2023: Electronic Component Shortage Update

In recent years, one topic has continued to dominate the technology industry: the global shortage of electronic components. This has been a major challenge for businesses, preventing them from being able to build their products and increasing competition for the available parts. However, as we near the middle of 2023, what is the current situation, and what does the future have in store?

What Caused the Shortage?

There is no cause for why electronic components have been in short supply. Instead, it’s a perfect storm that began in 2021 with the global shutdown due to the COVID-19 pandemic. The lockdowns that were implemented had a significant impact on the electronics industry, and as factories ceased production, it disrupted supply chains and slowed down production.

The now infamous Suez Canal blockage in 2021 also caused major disruption around the world, having far-reaching effects in almost every industry. The ‘Great Resignation’, which began in 2021, also caused major issues, creating a lack of experienced staff that had wide-reaching ripples across the industry.

These issues were compounded further in 2022 with the invasion of Ukraine. The resulting sanctions created a major energy crisis that saw prices skyrocket, particularly for raw materials. Coupled with rising shipping costs, this placed significant pressure on supply chains. The industry began to see global shortages of the materials electronic components are made from, and the energy driving the manufacturing process.

The Current Market

In response to the electronic component shortage, many of the leading automotive manufacturers began to cut production late last year to ease pressure on the industry. Honda announced several cuts, which saw production levels drop by 40% compared to the previous year, while the likes of Toyota, Ford, Stellantis, and Volkswagen also announced that they would be cutting production of thousands of vehicles. Lexus has also stated that the chip shortage is going to impact its financial outlook for 2023.

Although there are signs of stabilization within the industry, the production of electronic components is still not at the levels required to meet demand. Recent research by McKinsey and Company estimated that the global electronic component shortage could continue into 2025 or, in a worst-case scenario, even 2030.

Despite the challenges, there are glimmers of hope that the market is more robust. While the automotive chip industry is facing a shortage, the consumer electronics sector is actually facing an issue with excess stock. By refocusing their efforts, they could help to fill the production void, and the likes of Samsung, Sk Hynix, and Yageo have all announced that they will be increasing their automotive capacity this year.

Final Thoughts 

Although there can be no denying that there are still a number of challenges facing the component sector in 2023, there are good indications that the electronic component shortage is starting to ease.

Here at Part Locator, we understand the difficulties companies are currently experiencing, but as a leading B2B semiconductor distribution company, our experienced team is working closely with our clients to help them overcome these issues and keep their production lines running.