Electronics industry facing labor shortage and rising component costs

The great shortage of chips isn’t the only thing holding back the production of consumer electronics. Manufacturers around the world are also struggling to hire enough workers, according to a new survey.

The findings come from a business group called IPC, which this month surveyed hundreds of companies around the world to gauge their perspective on the electronics supply chain. The results revealed that 80% of companies said it was “somewhat” or “extremely” difficult to find qualified workers.

(IPC)

The other major challenge facing manufacturers is the rising costs of components and other supplies. “Nine in ten manufacturers are currently experiencing an increase in the cost of materials, and seven in ten report an increase in labor costs,” the survey found.

A slide from the survey.

(CIP)

The investigation comes weeks after large chip foundry TSMC reportedly began announcing price hikes for its chipmaking. According to the CPI, 90% of all manufacturers surveyed blame the chip shortage for causing them to pay higher costs to suppliers.

IPC did not say whether rising costs would push the same companies to raise prices for consumer electronics. But about 30% of the companies surveyed expect their profit margins to decline over the next six months.

On the positive side, the survey concluded that “the electronics supply chain continues to function well despite difficult circumstances”. At the same time, the industry is facing an increase in customer orders and a gradual increase in manufacturing capacity.

However, 58% of those polled do not expect the semiconductor shortage to resolve until “the second half of 2022 or beyond.”

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a slide from the survey

(IPC)

“Strong demand is helping industry sales, but shortages are delaying shipments and increasing backlogs,” said Shawn DuBravac, chief economist at IPC. “Manufacturers face higher prices as they compete for limited supply. This is a global phenomenon that will take a good chunk of next year to resolve. “

Yet others view the situation as a situation of half-full glass. This week, research firm IDC offered a more optimistic view of the current chip shortage. “The industry will see normalization and balance by mid-2022, with the potential for overcapacity in 2023 as larger-scale capacity expansions begin to come online towards the end of 2022,” IDC wrote. in a report.

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About Anne Wurtsbach

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