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There is currently a global innovation boom from consumer electronics to automotive manufacturing with no signs of slowing. In fact, recent reports indicate the need for electronic components is growing exponentially.

As a PCBA contract manufacturer, nearly all of the boards Dorigo Systems builds require resistors and capacitors. For years, these components were relatively easy to source.  However, over the past year, the passive market has been experiencing shortages on a scale never before seen in our industry.  

In simplest terms, this is a straightforward case of supply-and-demand. On the supply side, component manufacturers have realized that profit margins are much more favourable on smaller case sizes, and so are producing fewer of the larger sizes.  

At the same time, the demand for these components is significantly greater than ever before.  Demand from the automobile industry has greatly increased, as the amount of electronic components in cars has skyrocketed.  The smart-home industry has exploded, which also calls for resistors and capacitors. 

Dorigo Systems is competing with global powerhouses such as Volkswagen, Samsung and Apple every day for a very limited number of parts. In addition to resistors and capacitors, Flash/Memory ICs are also proving problematic to acquire.  Vendors are holding pricing on these sort of components for only 24 to 72 hours, and we are no longer allowed to schedule out these parts.

The EPS News article, “Electronic Component Shortages: No End in Sighthttps://epsnews.com/2018/05/23/electronic-component-shortages/ is clearly stating the severity of the electronic components shortages. Currently, Dorigo’s suppliers and distributors are telling us that these market constraints are expected to last for another 12-18 months.

With such a high level of uncertainty in the market, what can you do to be proactive?

The team at Dorigo Systems is making the following recommendations to our customers and partners that will help to mitigate the effects of these shortages on your product's cost and on-time delivery.

  • When we receive your purchase order, we will scan the BOM for any parts that are difficult to obtain.  We will then work with you to approve alternatives and find more readily available substitutes.
  • We can also work with you to secure parts to cover 1-2 years of production.  Planning this far in advance is, regrettably, the only way we can be assured the parts will be in-hand when we need them.  We can then purchase these parts from you on an as-needed basis.
  • On any new designs, we strongly recommend you design boards with smaller case sizes (0201, 0402 or 0603) instead of 0805 or 1206.  This should greatly cut down on the need to purchase parts so far in advance, and will also ensure you are not paying a premium for the most in-demand parts in the industry.

We understand that this is challenging situation for everyone involved.  However, it is our belief that, through advance planning and design flexibility, we can work together to ensure your business is not significantly affected by the industry-wide issue of passive market allocation.