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The global shortage of chips that disrupts the auto industry and threatens to supply consumer technology products will last at least another year, warned one of the world’s largest electronics contract makers.
The forecasts of Flex, the world’s third-largest manufacturer of its kind, are one of the darkest so far of a crisis that is forcing vehicle and consumer electronics groups to re-examine their global supply chains.
A fast one rise in vehicle sales combined with a lockout-driven boom in gaming consoles, laptops and TVs has left chip makers around the world overwhelmed by the sharp rise in demand.
Singapore-based Flex has more than 100 locations in 30 countries and manufactures electronic devices and gadgets for companies such as Ford, British home appliance designer Dyson, UK online supermarket Ocado and computer maker and US printers. Its position in the supply chain makes it a great chip buyer.
Lynn Torrel, director general of supply and supply chain at Flex, said manufacturers whose reliance on semiconductors have backtracked on their forecasts of when the shortage will end.
“With such strong demand, the expectation is in the middle of the end of 2022, depending on the merchandise. Some expect it [shortages to continue] until 2023, ”he said.
The Flex forecast, which is at the heart of supply chains for cars, medical devices and consumer electronics industries, follows a six-month contusion during which shortages have forced car companies to cut production and staff.
The problem has led many companies to take a more assertive approach to sourcing, such as paying chips in advance. Tesla, the American electric car maker, has explored the direct purchase of a chip plant.
Electronics manufacturers in Asia have done the same recently warned that the shortage of chips was beginning to spread to TVs, smartphones and appliances, with the situation exacerbated by the storage of Chinese groups affected by the sanctions.
Pandemic problems with supply chains have been exacerbated by the blocking from the Suez Canal in March, the extreme cold in Texas and recent fires to a large chip factory in Japan.
Revathi Advaithi, chief executive of Flex, said the disruption caused by the pandemic is motivating its multinational customers to look much more seriously at restructuring their supply chains than the US-China trade war. That could include making them more regional, he added.
“Most companies will not make the decision to regionalize only tariffs,” he said. “They know it could be a short-term thing, but things like the pandemic and escalating shipping costs that affect the total cost of ownership drive regionalization.”
Flex, listed in New York, which had revenue of $ 24.2 billion last year and has manufacturing facilities evenly distributed across Europe, Asia and America, has been forced to stop production of a wide range of electronic products.
Chip manufacturers are investing in new production capacity, but it can take up to two years to install the complex facilities.
Torrel said the picture could improve if vaccines against Covid-19 drive consumer spending toward services and people spend less money on consumer electronics as the world recovers from the pandemic.
However, he warned that seemingly small problems, such as a recent two-week shutdown in Malaysia, where many semiconductor suppliers are based, could have an excessive effect on supply chains that are already under pressure.
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