For much of 2017, the scales of supply and demand have been wildly out of balance, setting the stage for what has become one of the longest standing shortage periods that electronics components distributors have ever witnessed. Up to this point, the deficit of memory such as NAND Flash and DRAM among manufacturers has been the lead story in the ever-growing electronics demand dilemma, but now resistors – the forgotten commodities – are stealing the spotlight.
Regardless of their broad appeal and wide usage from a board-level perspective in everything from coffee machines to automobiles, passive components like the trusty resistor have rarely been top of mind for supply chain leaders when planning and forecasting…until now. Not for lack of trying, electronic components distributors have been unable to pinpoint a precise moment in time that caused the phenomenal uptick in demand for resistors that has picked up significantly since the spring. The only explanation for this unforeseen supply chain event is an incredibly bullish demand for electronics on multiple fronts.
As the saying goes, “a rising tide lifts all boats.” The impending boom of the Internet of Things, a constant push for heavy usage of consumer electronics and a move towards more complex safety and infotainment systems in automobiles have all played a significant role in raising the profile of the humble resistor as of late. The three verticals fueling the demand include automotive, mobile devices and factory automation. Manufacturers in these industries quickly went from hearing about extended lead times to confirming real shortages, and are now paying extra premiums for a commodity that has traditionally remained steady at less than a penny.
Fusion Worldwide has experienced a significant increase in resistor requests over the last two months, with the months of June and July producing 20 times the amount of inquiries as compared to any other instance over the past year. This is noteworthy in that there are many players in the resistor space, plenty of manufacturers to regularly manage the risk. When manufacturers start calling independent distributors like Fusion for such a readily available commodity that means there is exceptional – and perhaps unprecedented – demand.
When talking about shortages, the 9.1 magnitude earthquake that occurred in Japan in 2011 and the ensuing tsunami are typically the first to come to mind along with the severe flooding in Thailand in 2012 and several tantalum shortages. All of these incidents were driven by catastrophic events or a shortage of raw materials – supply-side issues.
While not as dramatic as a shortage caused by a natural disaster, the significant growth in demand happening today illustrates the changing tide of the electronics industry. Manufacturers are just starting to get their hands around the level of demand that they can expect as Artificial Intelligence and the Internet of Things continue their impending migration into every part of our lives. There is no catastrophic interruption causing a supply interruption, simply a much healthier than expected demand and explosive growth. So much so, that major manufacturers have entered the market, eager to scoop up the remaining supply, with everything from cars to coffee machines just now feeling the squeeze.
Believe it or not, while there are officially more gadgets in the world than people, the juggernaut that is the mobile phone industry still has a hugely untapped market in those who have yet to jump on the bandwagon, let alone the technophiles who will undoubtedly be waiting curbside outside the local Apple store for the iPhone 8 to launch.
As manufacturers begin to understand the new norm for demand, the lowly resistor will undoubtedly become a more integral part of the supply chain planning process instead of simply remaining an afterthought. The unsung heroes of passive components will clearly be playing a more active role in the inevitable evolution of electronics.
About the author
Tobey Gonnerman is Executive Vice President at Fusion Worldwide, a leading global electronic components distributor that sources, stocks and delivers a broad range of products and finished goods to a wide spectrum of clients worldwide. Currently responsible for global sales, Gonnerman joined Fusion Worldwide in 2005 as Purchasing Manager and quickly rose to Purchasing Director and then to VP of Global Trade before assuming his present role where he works out of Fusion’s Singapore office. Gonnerman is an industry veteran with more than 20 years of experience including working as Purchasing Director at several other component distributors.