Why are there so many supply chain delays for high-tech devices?

0
70

As you have probably noticed, many high-tech devices are temporarily unavailable or are announced as being restocked with varying delays on Son-Vidéo.com and other e-commerce sites.

Much has been said in recent weeks about Sony’s difficulties in fulfilling the many Playstation 5 orders. Depending on the chosen color, the waiting time for the new Apple AirPods Max headphones ranges from 2 to 6 weeks.

Depending on the color you choose, you will have to wait 2 to 6 weeks before you can get the Apple AirPods Max headphones.

The entire global production of devices containing electronic chips is affected.

The reason behind this?

  • the poorly anticipated and very high demand for semiconductors by microprocessor manufacturers.
  • production delays linked to the global pandemic (many factories are not running, or are running at a slower pace).
  • the fire at the factory of the Japanese giant AKM specializing in the manufacture of electronic chips, in particular audio DACs.
  • a shortage of containers impacting maritime freight on an international scale and delays in unloading and customs clearance of goods that are lengthening due to Covid-19.
  • Brexit with the complication of the procedures for exporting all British products to the European Union.

Explanations…

High demand for semiconductors

Since the start of the Covid-19 pandemic, global demand for electronic products has increased sharply: 4K UHD TVs, video projectors, amplifiers, sound bars, wireless speakers and video game consoles were in high demand during the first lockdown. Sales of desktop computers and monitors as well as laptops have also skyrocketed to enable millions of people to work remotely in good conditions.

Strong global demand for semiconductors coupled with slowing production due to the global pandemic has led to shortage of microchips.

At the same time, the deployment of 5G in many countries, the growing success of electric vehicles around the world and the global release of the latest generation video game consoles (Sony Playstation 5 and Xbox Series) as well as the latest iPhones and the Apple AirPods Max headphones have increased pressure on the already strained semiconductor market. All of these products are indeed loaded with electronic components that only a handful of manufacturers are able to produce.

In addition, the American sanctions against the Chinese firm Huawei Technologies have led the tech giant to rapidly increase its volume of orders for electronic chips from its usual suppliers.

Finally, because of the pandemic, the factories of the main foundries (the name given to the manufacturers of electronic components) were initially shut down and then resumed their activity at a reduced pace before returning to their usual production rate. But delays in deliveries have accumulated, accentuated by the strongest demand experienced since early 2020.

The terrible fire at the factories of Japanese semiconductor maker AKM in late 2020 has not helped matters, depriving many digital audio player, USB audio DAC, Wi-Fi / Bluetooth amplifier and even AV receiver manufacturers of audio DACs. Highly impacted, the manufacturer FiiO, for example, has announced it will be using ESS Technology audio chips for its future DAPs scheduled for release this year.

All these factors combined have led to an inevitable bottleneck sometimes explaining the long supply chain delays for certain audio and video devices which, for some, are not even available at all. Even car factories aren’t running at full speed while waiting for deliveries of microprocessors, more and more present in vehicles.

Shortage of containers for Europe

The Covid-19 pandemic has significantly impacted the ocean freight sector, in particular by modifying the strategies of freight transport companies. Thanks to the economic recovery in China and the massive stimulus plan initiated in the United States, these two countries have focused mainly on the transpacific sea routes linking these two countries. Deliveries from Asia to Europe are slowed down as a result.

In addition, the significant increase in Chinese exports since the end of 2020 has resulted in a shortage of containers available for its trade. China now exports three times more goods than it imports, which creates delays for the return of containers.

Maritime freight traffic is congested, with lengthening unloading and customs clearance times.

Firstly, because the unloading and customs clearance of these goods now takes more time because of the pandemic (delays increased from 2 to 15 days on average). This is explained by the decrease in the number of people on the docks due to anti-covid measures, but also by the obligation placed on the port authorities to load and unload essential products as a priority. As a consequence, queues of container ships stretch out off the western ports.

Secondly, because the shipping companies that have transported products from China do not wish to bring back empty containers and prefer to wait until they have reached been filled before returning to sea towards the East. However, filling the containers is also greatly slowed down by the anti-covid measures which impact production in the West, as well as by the overload of activity and the lack of personnel on the docks.

All these factors lengthen the turnaround time for containers between Western countries and China (from 60 to 100 days), creating tension that accentuates the shipping times from Chinese ports, lacking containers to fill and of boats to transport them, but also from the western ports which are saturated.

This shortage of containers does not only affect purely electronic products such as amps and televisions, but also some bookshelf speakers and floorstanding speakers, as well as some hi-fi headphones, in-ear monitors and even some HDMI cables and mounted speaker cables.

The impact of Brexit

In addition to the impact of Covid-19 on the production of British factories, the United Kingdom’s exit from the European Union resulted from January 1, 2021 in the increase in administrative procedures for the exchange of goods between the two zones, in one direction or the other.

Administrative procedures for the trade of goods between the United Kingdom and the European Union have become more complex with Brexit.

Exporting from the UK to Europe seems to have become more complex for UK companies like B&W, Cambridge, Fyne Audio, Monitor Audio, Naim, PMC, Q Acoustics, Rega

This is why supply delays are frequently observed with devices from these brands. Fans of British sound will have to wait patiently, until the subtleties of the new post-Brexit procedures are fully integrated across the Channel.

No worries, let’s be patient…

In order to meet demand and catch up with the supply backlog to manufacturers of consumer electronics, major semiconductor manufacturers are working hard. The second half of 2021 should be less strained with a return to normal expected by the end of the year.

In addition, to overcome the difficulties encountered by sea freight, many import-export companies now have access to rail freight, which is twice as fast as a boat and half as expensive as a plane. Launched in 2011, the China-Europe rail transport service is constantly developing and has seen a significant increase in its traffic in 2020, with 50% more trains. It has thus shown its ability to stabilize the supply chains undermined by the Covid-19 pandemic, in particular guaranteeing the delivery of medical equipment intended for the control of the epidemic. Today China and several European capitals are working on the commissioning of 73 new lines dedicated to China-Europe trains. Enough to consider the import of more traditional goods, in particular electronic products.

Finally, traffic between the United Kingdom and Europe should also resume its normal course after the new rules governing trade between these two zones have been fully integrated and brought under control.


LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.