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COVID accelerated design but slowed supply in 2021

Thought Leadership published by Anglia, under PR, Semiconductor Devices

Anglia helps designers navigate a difficult supply chain and exploit strong demand by Steve Rawlins, CEO, Anglia Components Ltd.

If COVID jammed up the supply chain in 2021, it speeded up the design cycle. The imperative to control the virus has pressed the fast forward button to the future and accelerated many technologies and concepts by as much as ten years. Addressing climate change, and the pent-up demand being released as we emerge from lockdown has amplified the effect. But getting these projects off the CAD screen and into the market means overcoming the supply chain challenges though. If you’re designing in components now without considering how they are going to be sourced, you’re designing in failure in the market. 2021 is definitely the year that the supply chain became a design issue. It will remain so in 2022 and probably beyond.

The design cycle accelerates
We’ve seen a significant growth in design activity in 2021. This has been most obviously true on the COVID front line: technologies that have a direct application in testing for, treating and vaccinating against the disease, and for controlling its spread through improving ventilation, monitoring air quality, reducing touch, reducing or controlling congestion and other countless areas. It’s more widely true though. General medical and welfare applications, communications technologies, security systems, communications technologies such as 5G, EV charging are amongst the multiplicity of applications where our customers are seeing growing success.

Electronics engineers in businesses large and small around the UK are developing solutions that keep us fit and healthy, safe and secure and address the all-encompassing imperative of tackling climate change. As a result, we are seeing projects that have been sitting on the shelf awaiting funding or resource being dusted down and implemented. Exciting new technologies that address these challenges are emerging all the time from our supplier base. We are also seeing established technologies being adopted more widely and in new and very innovative ways. Anglia is here to assist you technically in any way possible to get these designs rolled out as quickly as possible.

A picture containing outdoor, snow, dayDescription automatically generatedPerfect Storm
Our technical support is no longer enough for our customers, even if they have a design rather than a purchasing job title. They need our logistical support and supply chain savvy too. End-product markets are booming but demand is difficult to fulfil because of a challenging supply chain situation – a situation that is unprecedented in my experience. The position on lead times today is worse than it was a quarter ago, and I don’t see it improving until summer 2022 at the earliest. We’re seeing a perfect storm. As we emerge from the pandemic, though we are seeing pent-up demand. Yet COVID has reduced capacity at the sources of raw materials, at manufacturing sites and in logistics organisations. Raw materials are harder to obtain, as a result of which manufacturers are seeing significant increases in prices which they have no choice but to pass on to the customers. At the same time, freight charges are increasing globally and delivery times are extending even when the stock is in the warehouse. We know of distributors quoting 17 days delivery on ex-stock orders.

 

Customers sometimes say that if Apple can’t get supplies, how can they hope to succeed? The answer is that, though Apple has got more clout by virtue of its size, it is also more exposed because of the sheer volumes of devices it is seeking. A thousand devices gets Apple nowhere – but might be enough to get the next batch out of the door to a niche SME. Inventory is available in the supply chain, but you’ve got to be smart and forward thinking to get your hands on enough of it to get your product off the drawing board into the market in low, medium or large volumes. The right part for your design is one that not only addresses the technical specification but is also available in the right time frame for the project to go into production. Anglia recognised this eight years ago, launching Anglia Live as a single environment in which designers can look at both the design parameters and the supply chain situation of each and every device that we stock.

Graphical user interfaceDescription automatically generatedHow to plan
It is possible to find enough inventory to get your new product to market by careful planning. Anglia Live is the tool that helps designers and purchasing professionals do just that. The site not only offers full parametric search on all of the significant design parameters for each component, but also details Anglia’s current free stock, reserved stock, replenishment date and supplier lead time. This recognises that a device is only suitable if it not only fulfils the performance criteria but also if it can be obtained in time for the market launch of the design. In the current climate, that’s challenging and will remain so for a while.

Intel CEO Pat Gelsinger said in an interview with CNBC that he didn’t expect the semiconductor shortage to end until 2023.[i] The days when you could build a prototype from the catalogue pages of the high service distributors and expect purchasing to source those devices in volume to put it into production next week are well and truly gone. If a design is six months away from being released on the market, the time to start placing production orders for the BoM is now. If you stick your head in the sand and throw the BoM over the wall to purchasing when it is finished and qualified the product will be late to market.

Challenging, we know, but accurate forecasting of demand is key. Apple CEO Tim Cook admitted to CNBC that their issue came about partly because demand outstripped Apple’s forecasts.[ii]  Anglia, as an independently owned distributor, has invested in its customers and its business by vastly increasing its own forward ordering when stock was still relatively plentiful, against the lean times that we saw coming ahead. We’ve been told that we started ramping up our ordering at least six months ahead of the market. We’re carefully protecting this inventory position to allow us to support customers who partner with us. Working together in this way allows everyone to prosper. The commitment is two-way. We commit to reserving the inventory for our customers – but they need to commit to taking it. Our terms are currently no rescheduling and no cancellation. We can’t promise to protect every customer against every issue in 2022, but by working together transparently we can support as many customers as possible with most of their requirements most of the time.

 [i] “Intel shares fall after component shortages hurt PC chip business”, CNBC, 21 October 2021, https://www.cnbc.com/2021/10/21/intel-intc-earnings-q3-2021.html

[ii] “Apple’s iPhone hot streak is going to run into the global chip shortage,” CNBC, 27 July 2021, https://www.cnbc.com/2021/07/27/apples-iphone-hot-streak-will-run-into-global-chip-shortage.html

 

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