Advertisement

Blog

As Shortages Loom, Watch Out for Counterfeits

Like many of you, we at SolTec Electronics are all very saddened by the devastating high-magnitude earthquake, tsunami, and subsequent nuclear power plant meltdown in Japan. We express our most sincere and deepest condolences over the lost lives and suffering caused by these devastating events.

The total effect on the electronics supply chain is still being assessed. However, it is evident that most companies involved with electronics manufacturing will likely be affected in some way. Japan accounts for approximately 20 percent of all global semiconductor production, and there are already several reports of shortages and production halts from Japanese manufacturers.

Even companies that were not directly hit by the quake are affected because of power outages and transportation disruptions. Also, supply of silicon wafer will become shorter, and that could affect many product lines, even ones not manufactured in Japan.

Analysts from iSuppli have reported that “component shortages, caused by the Japanese earthquake, are not likely to appear until the end of March or the start of April, but the shortages and their price impact are likely to linger until the third quarter.”

We wanted to share a few updates that have come through from several major manufacturers:

  • Silicon wafer fabs {complink 9914|Shin-Etsu Chemical Co. Ltd.} and {complink 5274|Sumitomo Mitsubishi Silicon Corp. (SUMCO)} have sustained damage to their production lines, and the power outage has forced production to come to a stop. The traffic for areas east of Kantô has also been affected. As a result, the supply for silicon wafer will drop significantly, which will cause the global semiconductor players outside of Japan to compete for material.
  • {complink 5703|Texas Instruments Inc.}'s manufacturing plant in Miho, Japan, which is responsible for 10 percent of TI’s outputs, has been significantly damaged, affecting completed products and work in progress. It will likely take until September to get these plants operating at full production as normal. This will likely cause pushed-out lead times for TI products, especially DLP and Analog.
  • {complink 3297|Maxim Integrated Products Inc.}'s partner plant in Sakata (Seiko Emerson) has been affected by the power outages, and Maxim is currently in the process of shifting production to another facility.
  • {complink 4751|Samsung Electronics Co. Ltd.} and {complink 12912|Hynix Semiconductor Inc.} have stopped providing spot pricing for now as they wait to assess the current situation.
  • {complink 12722|Renesas Electronics Corp.} has temporarily shut down production at 7 out of 22 plants.
  • DRAM production has been significantly affected, especially for PC and system manufacturers.
  • {complink 2393|Hitachi Ltd.} and {complink 4185|Panasonic Corp.} LCD fabs have both been affected, at least temporarily
  • {complink 5648|Toshiba Corp.}'s assembly line, near Tokyo, will be closed for at least one month. Mobile phone industry and auto industry for car navigation displays will be most affected.
  • Murata Manufacturing Co. Ltd. has announced that three of its facilities have been affected by the earthquake. Affected product lines include: EMI Supression Filters, Coils, Piozelectric Products, Saw Filters, and Polymer capacitors. Murata has not yet released an estimated timeline on the restoration process; it's expected there will be at least some halt to production in the short term.
  • NAND Flash produced in Japan accounts for nearly 40 percent of the entire global supply, and experts predict that shortages are imminent.
  • Most large OEM and EMS companies currently are currently assessing their material needs for the second and third quarters and taking actions to ensure they will be able to secure the materials they need for production. Some companies may try to stock their shelves full now, in preparation for potential shortages and price increases. Others might try their luck and wait it out.

    When the shortages hit, OEMs may have to turn to independent distributors and try to secure the parts through the excess market. In this case, it is important for them to turn to a reputable distributor with certifications such as ISO 9001 & ESD S20.20. Also, they should have testing capabilities in place, to ward off potential counterfeits, which are always prevalent in cases of shortage or obsolescence.

15 comments on “As Shortages Loom, Watch Out for Counterfeits

  1. eemom
    March 19, 2011

    The situation in Japan is sad and heart wrenching.  Quake, Tsunami and potential nuclear disaster are each horrible, but combine them into one event and the resulting effects are catastrophic.

    Japan's crisis is not over by any means. Japan continues to work on containing the nuclear meltdown as well as re-building their devastated towns.  The effects of this event will be felt on many levels for some time to come.  The effects of the semiconductor and supply chain shortage will most likely be felt for some time to come.  I do not doubt that companies will rally together to find a way to divert manufacturing where possible and try to cover each others' shortages.  At least that is what I hope.  I also hope that all the large companies, whether or not they are affected by this tragedy, join together to help a broken Japan.

     

  2. mfbertozzi
    March 19, 2011

    Appreciated report Dawn, a very interesting (and deep) summary about current scenario, all of us are trying to provide their best to substain Japanise population.

    Coming back to topics you reported, a couple of thoughts was born:
    -current events could potentially move quickly consumers and suppliers interests towards products from West? (with severe impacts on the market, huge lack of biz in Japan, overload and difficulties to deliver products in West)
    -as reverse face of the coin, japanise manufactures should conceive new design and producing ways in order to overtake  lack of traditional eletronics components ?

     

     

     

  3. Ashu001
    March 19, 2011

    Given that 40% of all NANDflash is manufactured in Japan(and how critical a part of the Electronic Supply Chain this is);I have to say without an iota of doubt this is the most critical issue that has been affected by this disaster.

    Yes there is no doubt that turning to independent distributors can also cause problems(as you so rightly point out below)-But do OEMs have an option?Frankly speaking right now they Don't.

    When the shortages hit, OEMs may have to turn to independent distributors and try to secure the parts through the excess market. In this case, it is important for them to turn to a reputable distributor with certifications such as ISO 9001 & ESD S20.20. Also, they should have testing capabilities in place, to ward off potential counterfeits, which are always prevalent in cases of shortage or obsolescence.”

    Regards

    Ashish.

  4. t.alex
    March 19, 2011

    Japan still plays a very crucial role  in suppplying important components for the world's electronics products. Counterfeits will be definitely growing and intefering with the supply chain, and prices will be driven to higher and higher levels.

  5. prabhakar_deosthali
    March 20, 2011

    The problem of shortage of standard components like memory ICs, microcontrollers, wafers can be somewhat tackled by the alternate sources in other countries. But there are some products ( like CNC controllers or some of the Automotuve ICs ) which use propritary Japanese components for which there will not be second source. The companies requiring such components will have to wait  for Japan to retrun to normalcy as soon as possible.

  6. Dawn Gluskin
    March 21, 2011

    Hi eemom,

    Thanks for your feedback.  I agree that the situation is heart wrenching.  I did hear some good news on the way into the office this morning that the nuclear plants have been cooled enough to be considered “under control.”  However, they are estimating it will take Japan five years to recover from this tragedy and get back to “normal” living.  The effects of the semiconductor and supply chain shortage will definitely linger for quite some time….

    -Dawn Gluskin

    Founder & CEO

    SolTec Electronics

  7. Dawn Gluskin
    March 21, 2011

    Hello mfbertozzi,

    New design is always an option, but in my experience, redesign is typically a long-term solution as it takes quite a bit of time to execute.  Companies like mine (SolTec Electronics) are able to assist in locating hard-to-find materials, in the meantime.

    Thanks for your feedback!

    -Dawn Gluskin

    Founder & CEO

    SolTec Electronics

     

  8. Dawn Gluskin
    March 21, 2011

    Hi Tech4people,

    I agree — the NAND flash market is going to be hit hard, especially in the short term.  I have no doubt that the global market will ban together with some sort of solution to the imminent shortages, but it is going to take time.

    While I agree that turning to independent distributors can cause problems, it doesn't have to be that way!!!  My company, SolTec Electronics, is an independent distributor, but we have many processes and procedures in place (inlcuding an in-house testing lab & ISO 9001 & ESD S2020 quality certifications) to protect our client from potential bad parts in the supply chain.  That is why I suggest in my post that OEMs will need to turn to independents, but they need to make sure they are reputabl e!!

    Thanks for your feedback!!!

     

    Dawn Gluskin

    Founder & CEO

    SolTec Electroncis

  9. Dawn Gluskin
    March 21, 2011

    Hi T.alex,

    Agreed.  The basic principles of supply & demand are in affect & price increases are immiment.  Partnering with a vendor with solid counterfeit and avoidance processes in place is critical to stay protected from receiving these type of parts.

    Thanks for your feedback!

    Dawn Gluskin

    Founder & CEO

    SolTec Electronics

  10. Adeniji Kayode
    March 22, 2011

    I have no doubt that more Counterfeit consumer goods will find their way to the market right now, and its not that they just got there they have always been in market but right now they have a chance to gain prominence now and with that i see a fall in price and not increase because they will want to make something out of this disaster of Japan for themselves

  11. Barbara Jorgensen
    March 22, 2011

    I discovered something interesting last week when I spoke with some independent distributors: the customers that are turning to them in the wake of possible shortages are customers that have established relationships with these distributors. The distributors have established a track record during periods where supply is not so uncertain. They also don't want to jeopardize these relationships by dealing in substandard parts. This may be a period that tests independents' ability to help control the flow of counterfeits into the supply chain.

  12. Dawn Gluskin
    March 22, 2011

    Excellent point, Barbara.  As an independent, I can vouch for you being 100% correct!  Our clients continue working with us as an extension of their purchasing team based on relationship & past performance.  We also have an in-house test lab to uphold our zero couterfeit tolereance and validate parts prior to shipping, which helps to ease any concerns our clients might have.

    Thanks for the feedback!

    – Dawn

  13. hwong
    March 22, 2011

    Dawn-

    I don't think turning to the independent contractors will cause problems. But it's just that it will take some time to get through fitting, quality control and overall manufacturing integration. This time lag may be a few weeks to a couple months. I just don't know if companies would be willing to perform all that work if the CM can catch up with the shortage solutions

  14. Ashu001
    March 23, 2011

    Dawn,

    Thanks for the feedback on your company!!

    I agree with you here entirely, if we have reputable independent companies then everything gets taken care of immediately.

    This is why we need more sites like EBN as well as better word of mouth networking to understand and appreciate how fast things are changing and evolving in this field.

    After all,a company which is doing amazing work (& has top class service levels today) need not be able to deliver the same a month from now.

    Regards

    Ashish.

  15. t.alex
    March 25, 2011

    Hi Dawn, I believe SolTec does have a proper process in place to screen suitable vendors. Do you mind sharing with us more about this?

Leave a Reply

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