3 Ways to Source Hard to Find Electronic Components

This article has been updated, it was originally posted on 1/11/2022

Over the last few years, various factors have made sourcing electronic components increasingly challenging.  

The global Covid-19 pandemic turned the world on its head. The semiconductor supply chain faced manufacturing stalls from lockdowns worldwide. Businesses had to circumvent lockdowns through different accommodations, and the work-from-home model (WFH) boomed. Personal electronics orders skyrocketed. At the start of the pandemic, many original equipment manufacturers (OEMs) had previously cut orders expecting low demand. From this, the global chip shortage emerged.

Over the next several years, numerous disruptions further impacted the global supply chain and pushed recovery further into the future. Bad weather, chip fab fires, seaport congestion, a massive transport ship wedged in the Suez Canal, and mounting lockdowns as new Covid-19 variants sprouted contributed to this problem. The shortage hurt everyone, but some OEMs and other manufacturers faced bigger issues.  

Automotive OEMs have been through the wringer. Original component manufacturers (OCMs) determine production capacity on yearly demand and market growth indicators. Automotive chip orders are smaller than white goods and personal electronics manufacturer orders. Automotive OEMs require larger chips, known as legacy nodes–any node above 28nm is considered legacy–which are slowly becoming primarily obsolete. White goods and personal electronics utilize advanced nodes, which are usually beneath 11nm in size.  

When the lockdowns first occurred, many auto OEMs canceled previous orders during 2020, when automotive demand was low. Based on that demand, OCMs cut production to focus on increasing capacity for personal electronics. Vehicle orders suddenly recovered and boomed in early 2021, and automotive chips were unavailable as OCMs battled with demand across personal electronics and medical industries.

In 2021, carmakers worldwide lost $210 billion in sales due to the chip shortage. McKinsey & Company reported in 2022 that the chip shortage for automakers is unlikely to resolve in 2023. If chip allocation struggles persist, the automotive chip shortage could last until 2030.

But tomorrow’s solutions cannot help manufacturers today. Thankfully, OEMs, contract manufacturers (CMs), and electronic manufacturing service (EMS) providers can source hard-to-find microelectronics, like automotive chips, by following these best practices.

1. Reevaluate Your Designs and to and Diversify Your Supply Chain  

First and foremost, companies looking to navigate the landscape's procurement challenges must expand their supply ecosystems.

Chipmakers are still working to regain equilibrium for some time; especially now the shortage has transformed into a chip glut. Top component makers lack the capacity to meet the global market’s demand. Even Tier 1 vendors with significant capital and foundry service provider support have recently been unsuccessful in protecting their partners from multibillion-dollar financial losses.

Other methods are needed when traditional measures fail. Two significant OEMs in the automotive sector found success by changing their sourcing methods during the chip shortage.  

Like most automakers, Tesla could not source parts to power their popular electric vehicle (EV) models during the shortage. As a result, Tesla was on the verge of a financially devastating production shutdown—however, the firm pivoted by acquiring “substitute alternate chips” and updating its automobile firmware.  

Consequently, it generated over $1 billion in revenue while its contemporaries initiated major layoffs and temporary plant shutdowns.  

Similarly, Nissan discovered it could not source the custom semiconductors that supported its fleet’s braking systems. The engineers revamped a circuit board design to accommodate an off-the-shelf component. That simple change enabled the company to keep its factories open and save money by purchasing more affordable generic parts.  

Tesla and Nissan’s actions show that openness and flexibility are mission-critical for success in the semiconductor landscape.  

Another solution, now that the chip shortage is ramping down, is collaboration. Many automotive OEMs are partnering with OCMs to ensure future capacity and investment in new technology. General Motors and GlobalFoundries signed a long-term contract to provide future supplies. ZF is investing in Wolfspeed’s new German plant for supply and research opportunities.  

On a grander scheme, countries and OCMs are working alongside one another to pass semiconductor-friendly incentive plans and subsidies to help fund new domestic operations to prevent a shortage of similar magnitude. The U.S. passed the CHIPS and Science Act, leading to over $200 billion in new semiconductor projects. Beyond domestic facilities, the U.S. is strengthening chip collaboration between Canada and India to help diversify and strengthen the global semiconductor supply chain.

Diversification leads to resiliency. During the global pandemic, many OEMs, CMs, and EMS providers suffered when China’s leading manufacturing hubs went into extreme lockdowns. The supply chain stalled as many waited for China’s fabs to return online. As the supply chain diversifies, hard-to-find components won’t be impacted by the “eggs all in one basket” challenge.

2. Avoid Working with Unverified Suppliers  

In addition, manufacturers must do their due diligence when working with new vendors. Unintentionally connecting with a disreputable chip vendor has always been a risk, but that threat intensified during the global chip shortage. OEMs, CMs, and EMS providers must know that many counterfeiters viewed the global chip shortage as a golden opportunity.  

Fraudsters targeted electronic device makers using two strategies. Criminals use fake listings to trick companies into paying them for phantom chips. Scam artists posed as reputable part vendors with ample stock of components that could be shipped immediately.  

Industry watchdog group ERAI reported that bad actors defrauded professional buyers out of hundreds of thousands of dollars amid the worsening chip shortage.  

Another way criminals worked to take advantage of the chip crunch was by distributing counterfeit parts.  

The Wall Street Journal discussed how sophisticated con artists used search engine optimization to deceive unsuspecting manufacturers. These fraudsters created accounts on popular e-commerce platforms to offer difficult-to-source microelectronics. And after accepting payment, unscrupulous individuals sent their victims fake and defective parts. Many of these victims faced production stalls that could have put them out of business like the pandemic did to many others.

Since some leading online marketplaces do not verify the legitimacy of their merchants, their customers are left vulnerable to counterfeiters. Therefore, manufacturers should only work with trustworthy suppliers that operate through legitimate marketplaces.

Otherwise, firms leave themselves open to existential risks by chasing deals too good to be true.  

3. Use a Trustworthy Online E-Commerce Marketplace  

Traditionally, professional buyers employ an analog method to source electronic components. Procurement specialists contract manufacturers, distributors, and third-party vendors to acquire the parts needed to keep their companies running. However, exchanging emails and playing phone tag is an inefficient, time-consuming process that leaves OEMs at a severe disadvantage, especially during periods of volatility.  

Sourcengine is one of the largest global marketplaces for microelectronics to help manufacturers source hard-to-find components.

With over 1 billion component listings from 3,500+ suppliers and 40+ franchised partners, you can find your much-needed part. Moreover, you can find product details, datasheets, lifecycle status, and, if applicable, alternates. You’ll also see upfront pricing and shipping information, lead time quantities, and delivery dates. Established by long-time industry professionals, its design prioritizes seamless purchasing functionality.  

Sourcengine operates worldwide with procurement agents, inspectors, and warehouse personnel to facilitate the movement of electronic components whenever you need a delivery. Sourcengine’s logistics network enables it to move products from one corner of the globe to another with maximum speed. Need more help tracking offers to aid your buyers better? Sourcengine’s got the tool to make purchasing electronic components quick.

Order API is the last integration you will ever need. It smoothly integrates our large marketplace with your ERP system. Buyers can centralize and automate their purchases through a streamlined process that brings real-time market data to your system—no phone tag or time-consuming processes that slow down during volatile periods.  

With Order API, you’ll be able to find the components you need without ever having to leave your ERP system. If you can’t find an offer, you can quickly send our team of experts an RFQ. You’ll get an offer for the components you need without delay.  

We’re not out of the woods yet, but we can help you make up for lost time with Sourcengine.