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Will you get the chips you need this year?

Demand for semiconductors has never been spread evenly across the globe. The Far East, for example, has been a large purchaser because it’s the main manufacturer of consumer electronics. Europe, in contrast, has generally represented around 10% of chip consumption.

Last year, global demand grew by 22% to more than $422billion. How did demand in Europe stack up? According to figures published by distribution trade group DMASS, it was the best year yet, with sales through its members reaching €8.5bn – 14.6% more than in 2016.

According to DMASS chairman Georg Steinberger, the figures were driven by high demand from all industries, long lead times and price increases.

Those three factors point to potential problems. Steinberger acknowledges this in his commentary. “The combination could mean a certain risk for 2018,” he said. Steinberger uses the word ‘certain’, but ‘possible’ works just as well.

Depending whose projections you believe, it’s entirely possible that growth in demand in 2018 could match that of 2017, so the combination of high demand and long lead times is worrying. With phrases such as ‘constrained supply’, ‘tight market’, ‘undersupply’ and ‘demand-supply imbalance’ already being used, the next step is allocation.

No matter how many devices your company plans to buy this year, your purchasing manager should have a very good idea about how to secure what is needed.

Graham Pitcher

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