Component Shortages are Driving Production Delays and Higher Costs for Manufacturers, According to a New IPC Global Industry Survey

IPC found the electronics industry sees no immediate end to shortage woes, 58% expect problem to linger until late 2022 or beyond

A new global survey found that electronics manufacturers continue to be harmed by the global shortage in semiconductors and other components, parts and materials, leading to production delays, increased material goods costs, and a cloudy industry outlook. The survey, conducted by IPC, also found that companies continue to face significant challenges in hiring and keeping skilled talent.

“Supply shortages and other dislocations are impacting the global electronics supply chain and every downstream industry these manufacturers serve,” said Shawn DuBravac, IPC chief economist and lead researcher on the study. “Strong demand is helping industry sales, but shortages are delaying shipments and increasing backlogs. Manufacturers are facing higher prices as they compete for limited supply. This is a global phenomenon that is going to take well into next year to resolve.”

          The survey results found that:

  • Shortages are leading to delays. 88% of respondents have experienced increased lead times, and 31% saw production delays of eight weeks or more.
  • Companies report the issue will not be resolved soon. 58% of companies expect the shortages to end in the second half of 2022 at the earliest.
  • Global inventories – already depleted – are declining. 59% of respondents said that backlogs are increasing. 25% say inventory available to customers will continue to decline, and 48% say inventories will stay flat.
  • Shortages are forcing companies to spend more to produce their products. 90% of respondents have paid increased prices to suppliers because of shortages.
  • Companies are increasing wages and upskilling workers to address workforce hiring and retention. 80% of respondents believe the challenge of finding qualified workers isn’t likely to ease. Firms have increasingly taken to upskilling their workers on their own (46% of respondents), boosting wages (44% of respondents) and other measures to fill the gaps.

“While there has been plenty of attention paid to the shortage in semiconductors, it’s important to point out that electronics companies around the globe are facing additional shortages and backlogs, experiencing diminished inventories, and paying higher materials prices,” added John Mitchell, IPC president and CEO. “The current situation is unsustainable. If the current shortages extend beyond 2022 as feared, they will continue to have serious consequences for all industries tied to electronics manufacturing.”

IPC surveyed hundreds of companies from around the world, including a wide range of company sizes and representing the full electronics manufacturing value chain. Survey respondents were from North America (44%), Asia (20%) and Europe (17%).

About The Author