The year 2020 was an unprecedented year for us all. In March of 2020, the United States economy would all but shut down. COVID-19 restrictions impacted us all personally and professionally. The “new normal” included restrictions on all social gatherings and in-person events. The immediate impact on our business was felt right away. The factories located within hotspots had trouble with consistent output and virus restrictions. Equally, demand for components was unpredictable during the initial shutdown, and both OCMs and end customers struggled to determine what their forecast would actually be.
Fast-forward to March of 2021 and we find ourselves in the midst of allocation and long factory lead times that are stretching to 52 weeks. The news is full of headlines highlighting how this global shortage of electronic components is disrupting everything—from ceasing automobile manufacturing and slowing rollouts to component shortages for any devices that enable IoT and cloud computing environments. The situation’s impact is that electronic components are getting harder and harder to find, and prices are rising across the board. (You know it’s bad when Tesla and Apple are having supply issues.) Here’s what’s happening with a few of our OCMs this year.
Spansion – Lead time 30+ weeks and price increases coming
Cypress – CY7C/CY8C, CYUSBxxx, CYPD5xxx Series are on allocation with price increases expected
NOR Flash – Lead time 18–24 weeks
Discretes, MOSFETS, Diodes – Up to 40-week lead time
NXP / Freescale
LPC Series – Pricing is increasing, lead time is out to 52 weeks
JTA / PCA / SJA Series – Pricing is increasing, and lead times are 36–42 weeks.
MCUs, Sensors, and the S9S Series – Pricing is increasing, lead times 52+ weeks out and increasing due to wafer shortage.
Intersil / Renesas
Pricing is due to increase by 15%, and lead times are 24–36 weeks.
With lead times stretching to 52 weeks, parts in short supply, and price increases around every corner, the Flip sales team is offering several value propositions to our end customers.
1. Assurance of supply with parts in stock and ready to ship on EOL components.
2. Flip can extend the life cycle of their most critical components by working directly with the factories on LTB and having parts resurrected and brought back to life.
3. Flip offers authorized distribution with full traceability, thus avoiding the risks of substandard material being introduced into our customers’ supply chains from the grey market.
4. Avoid excessive testing and margin mark-up by coming directly to Flip instead of using the broker market to source EOL material.
5. Lastly, Flip offers flexible scheduling when needed for long-term last-time buy quantities.
In closing, the sales team has a tremendous opportunity this year to extend Flip’s reach, capture more market share, and be a trusted supply chain partner to our customers. The market conditions are favorable, and the wind is at our back in 2021. It’s time to execute our sales plans and make them happen.