Supply chain managers buying parts for mobile phones may want to brace for a bumpy ride. Recent news coming from Asia indicates shortages for several important components could trigger supply chain disruptions, hike prices, and make backlogs a new norm for a while.
Industry sources cited by DigiTimes reported that several key smartphone components, including high-end camera modules, touchscreen panels, and multi-chip package memory chips, are getting harder to find.
As these kinds of trends usually go, increased global demand for popular consumer devices, most notably Android and Apple smartphones, plus the manufacturing complexity associated with some of these parts, requires constant vigilance to keep these components in stock, at the right price.
Of course, if you happen to have Apple or Samsung written on your business card, you may have more luck securing parts. The battle for global smartphone dominance between these companies is proving how product quality, device innovation, and well oiled supply chains help triumph in the consumer electronics space, Forbes reported.
But, even these companies are not invincible, as noted in a report from The Street. Last fall, despite selling more than 5 million iPhone 5s, Apple's shares hit a rough patch when it faced supply shortages and rioting at one of its Foxconn partner's manufacturing plants. Earlier this spring, mobile phone operators Sprint and T-Mobile acknowledged that they had to delay the Samsung's Galaxy S4's rollout because of inventory challenges at the Korean electronics manufacturer, the article said.
The news ripples down from there. Chinese handset companies Yulong, OPPO, and Xiaomi have said that their suppliers are struggling to keep up with demand, according to The Street's report. And Taiwan-based HTC is having a hard time keeping up its phone production, too, because camera sensors aren't being manufactured fast enough.
If this weren't enough to cause jitters, uncertainty around how the world will respond to increasing political tensions between North and South Korea complicates matters further. EE Times Asia recently reported that a collapse in Korean parts production would have worldwide implications and particularly hit the DRAM, NAND flash, and LCD panel segments.
None of this is new, nor should it come as any major surprise. Anyone who has earned their stripes in this business knows all too well how these supply-demand fluctuations come and go. These cycles seem to be more the norm than the exception these days.
What's new about this is that it's hitting the almost-untouchable smartphone market. Smart supply chain professionals should have predicted this would happen, eventually. There's a pattern: A product comes out, and, as worldwide masses latch on and the technology becomes trendy, shortages show up sooner or later. It happened many times over with PCs, laptops, high-definition TV screens, and any other device the world wanted. Now it's the smartphone sector's turn.
How well prepared is this segment of the supply chain this time around? Are we going to double booking for parts and inventory building for key parts? Will there be more spot-market buying when parts get really hard to find? Or are people already anticipating this and finding better, more predictable ways of matching manufacturing build plans with customer orders? Tell us in the comments section.