The electronic component shortage is likely to get worse before it gets better. As a result, electronics prices are on track to rise this year – and it may not be until late 2023 before prices begin to fall. That’s the view from Electronics Purchasing and Supply Chain News.
“Manufacturers should prepare now for future price increases, long lead times and ongoing supply chain challenges. Over the next few years, if price and lead time increases become the norm, JIT (just-in-time) manufacturing may become less and less viable. Instead, manufacturers may need to adopt a just-in-case business model, holding onto excess stocks and finished products in anticipation of long lead times and supply chain disruptions,” writes Emily Newton in EPS.
On average, electronic component prices rose by 5-40% in the past quarter, says the report. Lead times for these components have also increased. For example, microcontroller manufacturer Microchip has begun telling manufacturers to expect up to 50 weeks before order fulfilment. The company is also requiring new orders to be no cancel, no return (NCNR).
During the summer, higher price tags may cause electronics prices to increase even more later this year, writes Newton. “According to CNBC, the world’s biggest chip foundries, including TSMC, Samsung, and Intel, are considering price hikes due to inflation and the rising cost of chemicals and other raw materials.
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