Over three years since the UK first went into lockdown, we have seen marked improvement for lead times. Yet, the effects of the pandemic are still being felt alongside wider geopolitical tensions, resulting in uncertainty and potential instability. So, while we have seen improvements across supply chains this trend is not guaranteed to continue. This uncertainty has resulted in customers increasingly being met with Non-Cancellable Non-Returnable (NCNR) terms for their orders.
Procurement specialists at Techpoint maintain that the best course of action is to plan for the medium and long term. This means that ensuring clear, constant communications across the whole supply chain. This should mitigate the effects of sudden changes in demand and prevent the need for NCNR terms.
September Market Spotlight:
5G Broadband Chipset
The first platform-optimised chipset for new radio and broadband IoT devices is launching in the form of the new 5G Chipset. Forecasts predict that the 5G chipset market will experience a Compound Annual Growth Rate of 18-27 percent over the next decade. This predicted growth reflects the central role of the chipset in emerging technologies like smart buildings.
Semiconductors and FABs
Consumer demand for end products like smartphones and laptops has declined in response to wider economic conditions. And manufacturers reduced microchip production. But as emerging technologies like AI, Quantum and 5G grow rapidly – so will chip demand. We anticipate increased demand and recommend that manufacturers maintain production. The microchip supply chain relies on a few regions for materials and production, meaning it is vulnerable to localised events. For instance, the Taiwanese drought caused extended lead times, inflated prices, and missed opportunities. Maintaining production could minimise the impact of similar events in the future.
As recent times have shown, it is prudent to prepare for potential disruption. Growing interconnectivity also means more points of friction; the pandemic chip shortages alone affected over 169 industries. Therefore, across the electronics supply chain, stakeholders should reduce their dependence on a single region by diversifying their suppliers and producers. Likewise, onshoring promises more control over the total supply chain and minimises global points of friction.