Electronics Supply Chain Resumes Some Normalcy

Engineers are at a turning point when it comes to navigating the design and supply chain disruptions of the last several years, according to findings from a survey by electronics distributor, Avnet. In its third annual Insights survey, Avnet garnered sentiments and strategies about industry and market conditions. The survey found that, while there is a sense of optimism about component availability, many companies are now looking at what comes next – and that outlook remains uncertain.

Key Takeaways from the Survey:

Nearly three-fourths of global respondents believe the severity of the component shortage has improved year-over-year: 73% say the shortage has gotten much better or somewhat better. This marks a significant improvement compared to the previous survey when 59% said the severity of the shortages was worse year-over-year.

Market conditions are becoming a bigger concern. More than a quarter of respondents are more concerned about market conditions versus component availability, up from 18% earlier. Still, component availability remains a top concern for the majority (69%).

Respondents are experiencing improvements in their access to several components – most notably passives (66%). However, many respondents are still feeling some strain with MCUs (20%) and analog (19%) components.

Hesitation remains around the adoption of AI. Avnet found that few engineers are currently using AI in their work today. Those who are currently using AI or have plans to use it appear to be cautious about the technology. More than half said they are not using it and have no plans to (56%).

Details on the Current State of the Supply Chain

We caught up with Rebeca Obregon-Jimenez, SVP of strategic business engagements and supplier management at Avnet, to get context for the survey results.

As for any lingering component shortages, does that concern specific components?

Rebeca Obregon-Jimenez: Yes, what we’ve seen is an unbalance between what’s available and what’s constrained. Lead times are getting better, but there are some lingering ones around analog chips and microcontrollers. There are a few different tactics in the supply chain. Companies seek alternative sources to buffer their inventories. Sometimes they order too much, which increases demand in the supply chain forecast. In the worst cases they, redesign the board altogether.

What are the market forces that are a concern to your respondents?

Rebeca Obregon-Jimenez: We know that this is a cyclical industry. A lot of demand was driven by COVID and the shortages that came after COVID, which caused rapid growth. Now we’re seeing that rapid growth is slowing down.

Every cycle is unique. We’ve had to deal with two issues: One was a rolling slowdown in specific markets. PCs were in demand during the pandemic. Automotive stayed very strong, but there was a backlog in automotive because of chip shortages. Now, we’re growing at a slower rate, which is a normal part of the cycle. The other issue is that people were ordering more material than they needed, which led to increased inventory across the supply chain. So, some of the lingering issues are due to consumer demand, and some are due to inventory that has accumulated.

Are your respondents currently working with artificial intelligence?

Rebeca Obregon-Jimenez: We didn’t get a high response rate on the use of AI. Only about 4% of engineers said they were using AI, and only 14% said they plan to use it. That was surprising. Companies are navigating ways to use AI responsibly. There is risk and companies are navigating carefully. Also, they’re keeping it close to the chest. It’s getting a lot of attention, but they’re not talking about what they’re doing.

AI is not new for our clients. They have been using AI and machine learning for a long time. Now we’re seeing a progression in the use of AI. A lot of companies use it to make internal processes more efficient. It can help in every stage of the operation but using it internally versus externally will be different for every application.