Excess: The Common Aftermath of Electronic Component Shortages

Excess: The Common Aftermath of Electronic Component Shortages

The electronic component market is known to experience supply and demand imbalances and continues to undergo significant strain as a result from shortages, such as the recent passive components shortage. Historically, after component shortages, the supply chain cycle is known to encounter excess inventory challenges. In today’s market, pockets of excess electronic parts are expected to create oversupply burdens for global OEM and EMS companies.

With technology advancing at an exponential rate, the demand for various types of electronic components is reaching an all-time high. As newer chip versions develop and older types become discontinued, it brings serious obsolescence and EOL (end-of-life) challenges for many manufacturers. To meet the demand, end-product manufacturers experiencing shortages tend to procure larger-than-needed quantities of hard-to-find components to secure enough stock for future use, as these parts may not be readily available otherwise. Once the shortage cycle is over, OEM and EMS companies may find themselves with a sizable number of excess components.

During the 2018 component shortage, several MLCC manufacturers announced their discontinuation of certain product, claiming the product had reached an EOL phase. To mention few, in October 2018, MLCC manufacturer Walsin Technology announced its discontinuation of large case-sized Y5V MLCC product with final shipments in November 2018. Murata also revealed their last order announcement for their MLCC GR Series and ZRA Series set for March 2019. While some MLCCs still remain in high demand, other MLCCs are forecasted to have shorter lead times by the end of 2019, appearing as an early indicator of some MLCC product falling into the excess category.

As the electronic component market looks for a clearer direction during the current oversupply market condition, it’s well worth it for OEM and EMS companies to assess their existing inventory levels identifying possible challenges brought by excess inventory. Excess parts can become a burden to a company’s bottom line if the electronics market condition continues to move in an unfavorable direction. Proactive planning for excess inventory solutions by obtaining current market information can help minimize any future potential challenges associated with excess inventory.

Serving as an experienced solutions provider for the global electronics industry, Advanced MP Technology, joining America II, offers customized and analytics-based plans for OEM, EMS and OCM companies in need of mitigating their excess parts. By closely evaluating and assessing each customer’s specific situation, our Inventory Market Intelligence program provides a quick and analytical approach to maximize profitability for our customers. Advanced MP Technology’s experienced team has the resources and service capabilities in place to provide our business partners with optimal solutions for inventory asset management.

For over 40 years, Advanced MP Technology has maintained a reputation of being a leading distributor of electronic components and provider of supply-chain solutions, providing successful inventory management programs to support customers maximizing profit.

Contact our Inventory Market Intelligence Experts today!