From a distributors point of view – MEMPHIS Electronic

In this article series, Evertiq has reached out to distributors and sourcing specialists of electronic components to see just how the experts are dealing with the current semiconductor shortage and what tools they have in place to cater to the needs of their clients. This time we're talking to Marco Mezger, Managing Director and Global Head of memory specialist distributor MEMPHIS Electronic.

Since the start of the pandemic the situation surrounding the supply of components have only gotten worse, how would you describe the past year in terms of operations?

”Like all players in the industry, we had to balance an increased demand from customers with supply chain issues in the past year. But despite the fact that delivery times quadrupled in some cases, we are proud to say that we didn’t let a single customer down. None of our customers had to stop their manufacturing lines due to missing memory components. In some cases, we had to stock and hold deliveries until missing power components or MCUs were available again,” Marco Mezger tells Evertiq and continues.

”To a large extent we were able to mitigate the effects with our MEMPHIS owned warehouses in Germany, Hong Kong and the USA. For customers with critical manufacturing timelines, we are keeping up to a year’s stock of the memory components they require in our warehouse as part of our contract framework. In 2021 this proved to be immensely valuable as we were not only able to meet our contractual obligations in terms of delivery time, but also with regards to the fixed agreed pricing.”

In the past, during periods of component shortages, we’ve seen an increase of counterfeit components hitting the market – what kind of measures does MEMPHIS have in place to catch these?

”Luckily, this is an issue that we don’t face at MEMPHIS as we work directly with the manufacturers in our line card to secure the supply for our customers. We maintain a close relationship with our vendors not only from the sales side, but also on a technical level to be able to consult clients, both during design-in as well as after sales.”

Which specific product group that has been the most affected by the shortage?

”All memory products were affected from shortage, although most of our memory manufacturers were not necessarily seeing a lack in raw materials but were hit by repeated lockdowns of manufacturing sites or shipping hubs due to COVID breakouts,” Mr. Mezger explains.

”However, during this shortage, discontinuations hit customers even more than usual. Due to the long lead times, in some cases there was literary no last time buy option as all available manufacturing capabilities had already been sold. We had customers that faced this situation and we worked with them to select, sample, qualify alternatives to their discontinued memory component in less than a months so they could keep their manufacturing timeline.”

What are your feelings about the current market situation as we enter 2022?

”Memory has become a commodity and hence is a market segment that is more volatile than other areas of the semiconductor industry. Having been in the market for more than 30 years now, we know the market and know how to navigate the turmoil. What is unusual about the current situation is that we have never seen a chip shortage that covered the entire semiconductor industry with almost all product categories affected and lasted this long. And there doesn’t seem to be a confirmed end in sight.”

”We are monitoring the situation closely, both in terms of the ongoing effects of the pandemic on manufacturing as well as the effects the terrible war in Europe to air shipments and shipment logistics in general."

For 2022, what plans does MEMPHIS have in store to further deal with the problem at hand?

”In times of need, industrial manufacturers are often treated like the foster child as their order volumes tend to be a lot lower and chip manufacturers understandably prioritize their larger customers. As specialized distributor focusing only on memory, we have a stronger case when negotiating with our suppliers as the combined volumes of our customers add up. So currently we are bringing forward orders and shipments as much as we can for our customers.”

”Our main focus will remain on our strategy to define the demand of our customers for the year ahead and stock their years’ supply in our warehouses at a fixed agreed price,” Mr. Mezger says and continues. ”All our customers that were working with us on this plan saw no supply issues and no price increases last year. Customers have never been more grateful for our reliability than in 2021. For this reason, we are continuing on this path and are actually already sourcing memory for 2023 for some of our customers.”