Last Saturday, an earthquake of magnitude 6.4 was felt in southern Taiwan. Ninety-four people lost their lives, and over five hundred people were injured in the quake. The last major earthquake in Taiwan took place in 1999, and in that instance over 2400 people lost their lives.
The 1999 earthquake was catastrophic for the component industry. Widespread power cuts went into effect, making the economy come to a complete standstill. The power cuts halted all production at chip factories, delaying shipments and eventually leading to price hikes. Following this incident, the manufacturing industry took steps to safeguard against seismic activity. Factories were moved to the northern part of the island, and some other factories expanded west onto the mainland.
Last week’s earthquake took place before the Chinese New Year, a time when production always slows down. It still caused notable damage. Affected companies include Taiwan Semiconductor Manufacturing Co., LCD panel maker Innolux, and United Microelectronics. The companies will need to analyze damage to wafers in progress, but they believe the plants will be functional within a time frame of two to three days.
Following the major earthquake that took place in 1999, Taiwan was much better prepared this time around. There will be some production delays, but there won’t be any stock shortages or price hikes.
For OEMs/ CMs that are working to meet client deadlines, shortages is not a welcome term. There are several types of shortages, and the broad term can be applied in the following way.
Most often, shortages are caused by production disruptions. A demand-based shortage occurs when the chip maker underestimates demand and produces less than what the market wants. A supply-based shortage (like this one) occurs when chip makers fail to meet targets. When chip makers mark electronic components as end-of-life or last-time-buy, it’s time to stock up. OEMs/CMs have designated last-time buyers who are responsible for predicting EOL stock.
To prevent your company from having to go through an electronic component shortage, we recommend the following steps:
1) Keep track of the electronic components being used in your build. If your build has an anticipated lifespan of ten to twenty years, this is an essential first step. As soon as items in your build are marked as end-of-life (EOL), last-time buyers should stock up on components for repair purposes.
2) Look for alternatives. Contact the chip maker directly and ask them for alternative components.
3) If the components cannot be found, you will need to turn to the open market. When you are dealing with independent distributors, it’s best to conduct a background check.
- Ask the company for sales references.
- Request high-definition pictures of the components.
- Ask to see original paperwork, including CoCs and invoices.
- Learn more about the company’s terms and conditions, including warranty information.
- Contact one, trusted independent distributor. Contacting multiple distributors will make it seem like there are multiple companies looking for the same components. This increase in demand will lead to a sudden price hike.
Are you having trouble with shortages? Let Luxe Electronics handle it. Over the course of fifteen years, we built a solid network of buyers and suppliers, allowing us to match one company’s excess with another company’s demands. We only deal with OEM excess.
Picture from CSMonitor