Editor’s comment: War in Ukraine means supply chain woes are set to continue…
Author : Mark Gradwell | Editor | EPDT
02 May 2022
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I’ve written about both global & local electronics industry supply chain issues in these pages several times over the last couple of years – and with good reason, as a confluence of factors has uncovered the gaps in the system we have come to rely on...
This editorial leader was originally featured in the May 2022 issue of EPDT magazine [read the digital issue]. And sign up to receive your own copy each month.
First, Brexit threatened to disrupt our well established and finely honed supply chain. Then, escalating US-China trade tensions, followed by an unprecedented pandemic, beginning in Asia and exacerbated by a series of natural disasters and freak events (including plant fires and shipping lane blockages), ramped up the pressure…
At the same time, demand patterns for electronics have shifted and grown, accelerated by global lockdowns and megatrends like remote working, electric vehicles, the rollout of 5G and the proliferation of AI and IoT, plus edge and cloud computing. Embedded and smart technologies have seen electronics become integral to so many types of everyday products and devices, as sensing, intelligence and connectivity – all powered by electronics – now underpin and enable applications and tech from home & building automation, or wearables and medical devices, to robotics and autonomous vehicles.
These factors have led to shortages of electronic components, especially semiconductor chips, which provide the ‘brains’ of every electronic smart device – with supply dominated by Asia. Europe and the US have reacted by thinking hard about how to make supply chains more resilient – including legislation and massive investment programmes – though such long-term measures will not quickly alleviate the short term issues.
Mark Gradwell, Editor, EPDT
But even as the world emerges from the COVID-19 pandemic – with supply chain issues expected to stabilise, ease and recover in 2022 – shocking news of Russian aggression and war in Ukraine has thrown yet more disruption into the mix.
Soaring oil and gas prices as a result of the conflict have seen energy costs spike across the board, with many European countries also thinking about security of supply – and investment in and focus on renewable energy likely to accelerate even faster. Sharply rising prices and scarcity of supply for such a fundamental resource is hitting businesses and consumers alike, with a growing cost of living crisis becoming a serious issue for citizens and their governments.
For electronics, both Russia and Ukraine play an important role in the global supply chain, as significant suppliers of raw materials, including noble gases and rare earth metals. Russia is the world’s second-largest supplier of palladium, used in computer memory, sensor chips and MLCCs (multilayer ceramic capacitors). Russia and Ukraine also produce the majority of the world’s neon, a noble gas that is essential for semiconductor chip-making, as well as being used in lighting and vacuum tubes.
EPDT May 2022 cover image
Potentially more worrying, some experts also warn that Russia’s invasion of Ukraine could embolden China to follow a similarly aggressive path, ramping up long-standing tensions with Taiwan (an island nation that currently manufactures more than 20% of the world’s semiconductors), which Beijing still regards as part of its territory.
As these last few years have highlighted the risks and fragility of highly globalised supply chains throughout the electronics industry, governments and industry alike are trying to figure out how to make them more resilient and diversified. But in the short term, we are probably in line for yet more disruption in the system, leading to lengthening lead times, ongoing chip shortages and rising prices. Strap in for a bumpy ride…
EPDT's May 2022 issue also contains features on Lighting & Rail, plus a show preview for ElectroTestExpo & EPDT's annual PXI for Test & Measurement supplement. Read more on what's inside EPDT this month…
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