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James Carbone -- Purchasing, 4/15/2004 2:00:00 AM
Most electronics purchasers have enjoyed a buyers' market for the past three years. High inventory levels and excess capacity resulted in plentiful supply and falling prices. Many purchasers are used to the buyers' market and are confident there will be no serious shortages in the near future. They point out that many chip suppliers have moved to 12-inch wafers and 90-nanometer process technology and are able to produce more chips per wafer.
A lot of passives and connector production has moved to China and other low-cost Asian countries, which means suppliers can reduce prices for parts.
While buyers may expect some shortages, the thinking is it won't be due to overwhelming demand, but merely mix issues. In other words, suppliers may make too much of one part and not enough of another. When suppliers see growing demand for a part, they can crank up production and reduce output of another component.
The problem is no one can predict severe shortages that aren't mix related. No one foresaw the tantalum capacitor shortage of 1999-2000. That shortage had buyers scouring the world for parts. It was so painful that many OEMs designed out tantalum capacitors from their products so they would never have the problem again.
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