Even Product Lead Times Feel the Pain of Semiconductor Shortages

Aurora Multimedia Corporation CEO Paul Harris:

“This past Sunday evening, there was discussion surrounding the growing lead times of products due to electronic parts shortages. Unfortunately, there is a growing shortage of semiconductors, resistors, capacitors and more, and lead times are now growing to 34 to 52 weeks, depending on the part. Prices of various parts have been increasing, as well, as a result of the shortages.

So, we do anticipate that, over time, manufacturers will probably have to raise prices on products. There will be much longer lead times and product shortages on the market. For Aurora, we’ve been doing our best to keep up with this on the forecasting, and we’re trying to stock up long-lead-time parts to be able to continue to produce products as best as we can. The biggest unknown that we’re going to all see in the industry is when a particular manufacturer runs out of product, then companies go looking for alternate equipment, which will keep moving around the industry.

When that happens, even us, we’re going to get a surge in sales, and that will prematurely wipe out our forecast for the products, and then people will move to the next company and to other companies that were out of product, come back online with product, including us, and so forth.

And this, unfortunately, will probably end up being a vicious cycle that could last until Q3. So, that’s pretty much the state of affairs of what is going on right now. Unfortunately, the best way to explain this phenomenon that’s occurring right now is that most manufacturers try to do a quarterly, or even every two quarters, forecast.

While we love to do a full year in advance, there are always highs and lows. And, especially with COVID, you don’t want to order too much, because the market shrunk. Now that that market has grabbed those parts to start building again, that, in conjunction with the tariffs and companies trying to move their facilities to places other than China in order to produce with the same capacity, has made for the perfect storm of this industry and not a place any of us like to be in.

But I can assure you our company is doing everything in our power to try to make this as easy as possible, to try to keep prices reasonable, to do our best to not raise prices on as many products as we can avoid doing that to, and to keep people properly informed as best as we can.”

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