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COVID-19 Disrupts the Electronic Parts Supply Chain

May 11, 2020
Both the U.S. military and automotive sectors are starting to feel the real impacts of COVID-19 on their parts supply chains.

A portion of the electronics supply chain that was already experiencing delays and shortages before COVID-19 could now experience 4- to 12-week lags in some areas. According to Military & Aerospace Electronics, effects of the coronavirus on the U.S. military electronic parts supply chain could extend lead times from four to 12 weeks (from order to delivery) over what manufacturers were dealing with prior to the pandemic.

“Defense integrators ranging from circuit board manufacturers to finished military platform designers had been complaining about delivery delays of electronic parts since at least 2018 because of a towering wave of demand triggered by Trump defense budget increases,” John Keller writes in “Disruptions of coronavirus pandemic to impose 4-to-12-week lag in military electronic parts supply chain,”which began shortly after President Trump took office in early 2017.”

Extended Lead Times

TTI Inc.’s President Don Akery told the publication that lead times on these products have been extended in the defense space for the past couple of years. “We saw it start more than 18 months ago, as demand exceeded capacity,” Akery said. “Some had seen lead times push out to 50 weeks, which is unprecedented.”

On a positive note, the defense electronics industry has been able to add capacity to make up for the supply shortfall, and saw the market start to sort itself out early this year. “They have put more capacity in place, so lead times have been stabilizing,” Akery told Military & Space Electronics.

The fact that military demand for electronic parts hasn’t slowed has put additional pressure on distributors and other parts suppliers. “Complicating the picture is surging parts demand from the medical industry,” Keller writes, “for systems like respiratory ventilators to help victims of the coronavirus pandemic.”

Car Makers Feel the Impact

In another example of COVID’s impact on the electronics supply chain, Automotive News says that a parts shortage could thwart the recovery of China’s automotive manufacturing market.

“The virus is now causing production disruptions in Europe, North America, and Japan, which supply crucial components to automakers in China, the industry’s biggest market,” the publication reports.

“Those at risk range from global automakers such as Tesla Inc. and BMW Group to local producers,” it continues, “including Guangzhou Automobile Group Co. and Zhejiang Geely Holding Group Co., all of which could face disruptions if the pandemic drags on.”

With auto-making currently on hold in Europe and the Americas, Automotive News expects glitches in China to primarily impact major manufacturing regions where plants are ramping up, threatening to set back the recovery of the world’s second-largest economy from a months-long paralysis.

Existing parts inventory will likely provide some cushion, but time is of the essence. “Automakers in China typically carry about eight weeks’ supply of imported parts such as engines and chips, though for some components that can be as little as four weeks,” the publication reports, noting that many electronic parts in particular are imported from overseas, leaving makers of higher-end vehicles that contain a lot of software and computers vulnerable.

“About two months ago, people were asking how the disruption in the Chinese supply chain would impact the global auto industry,” AlixPartners’ Stephen Dyer told Automotive News. “Now it’s the reverse.”

About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.

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