I N S I D E T H I S I S S U E : T o T he P o int
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A monthly newsletter for members of the Electronic Components Industry Association A P R I L 2 0 1 1 I ssue
Earthquake In Japan Boosts Component By: James Carbone Demand The deadly 8.9-magnitude earthquake and tsunami that wreaked havoc in Japan has caused a run on electronics parts, resulting in some distributors freezing their inventories and carefully reviewing orders before fulfilling them.
Lindsley Ruth, corporate vice president at Future Electronics in Montreal, said that Future also saw a big increase in demand after the quake and has frozen its inventories. That means Future’s marketing department is reviewing orders and determining which orders are filled, and how the parts get shipped to customers.
Rolling blackouts, damage to infrastructure and some suppliers’ facilities and transportation problems “The customers that have partnered in Japan has caused uncertainty with Future get immediate support,” in the electronics supply chain, says Ruth. “Other companies that resulting in panic buying by some we have not done business with, OEMs and electronics manufacturing we are trying to see what we can do services (EMS) to support them to providers. Distributors keep production lines Concern have responded by running.” He added essentially allocating exists about that the week after parts to customers the quake, “we had semiconductor they have long-term customers that came in relationships with. wanting to buy a year’s and component supply of parts,” he “Customers are coming production as well said. “Other customers in with a kind of a panic that we don’t normally as production forecast,” says Michael do business with Knight, vice president came in looking for materials. marketing and product inventory as a means management of TTI, based in Fort of protection or as an insurance policy Worth, Texas.” We have to go through against their existing supply,” he them one by one and try to strip out says. speculative buying and hedging.” He says some customers are trying to “buy up all the inventory they can get their hands on. There’s a little bit of a run on the bank. We are treating anything coming out of Japan as if it is on allocation.” That means TTI is “deliberately doling parts out to customers that we have ongoing long-term relationships with,” but ignoring orders from companies that have not purchased from TTI in the past.
He said the reaction by customers is understandable. OEMs and EMS providers want to make sure their production lines are not shut down because of a lack of supply of parts. Customers want to make sure “they have enough inventory to last for a period of time.” Distributors, OEMs, and EMS providers are concerned about the impact on semiconductor and component production, as well as the impact on production materials needed for semiconductors and other parts. continued on page 3
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