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Rough waters ahead! Do you have a trusted partner to help you navigate?

January, 2021

The ongoing COVID-19 pandemic is continuing to have a negative impact on the electronic component and bare PCB industry. Spectra-Tech has been working very closely with our supply chain to continually monitor the current market conditions and better prepare ourselves and our customers for the year ahead. Unfortunately, the news we are receiving is less than positive.

One major vendor commented “The global semiconductor supply chain is struggling as it has never struggled in the past”. Another leading industry distributer used the term “triage” when describing how manufacturers would prioritize and handle component allocations.

 

Below is a list of things that have already changed for 2021 and their impact:

• Due to high-demand, raw materials have limited availability. This has resulted in price increases on both bare PCB boards and, in particular, the semiconductor industry.

• For PCB’s, copper foil prices are expected to continue to rise due to increasing demand in bare boards and electric vehicle batteries where copper foil is also used. Copper Clad Laminates (CCL) and pre-preg availability is worsening due to accidents in two major Chinese epoxy resin companies.

• Epoxy resin availability has been reduced and prices have increased by as much as 35%. Raw copper has increased over 25% in the last six months.

• Many leading companies in the semiconductor industry have reported constraints in materials, packaging, test resources, and assembly. As a result, companies such as NXP, Microchip, Silicon Labs, and ST Micro have all announced price increases for 2021.

• Manufacturers are changing their cancellation policies AND revising commercial terms.

• Lead times are being stretched out as the high-demand materials mentioned above are split between many global powerhouses.

• Global trade restrictions have and will continue to have a negative impact on transportation and logistics.

• The tariff exemption on 2 & 4-layer boards expired on 12/31/2020. This may or may not be extended, however, at this point, there is no concrete information that this will happen.

As you have just read, we are experiencing rough waters and it appears the worst is yet to come. The 2020 buzzwords “new normal” and “unprecedented times” were often referenced, but many companies did not, and have not yet, adjusted their buying practices. The messaging and communication in this blog may come across as “doom and gloom,” but we wanted to communicate the many challenges the industry is facing. An immediate call to action is in order.

During 2020, when many Electronic Manufacturing Service providers were late with deliveries or worse, completely shut down due to poor supply chain management, Spectra-Tech continued to satisfy the needs of our partners. Our leveraged buying power and real-time inventory feeds with all major distributors has continued to allow us to stay ahead of many of the industry constraints to assure we can better service our customer’s needs. In the year ahead, now more than ever, companies need to fully understand the impact of the constantly changing market and work closely with a trusted partner to minimize cost impacts and disruptions within the supply chain.

For additional flexibility and assurance of supply chain, Spectra-Tech’s in-house stocking programs allow us to assist you in capturing sales during unforeseen spikes that traditional forecasting cannot predict. We can stock finished assemblies in safety stock or Kanban programs to ship to you immediately. We then adjust inventory and production scheduling to replenish, so you don’t miss a beat.

As you are reviewing your requirements for 2021 and beyond, you should consider Spectra-Tech Manufacturing to be your one stop Electronics Manufacturing Services provider for printed circuit board assemblies and wire harness/cable assemblies. Our 22 years of experience and dedicated staff can help you to navigate the current waters with success.

 

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