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By Bolaji Ojo
What’s at stake?
The electronics industry’s cycles cannot be controlled but they don’t also have to be as devastating as they have been in the past or even now. The industry is failing the credibility test by the unbridled response to upcycles and downcycles, which often lay the foundation for the future occurrence of problems being corrected. For an industry that makes precision equipment for others, this is a distinct black eye.
The electronics supply chain is in shambles. Again.
The World Semiconductor Trade Statistics (WSTS) projects IC revenues will increase 13 percent this year, reversing the drop from 2023. Look closely, though, and the market reality is disheartening and perplexing.
The story here is nuanced. Supply chain demons, unchained, lurk in the wings. Rather than grapple with its anomalies – top of which is demand-supply disequilibrium – industry executives are looking beyond the recent shortages and sales slowdown to clamber atop one another in a rush to embrace artificial intelligence, the current growth driver.
But what about the forecast inaccuracies, unrealistic orders, capacity utilization challenges, mismatched capex budgets vs. “real” production need that have bedeviled the electronics market for decades? These issues have not disappeared, and no amount of AI-fueled recovery will keep them from wreaking havoc on the industry within another short period of time.