Why Parts Shortages Might Last Longer Than Expected

It can be argued that the latest catalyst for parts shortages in capacitors and resistors began when there was an unexpected increase in the markets for mission critical and commercial off- the- shelf components consumed in the harsh environment of outer space. The result was a spike in demand for the very fragile tantalum supply chain, which was exacerbated by a fire in a key tantalum mine in Brazil.  This created the right market conditions for the market to move from symmetrical to exuberant as customers began to consume parts irrationally to make sure that their brands did not repeat the dreaded times of “allocation” which many still remember from back in 2000.  The result was a strain on the global capacity to produce electronic components.  In the past, there was typically a “reset” of the market when shortages began and allocation loomed-where groups of component manufacturers would agree to expand their “capacity to produce” by purchasing more machines that would guarantee unit expansion for the next ten years based upon reasonable forecasts of global demand for wireless handsets and notebook computers.  Likewise, vendors of capacitors would align their forecasting with their critical raw material vendors (powders, pastes, wire) and it would create a plethora of data and value for research, development and next generation component technology.  This time around however, there is no great growth black box business on the horizon, there is no TV set, desktop computer, notebook computer or wireless handset emerging from the depths of imagination and attracting form and function.  Instead the opportunities going forward seem relegated in value growth, but the heady days of unit growth averaging 11% for MLCC and thick film chip resistor seem related to the vernacular of the future as the “good old days.”  Why would anyone spend money on kilns, dryers, mixers, rollers and engage in long term materials supply contracts when unit demand faces plateau going forward at best as we take a breather and navigate where the next opportunities lie between 2017 and 2022 and beyond.  For Further No Nonsense Reading-Passive Electronic Components: World Market Outlook: 2017-2022 ISBN #1-893211-99-1 (2017)