Back in early 2016, I say down with a group of my colleagues at TTI and predicted that discrete components – along with other components – would suffer extended leadtimes and even allocation issues before very long. We made that forecast based on a number of factors:
i) Increasing demand from Asia
ii) the massive demand from a new sector – electric and hybrid vehicles
iii) significant mergers and acquisition activity which was removing competing suppliers and seeing many lines being made obsolete and forcing increased last-time-buy notices
iv) moth-balled manufacturing facilities that were not being turned on
In other words, a perfect storm – under capacity and over-demand.
TTI’s policy has always been to have large stocks of freely-available products, and to forge very strong relationships with both our supplier manufacturers and our customers, so we were able to plan and increase our inventory in Europe (and worldwide) ahead of the shortages. However, what we did not expect was the severity of the shortages and how long the situation would last. We expected to see a return to normal conditions by the end of 2017: six months further past that date, and if anything, the situation has got worse – with no one feeling confident about predicting when it will end, but most commentators believing it will be well into 2019 at the very soonest.
Currently we are seeing leadtimes for small signal and Zener diodes out from 30-70 weeks; TVS diodes at 40-60 weeks and MOSFETs and transistors also out to 30-70 weeks. Of course, all significant manufacturers – including TTI’s main franchises Vishay, Bourns, Toshiba, Littelfuse, Kingbright and TT Electronics – are now ramping up production and investing in new facilities.
I mentioned earlier on that at TTI we were prepared for this situation as early as the middle of 2016. At that time, we immediately increased our stocks of discretes and our backlog orders. TTI has always believed in stocking wide and deep across our franchise base in order to support our customers, and in working very closely with our customers and partner suppliers so that we have highly-accurate forecasts of demand and supply, and can act accordingly. Therefore, despite the tough market situation, TTI still has large stocks of over 15,000 different discrete semiconductors, and we believe we are in good shape for 2019 and further. Of course, we are constantly renewing our inventory and placing orders in line with supply chain conditions.
What does this mean for the customer? Simply it means that any customer – existing or new – if they come to TTI, they can still buy the most popular discrete products off-the-shelf, or on 10-20 week leadtimes. And let me just reiterate another cornerstone of TTI’s business ethic: we only sell from our franchise channels, so there is no chance of TTI supplying a counterfeit product. We have never dealt in the grey market, and never will.
That does not mean that we will not offer an alternative if a first choice part is not available. TTI’s knowledgeable and technically-qualified staff can cross-reference databases to try to find an exact or suitable replacement component if required.
All that being said, it’s still a very difficult market and we see no signs of any downturn in the market – quite the opposite – so my advice for buyers of discrete semiconductor components would be: secure your supply line now, for the foreseeable future!
