How is Chipageddon affecting you?

[Kjelt]

I suspect it is simple: the big auto OEMs (& so on) have simply bid much more for the parts, and in a volatile market, Digi-Key and other distributors do not want to buy in stock at prices that might vary week by week. 

No, it is actually very simple.
Manufacturerers and their representatives (at least the ones I met back in my day) don't talk to small customers.
They talk to the companies that are ordering boxes of reals, eg millions of components, sometimes contracts run for years. And even then they sometimes do not (can not) deliver.
So at the new production of such a component is already been reserved for year(s) by the big companies, they are already waiting for them for a long time. Prices were already neotiated contracts signed.
The manufacturers might even loose money now on certain contracts and there sometimes are also penalties for failure of delivery. The Farnells and Digikey etc of the world are small fish, if they need components they should also order millions in some cases they do btw.

[JPortici]

I am just guessing that SMEs are a significant part of the industry.

Maybe not in size or revenue, but they (and i would dare include us) are significant or essential as their role in the whole chain.
To cite tzaboo, and others, it is amusing that SMEs that are responsible for essential bits that keep the whole thing running may not be getting parts. What happens if the SME that produces something needed to create chips is not considered by the sales droid because they are not generating enough revenue? Myopia.

[IDEngineer]

No, it is actually very simple. Manufacturerers and their representatives (at least the ones I met back in my day) don't talk to small customers.

That has not been my experience, at least pre-COVID. Let me cite three examples.

I was working with a VERY small startup in Spokane WA (not a technology mecca whatsoever), under 10 employees, with zero history of shipping anything yet. We were running into some trouble with a then-new high speed opamp. The IC vendor had one of their Application Engineers travel to our laughably ramshackle "office" and he sat at our bench, using our ancient scraped-together T&M equipment, and sorted out the problems.

My present company was just getting started in the mid-2010's and we were getting weird behavior from a peripheral in a microcontroller. I called for technical assistance, and they set up a conference call. Next thing I know, I'm on the phone with a half dozen surprisingly senior folks from the IC manufacturer who spent a full hour with me going through all of the details and offering suggestions which led to a complete solution to the problem. That product has been in continuous production ever since, we use the same part in several other products now, and we consume well over 10K devices annually.

Within the last two weeks (so post-COVID) Microchip listed some parts we use at a surprisingly low price - like 75% off normal pricing as shown in other listings for the same part on the same page! I ordered multiple reels and when the order acknowledgement came, it now showed a note that said "Custom Part" that wasn't listed on the sales page. Uh oh, what were we buying? I contacted Microchip customer support and got a fast email reply, which led to a couple of phone discussions, which led to 1) The "custom" part was tighter-than-normal testing requested by one customer, and 2) the pricing was a mistake but Microchip would honor my order. The price was corrected on their website very quickly {grin}.

The largest electronics company I've ever worked for was ~2K employees, and most of my companies have been startups with 20 or fewer. Yet we've always gotten great support, everything from in-person Engineering assistance to rapid telephone responses from people who spoke English and weren't just flunkies. I'm bummed by the supply chain issues but I can't fault our vendors, they've been supporting us very well.

[Kjelt]

Perhaps I should rephrase, I was not talking about technical support.
I was talking about sales meetings taking days to get to the lowest price as possible for millions of pieces of multiple components, you commit to buy in coming year(s).
Those people fly in and stay for the negotiations. Those people do not take your phone call if it is not a million$ deal. They don't negotiate for tens of thousands of pieces, they are just not interested.
Those are the deals car manufacturers, mass product companies etc. make and they are the 60% steady income generating business they don't want to loose. And those deals are hard and tough and go down to get the last cent off on a component.

[KE5FX]

Perhaps I should rephrase, I was not talking about technical support.
I was talking about sales meetings taking days to get to the lowest price as possible for millions of pieces of multiple components, you commit to buy in coming year(s).
Those people fly in and stay for the negotiations. Those people do not take your phone call if it is not a million$ deal. They don't negotiate for tens of thousands of pieces, they are just not interested.
Those are the deals car manufacturers, mass product companies etc. make and they are the 60% steady income generating business they don't want to loose. And those deals are hard and tough and go down to get the last cent off on a component.

Except the car manufacturers are hating life, too.  Maybe not as badly as we are, but even if you order a new Porsche, you will get a long list of excuses regarding why you won't be able to get the memory feature for your steering column, or the Bose stereo, or (for that matter) why you will have to wait months longer than usual for what you do receive.  Mass-market manufacturers like Ford and GM still have vehicles sitting in parking lots by the tens of thousands, while their dealer lots have a fraction of their usual inventory.

I don't understand where all the parts are going.  I understand where the ones at DigiKey and Mouser are going -- they're snapped up by Chinese brokers the minute they hit the shelves.  But that wouldn't work for them if availability were anywhere close to normal, and it's been working for a couple of years now.

And where are all the chips that would normally be going to Russia?

The only guess I can come up with is that there is a massive defense buildup going on that is somehow flying under the press's radar.   Dies that would have gone into industrial, commercial, and automotive packaging are now going into military packaging.  But... by the millions? 

[SilverSolder]

Perhaps I should rephrase, I was not talking about technical support.
I was talking about sales meetings taking days to get to the lowest price as possible for millions of pieces of multiple components, you commit to buy in coming year(s).
Those people fly in and stay for the negotiations. Those people do not take your phone call if it is not a million$ deal. They don't negotiate for tens of thousands of pieces, they are just not interested.
Those are the deals car manufacturers, mass product companies etc. make and they are the 60% steady income generating business they don't want to loose. And those deals are hard and tough and go down to get the last cent off on a component.

Except the car manufacturers are hating life, too.  Maybe not as badly as we are, but even if you order a new Porsche, you will get a long list of excuses regarding why you won't be able to get the memory feature for your steering column, or the Bose stereo, or (for that matter) why you will have to wait months longer than usual for what you do receive.  Mass-market manufacturers like Ford and GM still have vehicles sitting in parking lots by the tens of thousands, while their dealer lots have a fraction of their usual inventory.

I don't understand where all the parts are going.  I understand where the ones at DigiKey and Mouser are going -- they're snapped up by Chinese brokers the minute they hit the shelves.  But that wouldn't work for them if availability were anywhere close to normal, and it's been working for a couple of years now.

And where are all the chips that would normally be going to Russia?

The only guess I can come up with is that there is a massive defense buildup going on that is somehow flying under the press's radar.   Dies that would have gone into industrial, commercial, and automotive packaging are now going into military packaging.  But... by the millions? 

I heard a truly ridiculous conspiracy theory the other day, that "they" want inflation and are therefore artificially choking all the supply lines of pretty much anything they can, to make prices go up.

[HwAoRrDk]

Politico published an article a couple of days ago about documents they had got their hands on that purported to be a 'shopping list' of Russia's most-wanted electronic components for their military.

https://www.politico.eu/article/the-chips-are-down-russia-hunts-western-parts-to-run-its-war-machines/

They included the complete list in the article, and it makes interesting browsing.

The 'Priority 1' stuff seems to be mostly things like FPGAs, memory, connectors (no doubt MIL-spec), etc. But on the 'Priority 2' list, things like 74-series logic, TL431s?!? You'd think they'd already be buying that jellybean stuff from China. At least we know who's to blame for ATmega8-16AU MCUs being out of stock.

[SiliconWizard]

I'd take this article with a grain of salt.

[Kjelt]

I don't understand where all the parts are going. 

If for easy reasoning we can assume that due to corona all fabs were closed for say a year and the demand for chips doubled due to home working.
The semicon design companies have developed new products.
So now they not only have to catch up with the sold out parts but also produce the new chips for new product releases. So it is a double edged sword.
But for some chips there is light in the tunnel, other chips might not even be produced yet.

[PlainName]

I heard a truly ridiculous conspiracy theory the other day, that "they" want inflation and are therefore artificially choking all the supply lines of pretty much anything they can, to make prices go up.

There must be a huge pile of backed up stock somewhere, then. All we need to do is find it and we're made for life! (Albeit a short one if we get caught.)

[Bud]

The only guess I can come up with is that there is a massive defense buildup going on that is somehow flying under the press's radar.   Dies that would have gone into industrial, commercial, and automotive packaging are now going into military packaging.  But... by the millions? 

There may be some truth to it...kind of

https://www.ept.ca/2022/09/china-demands-us-drop-tech-export-curbs-after-nvidia-warning/

[IDEngineer]

A broker I trust told me recently that pretty much everything is available for a sufficient premium. Interpret that as you will, but it implies the parts ARE out there.

[Black Phoenix]

The only guess I can come up with is that there is a massive defense buildup going on that is somehow flying under the press's radar.   Dies that would have gone into industrial, commercial, and automotive packaging are now going into military packaging.  But... by the millions? 

There may be some truth to it...kind of

https://www.ept.ca/2022/09/china-demands-us-drop-tech-export-curbs-after-nvidia-warning/

And there's more:

https://www.rfa.org/english/news/china/bans-09072022132338.html

[JPortici]

A broker I trust told me recently that pretty much everything is available for a sufficient premium. Interpret that as you will, but it implies the parts ARE out there.

it must be that we don't know good brokers then those who contacted us were either sorry not possible or quoting winsource prices, same for our main contractor and they certainly know better brokers

[coppice]

No, it is actually very simple. Manufacturerers and their representatives (at least the ones I met back in my day) don't talk to small customers.

That has not been my experience, at least pre-COVID. Let me cite three examples.

I was working with a VERY small startup in Spokane WA (not a technology mecca whatsoever), under 10 employees, with zero history of shipping anything yet. We were running into some trouble with a then-new high speed opamp. The IC vendor had one of their Application Engineers travel to our laughably ramshackle "office" and he sat at our bench, using our ancient scraped-together T&M equipment, and sorted out the problems.

When a part is new pretty much anyone with a useful input to make gets serious attention from its primary vendor. They need to catch and correct any problems as quickly a possible, before a huge pile of buggy devices have been produced. They would go broke putting the same resources into every query about a mature and trusted product.

[Howardlong]

A broker I trust told me recently that pretty much everything is available for a sufficient premium. Interpret that as you will, but it implies the parts ARE out there.

That has certainly been my experience.

[tom66]

A broker I trust told me recently that pretty much everything is available for a sufficient premium. Interpret that as you will, but it implies the parts ARE out there.

That has certainly been my experience.

Same, with the exception of Microsemi FPGAs, we can't find them for love nor money!

[coppice]

A broker I trust told me recently that pretty much everything is available for a sufficient premium. Interpret that as you will, but it implies the parts ARE out there.

Well, of course they are available for a sufficient price. Talk to a big customer with a good flow of parts, but low margins. They'll be happy to shut down production and sell on their parts for a good price.

[AndyC_772]

A broker I trust told me recently that pretty much everything is available for a sufficient premium. Interpret that as you will, but it implies the parts ARE out there.

It doesn't mean enough parts are out there, though.

Of all the parts which are manufactured,

- some go straight to real customers who use them
- the rest go to the grey market, who jack up the price and advertise them for sale

Meanwhile, other potential real customers are stuck with no components at all, because they're not on the manufacturers' preferred lists, and cannot or will not pay over the odds for grey market components.

This kind of situation is common in luxury goods, where demand exceeds supply. List price right now for a Rolex Daytona in steel is about £12k, but you can't just walk into a dealer and buy one because supply is limited and there's a waiting list a mile long. You can have a brand new one tomorrow if you like, but you'll have to go to the grey market and pay £25k-£30k for it.

The market is only this way because there aren't enough being made to go round; anyone with the means can indeed buy the watch over the counter, but only because other potential customers take one look at the prices being demanded, say 'no', and do without.

Sadly, it's harder to design out a CPU or FPGA than it is to wear a different watch.

[Psi]

yeah, i've been pondering what I should do for my product that needs a STM32F042.

Either I pay the china scalpers $4-9 per chip and jack up the product price the same amount or I just don't sell it until I can get the chips normally.

Kinda tempted to buy the scalped chips, but i'm not sure I can bring myself to actually do it.

[KE5FX]

A broker I trust told me recently that pretty much everything is available for a sufficient premium. Interpret that as you will, but it implies the parts ARE out there.

That's been true for a long time, but lately we're finding that the brokers we previously purchased from are coming up empty-handed, or quoting truly-insane prices that suggest that stock is getting very thin.  $200 for $5 parts, that sort of thing.

[IDEngineer]

Oh yeah, been seeing those incredible prices, but so far if you're willing to pay they're able to source. I agree this may indicate the drying up of backroom deals.

I must admit I've been scanning our Engineering stock for any extras that might be lying around. We have some PIC24F's that might be useful to someone....

[AndyC_772]

Considering the original question in a wider sense for a minute...

We've discussed at great length the market for components, the likely whereabouts of the parts that actually are getting manufactured, and the effects at the point of trying to place purchase orders for development or production.

However, I'm now starting to be impacted by the next inevitable consequence of a shortage of parts, namely the reduction in demand for new projects. There is, after all, no point designing new stuff if you know you won't actually be able to make it.

I've had a really busy year up to this point, a lot of which has been redesigns driven by shortages. The supply crisis has been good for business, if your business happens to include designing out unobtainable components.

Sadly we seem to be at the point where it's become a real challenge for SMEs to make anything at all. If it's not the CPU then it's the power supply, or some dull little sensor chip, or an op-amp, or something else that requires yet another PCB respin - if, indeed, there's a usable alternative out there at all this week.

The result is my work has dried up.

Normally when this happens it's just a couple of weeks at a time, and I spend the time learning a new skill, or designing something which I think will be interesting to someone and which I can sell at a later date. It's just not that big a deal, something always comes along, and I've learned not to worry. It's in the nature of running a business that there will be busy times as well as quiet ones.

Right now, though, picking up a dev board and a reference manual for <insert device family here> just doesn't seem worthwhile. Why waste time on a part that nobody can buy, when I could be out enjoying the sunshine while it lasts?

If you're in the design business, have you found yourself short of work lately? What are you doing to pass the time until - we presume - the supply chain starts to recover?

What will you do if it doesn't?

[tom66]

Is the drying up in demand not more likely down to the cooling economic climate as inflation bites?  Companies instead focus on what they already make and can market, rather than taking new risks on new projects.  In fact, inflation and a mild recession might just be what sorts out the whole supply chain problem in the end, because we're just seeing the desperate catch-up of everything just not quite running fast enough. 

That's not to say recessions are good at all, they're just a natural consequence in a modern economy which is like a really unstable PID loop with an Fc of 4e-9 Hz.

This is one reason I've preferred to take a salary rather than contracting, even though the rewards of contracting can be rather good, I've often thought you'd need to be comfortable being out of work for 12+ months in some worst case scenario.  Whilst jobs are never guaranteed, they are typically more stable that contract availability.

[AndyC_772]

If I were out of work for 12+ months, then in a sense that would be "OK" insofar as I can afford to eat and keep the lights on. That's not the problem in the short term or even the medium term, and I wouldn't have decided to become self employed in the first place if I didn't have savings to fall back on.

Periods between jobs are never 'comfortable', though. There's always the feeling that time = money when you make a living charging by the hour, and time spent idle is, in a very real and concrete sense, expensive.

The odd week here and there is a good opportunity just to take a holiday. I've been getting back into wildlife photography, shooting in archery competitions, clearing out and selling some old equipment to make some space and raise a little cash. It's all time well spent for sure.

It's the longer term outlook which is the problem. A month off might just be a welcome break and chance to relax and unwind. A couple of months would be time to also learn something new, develop a thing, get ready to take on new work doing something I've not been able to do before.

3 months? 4? 5? All of the above, but maybe also do some volunteer work, or find a part time job doing something worthwhile.

6+ months? Seriously question whether the job even exists any more. Suggestions for what happens at this point below.