Router-switch.com: 3 Suggestions to Shorten Lead times of ICT Products
Lead times of ICT products becomes longer and longer, up to 300 days. How to shorten the long lead times? Router-switch.com (Router-switch Ltd.), a 20-year- ICT hardware and solution provider prepared 3 suggestions.
NEW YORK, May 9, 2022 /PRNewswire-PRWeb/ -- As global chip shortage and material shortage, as well as the COVID-19, many manufacturers in the technology area are extending their lead time now.
The lead time of semiconductor packaging continued to be extended.
On April 12, according to the Taiwanese media "Economic Daily", the lead time of semiconductor packaging continued to be extended. Sondrel, an IC design service consulting company, pointed out that due to the change in the order of production capacity in the semiconductor supply chain, and the need for new packaging capacity and personnel training, it will take time. Packaging lead times have been extended to 50 weeks.
According to Nikkei[3], lead times for semiconductor manufacturing equipment is being extended, threatening equipment makers' plans for capacity expansion.
The lead times (in months) for parts and materials quoted by Nikkei are:
(1) Valves, Pumps, Engineering Plastics – 12-15
(2) High-end Ball Screws – 12-14
(3) Power supply systems - 12
(4) Equipment Front-End Modules – 10-12
(5) Quartz Oscillators, Sensors, MCUs, Controller Modules 8-10
(6) Special Grade Cables – 6-7
(7) Semiconductor Grade O-Rings 4-6
For consumers, IT devices also extend their lead time.
In April 13, Apple analyst Ming-Chi Kuo said at Twitter, "The delivery status of the new iPhone SE made exclusively by Pegatron remains 'in stock' on Apple's online stores in many countries after the China lockdown, implying that the current inventories can still meet lackluster demand. Conversely, the delivery time of high-end MacBook Pros (Quanta as the sole supplier) that have been in good demand since launch has roughly increased by 3-5 weeks after the China lockdown."
ICT products lead times becomes longer than before, up to 300 days.
According to Cisco's suppliers, the delivery period for ordering Cisco products is also getting longer and longer. For example, it is said that the longest delivery period for the hottest product series, the Cisco Catalyst 9200L switches can exceed 300 days, which are close to 40 weeks.
An announcement from Cisco said, "Material shortages across the semiconductor industry as well as logistics challenges continue to impact supply chains globally, slowing output across multiple industries from automotive to consumer electronics and beyond. This has resulted in extended lead-times across almost all of our products and extended delivery dates."
According to Fortinet news, their Fortigate firewalls series lead times will extend. The following are approximate availability ranges for Fortinet various product groups:
(1) High-end (FG-xxxx): 15-60 days
(2) Mid-range (FG-xxx): 15-60 days
(3) Low-end (FG-xx): 15-90 days
(4) FortiAP: 15-180 days
What are the reasons of the long lead times?
COVID-19 may be the reason causes the long lead times in many customers' eyes. However, COVID-19 is only a fuse of some problems.
(1) Chip Shortage
Friends who often read international news know that, the global chip is in short supply, and there are many application fields of chips, such as mobile phones, computers, automobiles, electric vehicles and so on. The so-called "chip shortage" does not refer to low-end chips. There are many countries in the world that can manufacture low-end chips by themselves, but the real shortage is high-end chips, such as 14nm, 7nm, 5nm, etc. Even the famous Huawei Kirin chips, they have 5nm design capabilities, but cannot produce such chips. Therefore, ICT products that are high-tech will be forced to reduce the production speed due to the shortage of chips and the ensuing shortage of materials, which will eventually lead to prolonged delivery.
(2) In short supply
The epidemic has caused most people in the world to not go out and work as usual, and can only stay at home to avoid the virus, which has increased people's demand for information equipment and carriers, resulting in a shortage of related products.
(3) Few skilled workers
In the same way, because of the ravages of COVID-19, the staffs of most manufacturers are forced to stay at home most of the time, unable to carry out efficient work. Coupled with the aging problem in developed countries, the average age of skilled workers is over 50 years old, and the older age leads to slower production efficiency. Of course, most ICT product manufacturers choose to set up their factories in underdeveloped countries, but underdeveloped countries have poor medical resources, and the impact of COVID-19 is more severe in these countries.
(4) Difficulty in transportation
Not all countries are taking open measures to coexist with the COVID-19 virus. Some countries will take strict entry and exit measures, resulting in very slow transportation of products. For example, the severe epidemic in some countries will limit the frequency of air transportation, resulting in many goods needing to be transported by sea, and sea transportation, as we all know, is very slow. This further lengthens the lead times of the product.
3 Suggestions of Shorten Long Lead times of ICT Products
How to respond to the problem of long lead times? Router-switch.com also provides 3 suggestions:
(1) Plan ahead for the new project, at least one year
If you are an integrator or end-user, you need to build a new network system, or you are going to bid on a project, please communicate the requirements with your suppliers as early as possible.
For example, if you plan to build a data center next year, please find suppliers to provide related products in the first half of this year. Don't wait until the project is about to start before you ask for a purchase. After all, none of the four reasons for the long lead times can go away in a few years.
If you have planned for your projects in advance, at least one year, the lead times will seem to be shorter than you think.
(2) Buy small quantities and multiple times, from multiple suppliers
Depending on your project needs, a "patchwork" approach is recommended.
For example, to build a data center, if you want to get products right now, you can buy servers from supplier A, network products from supplier B, and cables from supplier C. Moreover, you can purchase devices in several batches, just keep sharing inventory information with your suppliers.
In addition, choosing more reliable suppliers like Router-switch.com to purchase ICT products you need is a better strategy.
(3) Buy common and basic equipment.
It recommends to purchase common, basic equipment. In order to provide a good customer experience and their own income, manufacturers will not sit idly by the problem of excessively long delivery. They will devote resources to improving the efficiency of the production infrastructure to try to meet general demand. Therefore, for more partial products, you can suspend the demand now, and go to buy common basic equipment first!
Source:
[1] 2 3 https://asia.nikkei.com/Business/Tech/Semiconductors/Chip-industry-s-expansion-plans-at-risk-as-equipment-delays-grow
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