The surge in demand for IC substrates

29 July 2024

This surge has significant implications for the electronic component supply chain, including supply shortages, price increases, quality challenges and the need for increased investment and supply chain diversification.

What are the implications on the electronic component supply chain?

The surge in demand for IC substrates is driven by advancements in technology such as 5G networks, artificial intelligence (AI), and machine learning (ML), as well as the growth in consumer electronics, automotive innovations and increased data processing needs. This demand has significant implications for the electronic component supply chain.

Key implications include:

• Supply Shortages: Shortages in IC substrates create bottlenecks, delaying production and delivery of electronic components and devices.
• Price Increases: High demand and limited supply, lead to increased costs for IC substrates, affecting the overall cost structure of electronic products.
• Quality Challenges: Sourcing reliable, high-quality IC substrates becomes more difficult, potentially impacting product quality and increasing the risk of counterfeit components.
• Investment Needs: Companies are compelled to invest more in expanding manufacturing capacity and research and development to meet the growing demand.
• Supply Chain Diversification: To mitigate risks, companies are diversifying their supplier base and regionalising production to enhance supply chain resilience.
• Product Launch Delays: The shortage of IC substrates can delay new product launches, impacting market dynamics and competition.

A more detailed look at the drivers and Implications

5G Networks

The rollout of 5G technology demands more sophisticated and high-performance IC substrates to support higher frequencies and faster data transmission.

Artificial Intelligence (AI) and Machine Learning (ML):

The increasing use of AI and ML in various applications requires advanced ICs with higher performance and power efficiency.

Smartphones and Tablets

The proliferation of smartphones, tablets, and other portable devices is driving demand for smaller, more powerful, and energy-efficient IC substrates.

Wearables and IoT Devices

The expansion of wearables and IoT devices also contributes to the need for compact and efficient IC substrates.

Electric Vehicles (EVs)

The shift towards electric and autonomous vehicles requires robust and high-performance electronic components.

Advanced Driver-Assistance Systems (ADAS)

The demand for sophisticated electronic systems in vehicles is growing, increasing the need for advanced IC substrates.

Data Centres and Cloud Computing:

Increased Data Processing Needs

The rise in cloud computing and data centres to handle large volumes of data requires high-performance IC substrates to support efficient data processing and storage.

Miniaturisation and Integration

The trend towards miniaturisation in electronics, necessitates the use of advanced IC substrates that can support smaller and more integrated circuit designs.

Implications on the Electronic Component Supply Chain

The surge in demand has led to shortages in IC substrates, creating bottlenecks in the production of electronic components and devices. Extended lead times for IC substrates impact the entire supply chain, delaying product development and delivery.

Cost Pressure

The high demand and limited supply have driven up prices for IC substrates, increasing the overall cost of electronic components and devices.

Budget Constraints

Manufacturers may face budget constraints and need to adjust pricing strategies or find cost-saving measures elsewhere in their production processes.

Sourcing Challenges

Finding reliable suppliers who can meet the quality standards for IC substrates becomes more challenging, potentially impacting the quality of final products.

Counterfeit Risks

The shortage may lead to an increase in counterfeit or substandard IC substrates entering the supply chain, risking product reliability and safety.

Increased Investment in Capacity and R&D Investment

Companies are investing in expanding their manufacturing capabilities to meet the growing demand for IC substrates. Increased investment in research and development to innovate and improve IC substrate technologies and manufacturing processes.

Supplier Diversification

Companies are seeking to diversify their supplier base to mitigate risks associated with supply shortages and to ensure a stable supply of IC substrates.

Regional Production

There is a trend towards regionalising production to reduce dependency on specific geographical areas and to improve supply chain resilience.

Impact on Product Launches

The shortage of IC substrates may delay the launch of new electronic products, impacting market dynamics and competition.

Addressing these challenges is essential to meet the growing demand for advanced electronics. By adapting and innovating, the industry can capitalise on this opportunity while ensuring a robust and efficient supply chain.

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