Supply chain issues a top concern across most industry sectors

Supply chain issues, often caused by semiconductor shortages, remain the top concern for most industrial sectors despite talk of a slowdown in the pandemic, according to a report from electronic components and semiconductors distributor Avnet Silica.

The report, based on a study conducted by Avnet consultants after examining 30,111 phone calls across sectors between January 2018 and April 2022, indicates that supply chain issues will account for more than 60% of airtime in 2022 in telephone calls in all branches. compared to just 47% and 37% in 2021 and 2020 respectively.

The bulk of supply chain problems stem from semiconductor shortages as demand continues to grow and outstrip supply. This contrasts with the popular belief that lockdowns instituted due to the pandemic were to blame for such problems.

“It (the pandemic) has certainly put a lot of pressure on the system with ports and factories shutting down during the lockdown. But if it were really just the pandemic and lockdowns, businesses would have largely recovered by now. But that’s not the case,” said Mat Ransom, director of supply chain programs at Avnet EMEA.

“Today, more and more electronic components are packed into so many of our products, from our clothes to our cars. And the rate at which consumer demand is growing doesn’t compare so easily to the growth in production of electronic components like semiconductors and microcontrollers,” Ransom said.

Chip manufacturers are only slowly expanding their capacities

The reason demand is outstripping supply, Ransom says, is that the relatively low annual capital investment in semiconductor production is holding back capacity expansion. The approximate value of the investment is about 15% of demand over the next four years at major chipmakers, the report shows.

“Ramping up production and delivery of these essential components can be a slow process. There are plans to bring several new semiconductor fabs online over the next five to six years, but in the meantime demand continues to grow,” Ransom said.

A separate report by market research firm International Data Corporation (IDC) expects semiconductor shortages to persist in the first half of 2022 as the industry builds inventories to normal levels.

The 20 industries included in the Avnet Silica report include consumer electronics, automotive, aerospace and defense, telecom, fashion, retail, conglomerate, beverage and agriculture.

The report also says that supply chain issues were raised in 100% of earnings calls amid rising semiconductor shortages this year in 12 different sectors, including automotive, electronic components, computer hardware and consumer technology. Other factors plaguing companies in these sectors are inflation and talent issues.