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NOTIFICATION OF SEVERE RAW MATERIAL AND COMPONENT SHORTAGES ACROSS ALL SECTORS AND PRODUCT TYPES.

Notice for increasing lead times and shortages.

26 March 2021
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NOTIFICATION OF SEVERE RAW MATERIAL AND COMPONENT SHORTAGES ACROSS ALL SECTORS AND PRODUCT TYPES.

 

Dear Customer,

 

I wanted to take this opportunity to write to you and provide some detail on numerous supply issues being seen within the Industrial Electronics Sectors right now.  Review Display Systems Ltd (RDS) has operated within all areas of this sector for nearly 40 years and the shortages, price increases and increasing lead times are some of the worst we have seen.  As your aware RDS is split into three different divisions these being Displays, Embedded & Design.  Not every RDS customer uses all three divisions and so I wanted to break down some of the reasons behind these shortages by division/product/service offered. 

 

Display Division Supply Issues:

The Display manufacturers have been seeing supply issues for some time now.  Of course, the COVID-19 Pandemic has resulted in many unforeseen factors that are still causing supply problems.  They are suffering from component and raw materials shortages plus in some cases a limited ability to manufacture due to COVID-19 restrictions.  For example, the global supply of Driver IC’s required for Display manufacture are suffering from global shortages.  This is due to a massive increase in demand on wafer fabs.  Raw materials such as OCA are also in short supply due to a large increase for TFT product coming through from various growing sectors such as the EV (Electric Vehicles) market.  These supply issues and others are causing an increase of both lead time and unit pricing.  We are seeing some suppliers report 25WK lead times for specific products along with price increases of up to 5%.

 

Embedded Division Supply Issues:

Again, the manufacture of all embedded technologies is also being impacted and again the causes come from both component and raw material shortages.  Some examples here are the supply of copper foil.  This raw material is used in the manufacture of PCB’s and so impacts the build of SBC’s, Memory, SSD’s and displays.  Controller IC’s used in the manufacture of SSD’s are also in massive demand and right now there simply is not enough availability to go around.  The growth in 5G throughout 2021 will also be another factor that will only add to the problems being faced by all supply chains.  Manufacturers within the embedded sector are expecting lead times to continue to grow during 2021 ultimately seeing product lead times exceeding 20wks.

 

Design Division Supply Issues:

This section relates to all customers using RDS for bespoke finished product.  The supply of raw materials here is again a major factor.  Metalwork, plastics etc are now subject to longer lead times as is the supply of miscellaneous items (specialist fixings) used in the assembly of finished systems.  The lead times now associated with product approvals such as EMC & safety are also increasing due to restrictions being placed on test houses due to the ongoing Pandemic.

 

So, how do we mitigate the risks associated with this global and industry wide supply problem were all experiencing.  There are several things that we should be looking at together: -

 

  1. For those customers with order coverage in place we should discuss any delivery problems we might face regarding that schedule, plus look at providing a forecast for demand beyond that existing schedule or finally, look to add to that schedule.
  2. For those customers without order coverage in place then we should discuss your order book for the coming 12 months and understand what todays lead times are for your product/system.  Then if need be ensure coverage is put in place to mitigate production downtime or again provide a forecast of expected demand for the next 12 months.
  3. Discuss buffer stock arrangements that can be managed for you by RDS.
  4. For those customers who might normally place back-to-back demand on RDS, then we should discuss the possibility of frame orders that cover a longer schedule period.

 

One point that is clear from all suppliers in all industries and that is that the longer-term view is the safest one during these times.  This means the provision of an accurate forecast that allows RDS and our supply chain to prepare in advance.  Alternatively, the placing of scheduled orders over a good period.  The industry expects these issues to be relevant for at least the next 6 months but probably the next 12 months as we hope the world starts to recover from the Pandemic.

 

There is no doubt that 2020 has been a very difficult year for all of us due to the uncertainties of Brexit and of course the COVID-19 Pandemic.  RDS have been very fortunate as we have been successful in the supply to our customers of components and systems for use in several COVID-19 related products including the Ventilator Challenge programme reported on during the first National Lockdown.  So, we would like to take this opportunity to thank you for your ongoing support of RDS.

 

Finally, if you would like to talk through any concerns you might have about your ongoing supply then please call us to go through how we can help you mitigate these risks.

 

Thank you.

 

Below is the full announcment

2021 Supply Issues

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