22nd August 2022
It’s been a tumultuous few years across the board for many sectors, both globally and domestically, and the electronic component market is no exception. Here, we take a look at some of the factors having an impact on the industry in 2022, and how businesses using electrical components can try to navigate this challenging period.
Covid-19’s impact on the electronic component market
The global pandemic has caused havoc in the sector in many different ways, exacerbating and highlighting some issues that were already a ticking time bomb, in combination with a huge rise in demand that is still ongoing. Most industries have been affected to some degree, but two of the most pressured have been automotive and consumer electronics.
Demand for new cars fell with pandemic lockdowns, at the same time as more people were spending on electronic devices for their homes. When new car sales started picking up again, along with sustained demand for a wide variety of electronic products, the shortages that occurred are yet to be resolved in many cases. Limited availability of the minerals needed to manufacture some components has meant that supply can’t possibly keep up with the demand for semiconductors, amongst other essential parts.
This has led to an increase in lead times for both raw materials and components themselves, along with production backlogs that add more delay to the supply chain.
Brexit’s impact on the electronic component market
Leaving the politics out of it, the ongoing impact of Brexit, in combination with the other factors covered in this article, is continuing to have an effect on the electrical components industry. With some uncertainty still in play concerning shipments travelling to or via Northern Ireland, along with the increase in red tape and paperwork required for imports and exports from other countries, both inside and outside the EU, issues such as delays and cost increases are commonplace for manufacturers, suppliers and retailers to contend with.
Russia-Ukraine war impact on the electronic component industry
Both Russia and Ukraine have been playing leading roles in the process for fabricating chips used in electronic components in recent times, purely because of the raw materials that they provide. The sale of neon gas from Ukraine and palladium provided by Russia have understandably reduced or stopped altogether, whether from ceased production or a refusal to deal with Russia while the military action continues. This has added to supply problems and delays globally, with alternative countries who also provide these essential materials not ready yet to scale up their operations to adequately fill the gap.
The conflict has also had a huge impact on oil and global energy prices, which has a knock-on impact in many areas of the electronic components industry, including the cost of manufacturing and production itself, along with the costs of getting components to where they need to go.
Cost-of-living crisis’ impact on the electronic component industry
The current cost-of-living crisis looks to be in its early stages, with many more squeezes predicted over the next months and possibly years. The impact that this will have is yet to be fully realised, but with the costs of essentials increasing, consumers and businesses will simply have less to spend on things like electronic devices and new vehicles.
Common sense might tell us that a drop in demand due to the cost-of-living crisis may actually help ease some of the shortages and other problems that high demand has exacerbated in recent years, but that will be of little solace to businesses needing to survive in the meantime.
While the various factors above are not the only challenges to the electronic components industry in 2022, the fact that these issues are all still ongoing means that the full impact is unpredictable, especially when it comes to light at the end of the tunnel. Instead of dealing with just one market problem at once, the current circumstances mean that businesses which need a regular supply of electronic components to function are dealing with a combination of serious issues all at the same time.
How EP4 can help
As specialists in sourcing hard-to-find electronic components, including many obsolete parts, we’ve been working hard to help our customers meet the challenges they are currently experiencing. We help increase efficiency, lower supply chain costs and our excellent relationships, built over many decades, can often give us access that isn’t available to everyone. Get in touch with us to see how we can help your business.