Why component availability matters, and how good electronic engineering and component procurement can reduce the risks.
Electronic component availability has always been an important consideration in product design and manufacture. However, increasing demand from industries such as Artificial Intelligence, Electric Vehicles and Industrial Automation is placing additional pressure on parts of the global semiconductor supply chain.
For manufacturers, this can mean longer lead times, higher prices and, in some cases, components becoming subject to allocation.
Understanding these challenges, and planning for them early, can make the difference between maintaining production and facing costly delays.
What is component allocation?
Allocation occurs when demand for a particular component exceeds the manufacturer’s available supply.
Rather than accepting unlimited orders, manufacturers or their authorised distributors, may restrict the quantities available to individual customers, sometimes prioritising existing customers or those with established purchasing commitments.
Even customers willing to pay higher prices may find that the components they need simply aren’t available when required.
Allocation can affect a wide range of electronic components, including:
- Microcontrollers and processors – from manufacturers such as STMicroelectronics, Microchip, NXP and Texas Instruments.
- Power management and analogue devices – including products from Infineon, Onsemi and Vishay.
- Memory devices – where demand from computing and AI applications can influence availability and pricing.
- Passive components – including capacitors, resistors and inductors from manufacturers such as Murata.
- PCB materials – where raw material availability and manufacturing capacity can affect both prices and delivery schedules.
Not all products from these manufacturers are necessarily affected. Availability can vary considerably between individual part numbers, and conditions can change rapidly.
Why is allocation happening?
There is rarely a single cause.
Rapidly growing demand from emerging technologies can place pressure on manufacturing capacity, particularly where production requires specialist semiconductor fabrication processes.
Increasing production capacity is expensive and can take years, making it difficult for manufacturers to respond quickly to sudden changes in demand.
The situation can be made worse when customers anticipate shortages and increase their orders to protect future production. This can create a cycle in which apparent demand exceeds actual consumption, further restricting availability.
Geopolitical uncertainty, particularly relevant in today’s international trading environment, together with changes in trade arrangements and disruptions to raw material supplies, can introduce further complications.
What issues could you expect?
Long lead-times -Lead-times are increasing, with some manufacturers quoting anywhere from 30weeks-52.
Increased costs – As demand rises, so to do prices. Franchised routes increase their baselines to match the demand, and stockists buy up stock to sell them for a premium. This further drives the allocation issue, turning it into a vicious cycle.
Counterfeit parts – Grey market supplies come into their element and use the panic to produce counterfeit parts which often go unnoticed.
Production stops – failure to plan leads to production lines stopping. This can haemorrhage money for companies who have no alternate route.
Designing around the problem
At Arrow Technical, we believe that managing component availability should begin at the design stage, rather than waiting until a product enters manufacture.
Where practical, our engineers consider alternative components during development, reducing dependence on a single manufacturer or part number.
This might involve selecting components with compatible alternatives, allowing flexibility in PCB layouts, or identifying alternative solutions that could be introduced with relatively minor design changes.
Our procurement team also works closely with established suppliers to monitor availability, identify potential shortages and source suitable alternatives before problems affect production.
A little forward planning during design can prevent a great deal of expense and disruption later.
What about the grey market?
When authorised distributors cannot supply a component, manufacturers sometimes turn to the grey market.
The grey market consists of components sold outside the manufacturer’s authorised distribution network. These may include genuine surplus stock, excess inventory from other manufacturers or components obtained through independent brokers.
The grey market is not necessarily illegitimate, and it can provide a valuable source of otherwise unavailable components.
However, it also introduces additional risks.
Components may have been stored incorrectly, handled without adequate electrostatic protection, or supplied without reliable traceability. In the worst cases, parts may be counterfeit, previously used or incorrectly identified.
For manufacturers producing safety-critical or high-reliability equipment, these risks can be particularly significant.
Our approach to alternative sourcing
Arrow Technical’s preference is always to obtain components through manufacturers and their authorised distribution channels.
Where this is not possible, we can investigate alternative sources through established and trusted independent suppliers.
These suppliers employ inspection and verification procedures intended to reduce the risks associated with independently sourced components.
However, inspection cannot eliminate every risk, and the level of testing required depends on the component and its intended application.
At Arrow Technical, we only consider grey-market sources when conventional supply channels have been exhausted, and even then, only with our customer’s prior knowledge and agreement. In these circumstances, we also apply additional inspection and testing procedures to minimise the associated risks.
This ensures that customers understand the options available and can make informed decisions about cost, availability and acceptable risk.
Can we help with your component availability problems?
Whether you are developing a new electronic product or struggling to maintain production of an existing design, early action can help avoid costly delays.
Arrow Technical can review your Bill of Materials (BOM), investigate component availability and identify potential alternatives.
Where necessary, our engineers can also assess the implications of substituting components, including any changes required to the circuit design, PCB layout or firmware.
Are you concerned about component availability?
Send us your BOM or component enquiry and let our engineering and procurement teams investigate the options.
Contact us at [email protected] to see how we can help.
