Purchasing ‘super-cycle’

Future Electronics’ corporate VP, Karim Yasmine

Future Electronics’ corporate VP, Karim Yasmine reflects on the factors that drove the industry to record levels and what to expect in the next phase of the market’s ‘super-cycle’.

As opposed to prior market allocations, this round has lasted for four to five quarters, with strong indications it will remain until July 2022. 2021 was driven by a perfect storm of challenges including: record breaking weather patterns; massive transportation/freight issues; heavily reduced air travel; fab fires; and many more curve balls impacting supply chain recovery. 

This is on top of unplanned and unforecast demand impacting major wafer foundries, OSATs and raw materials. Naturally, Covid-19 also impacted consumer spending patterns and manufacturing sites across the world.

Heading into 2022, many of the challenges remain. Manufacturers have enforced long-term visibility and long-term commitments. This will allow them to make long-term commitments and reserve capacity with their foundries. 

Major foundries have launched multiple rounds of price increases to the manufacturing community which have been passed to distribution and the customer base. It is also important to note that flexibility on backlog will be minimal in 2022. 

Shipping delays and freight costs are expected to remain at all-time highs throughout the year.

We recommend purchasing executives show long-term visibility with accurate requirements for the short-term so limited product output is directed to actual usage, driving end products to end consumers.