How the Component Shortage Can Affect Holiday Shopping

December was the busiest shopping season of the year, and the electronic component shortage that ran through 2018 threatened to make some popular electronics harder to find on store shelves.

MLCCs Stayed the Tightest Part

Multilayer ceramic capacitors, or MLCCs, remained among the hardest parts to get in a wider passive component shortage. Depending on type and application, MLCC prices were up 35 to 45% from the year before, Supply Chain Connect reported in July 2018, and supply was expected to stay constrained for the rest of the year.

In October, Murata Manufacturing’s chief executive, Tsuneo Murata, told Reuters he expected the shortage of the tiny ceramic parts to last another two years, and the company said some automotive customers were waiting as long as four or five months for orders. A product missing a single capacitor cannot ship, so long waits for MLCCs could mean fewer finished devices in stores.

Demand Took Off Last Holiday Season

The shortage was already under way during the 2017 holidays. That October, EE Times reported that tight supplies of capacitors and resistors were expected to last into mid-2018. Demand kept outrunning production capacity instead, and supply stayed tight through 2018.

Phones and cars pulled on the same supply. An iPhone X used about 1,000 MLCCs, against 300 to 400 in earlier smartphones, and a conventional car used about 3,000 MLCCs while an electric vehicle used about 30,000, Supply Chain Connect reported.

Cars kept adding electronics. Features for self-driving vehicles, driver assistance (ADAS), vehicle-to-vehicle communications, on-board safety, convenience and the environment, along with continued interest in electric vehicles, kept lifting the market for automotive electronic systems, according to IC Insights.

The largest buyers set the pace. MLCC makers were favoring the smallest case sizes used in high-volume products, while the larger sizes common in industrial designs faced shortages or long lead times, Supply Chain Connect reported. With supply still trailing demand, companies without that buying power were left wondering whether they could fill their own orders.

Where the Shortage Stood in December

Suppliers were adding capacity. Murata had added about 10% a year for a decade and planned at least another 10% for the coming year, Reuters reported. Others held back: some parts suppliers, burned badly before, were wary of adding capacity, The Wall Street Journal reported in August. Some makers raised prices as well, Kemet among them, Supply Chain Connect reported.

Demand was not easing either. IC Insights forecast in November that sales of automotive electronic systems would grow 7% in 2018 and 6.3% in 2019, the fastest growth in both years among the six major end uses for semiconductors.

So lead times would stay long for now, and OEMs that had to keep building had one more reason to weigh a domestic manufacturer.

Don’t Wait It Out

The shortage would not last forever, but waiting it out put production at risk. Staying current on component supply, and making supply decisions early, gave OEMs a better chance to keep building. Kodiak runs SMT and through-hole assembly in Austin. When an MLCC on a build is scarce, Kodiak warns the customer early, then works to find an approved substitute part.