What has changed? In short, everything - but nothing. The world is still adapting and evolving to find the ‘new normal’ leaving many asking, ‘will we ever go back to the old normal?’.
Unfortunately, the feared ‘second wave’ appears to be gaining speed in most parts of the world, whilst other countries such as India, Brazil, Argentina, and the United States are struggling to contain the initial wave that is having such devastating consequences.
Capacity and lead-time issues
ST Microelectronics are continuing to struggle to meet heavy demand of their STM32 microcontrollers, with lead-times continuing to extend and stock becoming harder to secure. Any demand for STM32’s should be secured within the supply chain for the remainder of 2020, Q1 2021 and into Q2.
Lead-time increases and shipping delays are expected from most manufacturers with a combination of scenarios fueling this. Manufacturing facilities are operating under capacity due to COVID-19 secure ways of working, freight is taking longer to move due to less readily available commercial flights, 5G demand is rapidly exhausting stock from the marketplace and OEM’s are nervous of over commitment on stock with markets still unstable and future demand unknown.
Linear Technology lead-times are still fluctuating, but now look to be more than 20 weeks across most ranges. This is due to raw materials being consumed in medical applications.
TE Connectivity are struggling still with allocation on relays (52 weeks), this has been ongoing for at least 12 months, and is showing no signs of improvement yet.
There are reports that Vishay IHLP inductors are on 70 weeks plus, forward visibility of demand is crucial, this has not improved throughout Q3 and forward ordering is critical.
Altera lead-times have slowly increased, and are now around 16 weeks, this is due to higher demand in the server market.
Texas Instruments are preparing to use Arrow Electronics as their sole global distribution partner; the formal end of the current franchise agreements with other distributors will be 30th December 2020. Macnica and TED will be supporting Japan, and Digikey and Mouser will continue to support high service needs for immediate low volume purchases.
NVIDIA are looking to buy Cambridge based ARM for a reported $40 billion to expand on ARM’s R&D with cutting edge NVIDIA AI technology.
The Maxim and ADI merger is likely to take up to 18 months to see an impact on the supply chain, but it should be noted now that many ranges will be likely consideration for obsolescence to avoid duplication between the two technologies.
Global airfreight is down 12.6% from last year, with surcharges having been in place for most of this year. Rail and Sea options are becoming more popular to keep cargo moving. With peak season once again on the horizon, further disruption is expected with an increase or return of surcharges likely to be implemented from Q4.
Chinese New Year falls on 12th February 2021, with most factories on a two-week shut down for the 15 days of celebrations for the year of the Ox that will be held. As the holiday is early in the calendar year, any PCB’s should be ordered well in advance of this, as early as possible in Q4 to ensure on time delivery from factories in Asia.
Peak Season surcharges are still in place, but there is hope these can be removed from August 2021. Many manufacturers and distributors are heavily reliant upon using commercial airliners to transport goods; without these, cargo and freight space is at a premium with logistics companies
Pricing is still volatile, with planned manufacturer increases observed, as well as increases due to constrained supply of product, capacity, and raw materials.
COVID-19 is still fueling this instability and it is hard to tell how long this will go on for. Manufacturer price increases should continue to be expected, especially as they attempt to re-coup any lost sales throughout the pandemic, but the effects could go on for many months after it is contained.
Oil pricing has fluctuated over the last three months, with lows quickly recovering following the upward curve and is $41.73 per barrel at time of writing.
Gold pricing has risen, and peaked briefly at the start of August 2020 ($2067.15 per ounce) but has since fallen to $1864.30 ounce; this is still higher than seen in July 2020.
Silver is usually stable but has been subject to increases since the start of August 2020, with the peak price £21.66 ounce, and at time of writing this had fallen to £18.64 per ounce.
Copper pricing today is $3.09 per ounce, an increase from July 2020 but not as sharp as the March to July 2020 increases.
Steel pricing is sharply increasing – now $580 tonne for hot-rolled steel - but whether this is sustainable remains to be seen, with some predicting prices will fall again as early as November 2020.