Plan now to avoid production losses in 2021

In this article Rutronik’s vice president North America, Sean Sisson explores the market forces shaping supply and demand through 2021 and beyond.

For 2021, three industry sectors which will become growth drivers are 5G, automotive (especially in e-mobility) and servers. Requirements for performance, capacity and service life are increasing at the same rate as IIoT, cloud computing, edge and artificial intelligence.

To successfully overcome the global economic crisis, companies need to focus on and plan for the long term. Rutronik recommends ordering resources required for the entire 2021 production year as soon as possible. Long delivery times of 20-plus weeks (possibly longer for large orders) can make or break a company’s survival.

Due to the partial shortage of resources and components, prices are expected to rise. This introduces the risk of accepting supposed bargains from dubious suppliers, especially if they also promise shorter delivery times. Constructive cooperation creates a way out of this tense market situation, with Rutronik offering customers economic and technical support.

Positive development, triggered by expected growth, is creating challenges, especially in Europe.

China is working on new infrastructure across the country, including 5G, e-mobility, EV charging (with high power charging stations), high-speed trains and server farms for artificial and edge intelligence. Accordingly, components produced in China are being used for its own market. In addition, the US ban on SMIC is the reason other foundries are seeing so much demand.

Growth markets are accessing similar, if not the same, components and resources. For example, 10μF, 1206, MLCCs overlap in the automotive and 5G sectors. High-performance servers require 22μF capacitors which are also relevant for automotive electronics.

Delivery bottlenecks are already occurring at the beginning of the production chain. The problem relates to the worldwide lockdowns that severely restricted production in 2020. In addition, the raw materials for the production of these components have a limited shelf life before they degrade.

Manufacturers have been facing discontinuations resulting from mergers and acquisitions: not just since the 2020 crisis. Rutronik is working to establish constructive cooperation with global manufacturers to ensure customers are supplied without interruption. Thus, if a discontinuation occurs, production can be guaranteed with equivalent alternatives.

In summary: demand for high, ultrahigh and AEC-Q MLCCs is rising; there are long delivery times for new technologies and materials such as SiC, GaN, polymers, nanocrystalline ferrites and carbon components; prevent line stops with forward-looking resource planning.