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Electronics Production | August 11, 2010

Component shortages hurdle to recovery

Electronics Manufacturers were poised for a bounce back year but component shortages have slowed down the recovery.
The shortage of components has adversely affected the electronics production chain. Essentially, electronics manufacturers were producing at a high rate due to the recent spike in global computer and mobile phone demand. However, a shortage in components, namely semiconductors, is negatively impacting recovery and growth, according to an analyst by Stockcall.

Raw materials shortages also created difficulties. Manufacturers produced at a rate to meet demand but when the production chain was interrupted, many manufacturers saw a decline in profits and an increase in issues related to being overstocked.

There is reason for optimism though as efforts are underway to correct the components shortage issues. Already narrow operating margins will continue being put into increased peril while the production chain slowly corrects itself. In the meantime, many electronics manufacturers will try to weather the storm until production returns to rates prior to the shortages.

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