrive in an increasingly dynamic field.
North American EMS Industry Down 4% in March
04/29/2024 | IPCIPC announced the March 2024 findings from its North American Electronics Manufacturing Services (EMS) Statistical Program. The book-to-bill ratio stands at 1.31.
Real Time with… IPC APEX EXPO 2024: A Global Presence in PCB Manufacturing
04/29/2024 | Real Time with...IPC APEX EXPORob DiGiovanni, VP of sales for the Americas at STARTEAM Global, discusses the company's global presence in PCB manufacturing. As he explains, the firm operates facilities across Europe, Asia, and North America, specializing in serving contract manufacturers in the automotive and medical industries. They emphasize quality and meeting OEM standards, focusing on offshore supply and non-Chinese factories in the North American market. The company has grown through acquisitions and rebranding to offer multiple products.