Continued price increases and longer lead times
The situation in the component market continues to remain strained. Adding to the already existing issue, Russia’s invasion of Ukraine is also affecting the market.
Swedish EMS provider Orbit One has been issuing supply chain updates continuously throughout the past two years. There have been many moving parts affecting the supply of components during this time, everything from production output, lockdowns, logistical issues and geo-political situations – ranging from trade wars to Russia's invasion of Ukraine.
“This has not alleviated the pressure off the market and we are now seeing continued price increases and longer lead times despite the fact that manufacturers are working hard to expand their capacity. However, we will not see the effect of this until 2023,” Orbit One’s Chief Supply Chain Officer, Marcus Gunnebrant says in the company's latest update.
Gunnebrant continues to explain that the one of the most pressing things for an EMS provider is information, saying that it's extremely important for customers to be able to provide as long-term forecasts of their need for components as possible.
“Our advice to all our customers is thus to review their needs as carefully as possible, and neither underestimate nor overestimate their purchasing needs. We prefer to see estimates of at least 18 to 24 (max) months in the future,” Mr. Gunnebrant says.
And as always during times of shortages, prices have increased and currently they continue to do so. According to Gunnebrant there are three main driving forces behind the current increases; namely the price rises of raw materials, transport and production capacity.
”Price increases have been around 20% recently and it is difficult to guess when the situation will stabilise, especially in view of the new uncertainties created by the war in Ukraine,” the Chief Supply Chain Officer concludes.
Currently the company sees that Russia’s invasion of Ukraine is delaying transports by train from China via Russia. Air or sea transport are preferable, but even here the lead times are long and prices continues to increase.