PURCHASING magazine recently held its annual meeting of its Editorial Advisory Board. The board consists of the top purchasing and supply chain heads from a cross section of industries including high-tech companies IBM, Intel, Hewlett Packard, Celestica and Invensys.

Board members report that business has not improved substantially in the first quarter but are hoping for recovery in the second half.

However, some board members are concerned that when the recovery takes hold, there will be serious shortages of a variety of parts ranging from memory ICs to capacitors. The board members point out that component suppliers have cut back investment in fabs and capital equipment. Once demand for end equipment such as computers, cell phones, consumer electronics, networking equipment and industrial controls picks up, the supply base won't be able to handle the influx of orders. Allocations and higher prices seem inevitable for next year.

Perhaps more important, companies have not been able to invest in developing new technology. That could delay development of new chip technologies needed to improve the performance of end equipment.

jcarbone@cahners.com