Podcast Ep. 3: All about parts purchasing
This week we are joined by Brett and Magnus from Worthington to talk about parts and parts purchasing.
You may have noticed over the course of the past few months that common value capacitors (0.1uF, 1.0uF, 2.2uF, 4.7uF etc.) in case sizes ranging from 0402 and up have become exceedingly difficult to locate stock of. You may have been impacted by this in terms of us suggesting or requesting substitutes for parts that may be on your builds due to sourcing issues after an order has been placed.
In short, we are in the middle of a global capacitor shortage the likes of which the electronics manufacturing industry has not experienced since 2008…and this time the market for these parts is even worse. There are multiple causes behind the current situation, but the two biggest contributors are supply and demand.
On the supply end, manufacturers have been building capacitors under constant cost-down pressure for some time. So much so that in a recent whitepaper, TTI noted that although production of MLCC’s has doubled since the “Great Recession” the market value has remained the same. There is no more profit left in production of these parts for manufacturers, they have no plans to increase their production capacity, and in some cases are pulling out of manufacturing these common value commodity capacitors all together and shifting towards higher voltage parts that have more demand in markets that offer higher profitability. Manufacturers have ended the special volume pricing that they once offered to large scale vendors, and reels of parts that may have sold a year and half ago for $10 now have a market value in excess of $800 in some cases.
While the above conditions have unfolded on the supply end, the demand for these parts has sky rocketed. Consumer products, especially affordable electronically loaded automobiles have driven demand as entry-level vehicles incorporate more and more on-board sensors (lane assist, vision, touch screens etc.) and affordable IoT devices being manufactured by large companies gobble up stock of these parts at an alarming rate. This has forced vendors to go into allocation where they limit sales of these types of parts to any single customer and prices continue to sky rocket.
If at all possible, we suggest researching less common values that might be acceptable for use in you designs. If a 1uF capacitor with a 20% tolerance has been designed into your product, perhaps consider changing to a less common value with a tighter tolerance that may maintain design functionality. Unfortunately expect the current situation to continue and possibly worsen into 2019, so the difficulties are only beginning…
A big thanks to Brett Babilonia at Worthington Assembly for authoring this post.