07.06.2021 – 12:58
The global chip shortfall that disrupts the car industry and threatens the supply of consumer technology products will last at least another year, has warned one of the world’s largest electronics contract manufacturers.
The forecast by Flex, the world’s third-largest such maker, is one of the most grim, for a crisis that is forcing car and consumer electronics groups to rethink their global supply chains.
A rapid jump in vehicle sales combined with a boom driven by blockages on game consoles, laptops and televisions has left chip makers around the world overwhelmed by sharp surge in demand.
Singapore-based Flex has more than 100 sites in 30 countries and manufactures hardware and electronics for companies including Ford, British home appliance designer Dyson, UK electronics retailer Ocado and US computer and printer manufacturer HP. His position in the supply chain makes him a big buyer of chips.
Lynn Torrel, chief supply and supply chain officer at Flex, said manufacturers relying on semiconductors have postponed their forecasts when the shortage will end.
“With such a strong demand, the expectation is from the middle of the end of 2022 depending on the goods. “Some expect the shortages to continue until 2023.” she said.
The forecast by Flex, which lies at the heart of supply chains for the automotive, medical devices and consumer electronics industries, follows a six-month slump in which shortages have forced car companies to reinstate production and current staff.
The issue has led many companies to adopt a more secure approach to resources, such as chip payments in advance. Tesla, the American manufacturer of electric cars, has fully explored the purchase of a chip factory.
Electronics makers in Asia have also recently warned that the shortage of chips was beginning to spread to TVs, smartphones and home appliances, with the situation exacerbated through aggregation by Chinese groups hit by sanctions.
Problems with the supply chain pandemic have been exacerbated by the blockade of the Suez Canal in March, extremely cold weather in Texas, and a recent fire at a large chip factory in Japan.
Revathi Advaithi, Flex chief executive, said the rift caused by the pandemic was pushing its multinational customers to take a much more serious look at restructuring their supply chains than the trade war between the US and China ever. That could include making them more regional, she added.
“Most companies will not make a regionalization decision on tariffs alone.” she said. “They know it may be a short-term thing, but things like the pandemic and the escalation of transportation costs that affect the total cost of ownership drive regionalization.”
New York-based Flex, which recorded $ 24.2 billion in revenue last year and has manufacturing facilities split evenly between Europe, Asia and America, has been forced to discontinue production for a wide range of electronics products.
Chip manufacturers are investing in new production capacity but it may take up to two years to set up complex facilities.
Torrel said the picture could be improved if Covid-19 vaccinations cause consumer spending to shift to services and people spend less money on consumer electronics as the world heals from the pandemic.
However, she warned that seemingly minor problems, such as a recent two-week blockage in Malaysia, where many semiconductor suppliers are located, could have a major effect on supply chains already under pressure.
Translated and adapted for Konica.al by Financial Times