In an era where technology underpins every facet of modern life, electronic components are now the linchpins of national economies. Recognising this criticality, governments worldwide are stepping up, earmarking billions in funding to secure and stabilise the supply of these vital resources. This strategic shift, a direct response to recent global challenges, marks a new era in the electronic components industry.
Everyone knows that the rapid rise of AI is powered by processor chips. Not many people know that almost all the chips used for AI are made by one, vulnerable. company.
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In the wake of the systemic shocks brought on by COVID-19-related shortages, every major consumer of integrated circuit chips has been compelled to re-evaluate their procurement strategies, to look beyond minimising costs. We’ve previously discussed the shift from a “Just-In-Time” to a “Just-In-Case” inventory approach as manufacturers reassess the optimal level of chips to keep in stock. Under the “Just-In-Time” model, manufacturers minimized inventory to free up working capital. However, the “Just-In-Case” approach has underscored the value of maintaining a surplus as a protective measure against sudden supply disruptions. Having extra stock is in fact a good investment of that capital, as it provides a protective buffer against sudden shortages.
Billions of government dollars show that electronic components are now recognised worldwide as an essential resource
The post-pandemic shortages of components showed everyone something that we, and our customers, have known for years: that a reliable supply of electronic components is essential to the economies of all developed countries. The shortages left key manufacturing industries, such as the automotive and aerospace sectors, unable to manufacture.