The manufacturer warns that the chip shortage will last until at least the middle of 2022
One of the world’s largest electronic foundry manufacturers warned that a global chip shortage disrupts the automotive industry and threatens the supply of consumer technology products for at least one year.
The forecast of Flextronics, the world’s third largest manufacturer of this kind, is one of the most pessimistic so far. The crisis has forced automotive and consumer electronics groups to re-examine their global supply chains.
A quick Car sales rebound Coupled with the craze for locked-drive game consoles, laptops and TVs, global chip makers are overwhelmed by the rapid increase in demand.
Singapore-based Flex has more than 100 sites in 30 countries and manufactures equipment and electronics for companies such as Ford, British home appliance designer Dyson, British online grocer Ocado, and American computer and printer manufacturer Hewlett-Packard. Its position in the supply chain makes it a big buyer of chips.
Lynn Torrel, Flextronics’ chief procurement and supply chain officer, said the semiconductor manufacturers it relies on have delayed their predictions of when the shortage will end.
“Because demand is so strong, it is expected to be in mid-to-late 2022, depending on the commodity. Some people are expecting [shortages to continue] By 2023,” she said.
Forecasts from Flex, the company is located in automotive, medical equipment and Consumer electronics products Industry, after six months of suffering, shortages have forced auto companies to reduce production and employees take vacations.
This problem has led many companies to adopt more confident purchasing methods, such as paying chip fees in advance. American electric car manufacturer Tesla has considered buying a chip factory directly.
Asian electronics manufacturers also recent The warning said that chip shortages began to spread to TVs, smartphones and home appliances, and the hoarding of Chinese groups hit by sanctions made the situation worse.
Revathi Advaithi, CEO of Flextronics, said that compared with the Sino-US trade war, the devastation caused by the pandemic is prompting its multinational customers to consider restructuring their supply chains more seriously. She added that this might include making them more regional.
“Most companies don’t make regionalization decisions just because of tariffs,” she said. “They know this may be a short-term thing, but factors that affect total cost of ownership, such as pandemics and rising transportation costs, are driving regionalization.”
Flex, which is listed in New York, had revenues of US$24.2 billion last year. Its manufacturing facilities are evenly distributed in Europe, Asia and the Americas, and the production of a variety of electronic products has been interrupted.
Chipmakers are investing in new production capacity, but it can take up to two years to build complex facilities.
Torrell said that if Covid-19 vaccination causes consumer spending to shift to services, and as the world recovers from the pandemic, people spend less on consumer electronics, the situation may improve.
However, she warned that seemingly small issues, such as the recent two-week lockdown in Malaysia, where many semiconductor suppliers are located, could have a huge impact on an already stressed supply chain.