Ensuring a secure supply chain

Velocity Electronics’ president and CEO, Kristofor Kelly

Velocity Electronics’ president and CEO, Kristofor Kelly, asks business partners to communicate openly and collaboratively as the industry adapts to a changing world

 As we approach 2023, what are the major challenges facing our industry? Will lead times contract? Will inflation continue its upward climb? What about obsolescence as OCMs shift into advanced semiconductor technology? How will the world evaluate its relationship with China?

Lead times in certain verticals, particularly automotive, remain constrained. Our industrial business partners have slowed their demand in 4Q22, and consumer chip prices have returned to pre-pandemic levels. I would expect this trend to continue into 1Q23.

I would expect the world’s governing bodies to continue to combat inflation with increased interest rates. Most experts believe inflation will cool by the end of 2023.

Why are semiconductors becoming obsolete faster than in the past? This is partly due to the natural process of semiconductor manufacturers shifting into newer and more cost-efficient alternatives. However, I believe continuous mergers and acquisitions within the semiconductor manufacturing market over the last decade are accelerating this process. These new ‘super’ companies are streamlining certain product portfolios to make room for newer more advanced models.

The United States’ most recent export restrictions against China is our company’s most pressing initiative entering 2023. The export restrictions are unprecedented. Companies will need to re-tool how they operate in and with China. Agility in managing the new restrictions will be paramount to ensuring a secure supply chain. I would encourage each of our internal and external business partners to communicate openly with each other in a collaborative spirit as we adapt to this ever-changing world in which we all share.