Electronics Today features CCL article on component shortages
30 Jun 2021
CCL's article has been featured on the cover of this month's Electronics Today Magazine here.
Read our article below:
As shortages drive demand for components in automotive and other sectors, is now a good time to sell your overstock for a profit?
Could you be sitting on a gold mine of surplus semiconductors? If you are ignoring a mounting pile of obsolete electronic components, you might be missing an opportunity to generate substantial revenue. Across many industries, particularly the automotive sector, purchasing departments are finding the value of their excess components has surged.
What has led to a component shortage in the automotive sector?
There have been several causes for today’s component shortages. After an initial slowdown in car production in early 2020 due to Covid-19, a sharp rise in demand for consumer electronic goods followed. The subsequent purchasing power of technology giants such as Apple and Samsung increased, pushing many car manufacturers further down the queue for procuring semiconductors. The shortage situation worsened in March due to the fire at the Renesas factory in Japan, one of the largest global electronic component suppliers for the automotive sector, causing several further months of delays.
The rise of electronic vehicles has squeezed demand further
This year alone, global sales of battery electric vehicles (BEV) and other EVs are expected to rise by about 70 per cent, further increasing demand for electronic components. Electronics now account for around 40 per cent of the total cost of a new car. As new technologies, such as Bluetooth connectivity, driver assistance, navigation, and hybrid electric systems advance, the need for electronic components for vehicles will continue to grow.
The impact on car manufacturing
From the beginning of this year, many of the world’s largest car manufacturers have been forced to suspend operations for one or more vehicles, and sometimes shut down altogether. Global automakers Ford Motor Co., Toyota Motor Corp. and Volkswagen AG are among those impacted by semiconductor shortages. Analysts are now forecasting that electronic component shortages could cost the global automotive industry as much as $110 billion in revenue in 2021. In Europe, German semiconductor manufacturer Infineon Technologies AG has estimated that as many as 2.5 million cars will not be produced in the first half of this year due to ongoing supply chain shortages. And in Asia, Japan's leading car manufacturers, Honda Motor and Nissan Motor, anticipate selling a combined 250,000 fewer cars this financial year due to the semiconductor crisis.
An opportunity for OEM and EMS companies
Although a challenging time for the electronics industry, the semiconductor shortage does bring some good news to OEMs and EMS companies with excess electronic components to sell. The current surge in demand has significantly driven up the price for many components, offering a rare opportunity for purchasing departments to recover their original investment, and in many cases make an additional profit.
Adam Chinery, Managing Director at Computer Components Ltd (CCL), provider of excess electronic component inventory solutions worldwide, commented:
“Today’s surge in demand for electronic components offers a golden opportunity for OEMs and EMS companies holding excess inventory to sell surplus components while prices are high. Many of our customers are taking advantage of the current rise in value to recoup their original investment. We are currently seeing customers receiving more than 10 times the value for their excess than they would have achieved back in the Autumn of last year.”
No time to sell your surplus inventory? CCL can help.
Dealing with excess stock can be headache, especially if you are trying to achieve a good market price. This is where a specialist excess inventory management service can help by saving you time, freeing up warehouse space and enabling you to reap the benefits of today’s buoyant market for semiconductors. CCL offers an easy-to-use service to thousands of OEM and EMS companies globally. Established in 1997, CCL has 24 years of experience in the electronics industry and helps companies achieve the maximum return for their excess electronic inventory.
Contact CCL to find out more here.
How can OEMs adapt to component shortages?
Analysts at research and advisory company Gartner are recommending OEMs dependent on semiconductors, either directly or indirectly, consider taking the following steps:
- Plan further ahead – extend your supply chain visibility beyond electronic component suppliers to the silicon level to foresee delays further into the future.
- Expand your network of suppliers – try to broaden your supplier base for sourcing components so that you can spread your risk.
- Build up partnerships to guarantee supply – grow relationships with similar entities, chip foundries and/or OSAT players and join forces to improve your negotiating power.
- Monitor leading indicators – Track indicators such as capital investments, inventory index and semiconductor industry revenue growth projections to predict overall trends.