This article looks at why the only way forward for the electronics-driven and digital-based industries will be the small batch (even individual) production of bespoke components such as printed circuit boards, chips and more. These components had previously generally been produced in vast quantities in the South-East Asia region and China, and the systems of supply and demand seemed to work as required by electronic businesses around the globe. However, issues related to raw materials needed for production and an overall reduction in the availability of chips, semiconductors and PCBs, resulted in many global businesses having no choice but to put their business or production on hold.
What you can expect in this article:
The Electronics Industry is in dire straits
There has been an ongoing shortage of the components used to create printed circuit boards that are at the heart of most, if not all, electrical devices. This left a huge number of all sorts of businesses in dire straits, unable to produce their electrical, automotive and even aerospace products, driving profits downwards. The most notable industry to suffer was the automotive sector. It was headline news for months on end; that waiting times for new vehicles had gone through the roof, several big producers halted work, laid people off and yes, all because they didn’t have a tiny microchip. It is still a current issue in the world of automotive design and the expectation is that this shortage will last through 2023 and perhaps even longer. Some of the big auto producers, such as Honda, Ford and Toyota have even reported planning a reduction in supply, to counter the persistent lack of the right quality and quantity of semiconductors and chips.
Why has there been a component shortage and the results
There are a number of reasons for this shortage, some of which are detailed below.
Higher than expected demand for new hardware during the pandemic: with many more people and businesses alike looking for the same small components that made their electrics work. The self-same chips required by at-home workers and gamers meant that industrial applications had to be put on hold. Everyone was buying PCs and laptops, digital cameras and smart home entertainment setups. It was an electronics producer’s dream situation. Still, it couldn’t and didn’t last and all through this production boom of home electronics there was a related shortage and adverse impact on other sectors.
Shortage of copper foil: as the production of e-mobility scooters, bikes and cars peaked the need for copper foil increased tenfold or more. This led to a shortage in copper foil that is required for the production of PCBS, as well as an increase in price by over $1000 over a mere nine-month period in the price of this commodity. It was the latest of a number of material shortages and affected the entire PCB production process, showing just how fragile the supply chain for electronic components was and continues to be. The 35% increase in copper foil costs saw the price of PCBs rise and these increases passed onto the consumer in the form of increased prices for all forms and sorts of electrical and electric devices, vehicles and home entertainment products.
Leading to the poor quality of resultant replacement parts and cowboy components. This was a direct result of the increased demand for chips and PCB components as more small unknown businesses looked to turn a quick profit by entering the PCB and chip sector. A black market in chips blossomed and as is the nature with shortages, an increased number of poorer quality chips and PCB were designed, assembled and flooded the market. Those to suffer were mainly smaller electrical device manufacturers who didn’t have the stringent quality control measures that all the larger producers and manufacturers can easily afford. Highlighting the need for constant testing and re-testing and why the sustainability, durability and quality of PCBs are more important than simply their availability.
Increased lead times led to reduced profits: the fact that companies had to wait for lengthy periods of time to receive the chips and semiconductors that they needed to make their products saw them lose money. It was indeed ironic that the unavailability of the smallest basic component was able to hold up and actually stop the production of some of the most complex and expensive electronic automotive and aerospace machines.
How the entrepreneurial sector can solve this issue
There is a significant amount of online chatter as to a long-term and sustainable solution to the problems outlined above. The small batch production of components and PCBs is the dominant idea and one that can indeed solve the issue. Being able to make their own chips and design bespoke PCBS has been the opportunity unearthed in the current uncertainty. Using the available software, support resources and training available exampled by what Altium has made available, any small business or budding entrepreneur to the biggest space tourism business can all design and make their own chips, PCB components and more.
What is small batch production about
Small batch production is being able to source sufficient raw materials to create the exact number of bespoke and specific grade chips and semiconductors and then the resultant PCBs that the business needs. It’s a new take on flexible specialization and has been proven to be the best way for firms to meet their own semiconductor and PCB needs.
In conclusion, the argument is stated thus: for any sized electrical and digital production entity to succeed there will need to be a rethink of their entire supply chain and procurement processes. Many would lean towards the only solution being the return to a smaller production cycle, with smaller businesses taking on the strain and the larger electrical device producers and automotive producers making their own PCBs and chips in smaller batches. The software that now exists allows for a more precise form of testing PCB components and parts, from the power supply and usage to durability as well as ensuring that quality components are used for their specific application potential. Small batch production thus provides a clear and advisable way forward out of the component shortage and resultant drop in the quality of available PCBs.