When the market experiences great change, whether that be due to structural changes in the landscape or due to world events, information becomes key; and having the ability to provide information – or rather market intelligence – becomes a lever for business success.
In this article series, Evertiq has reached out to distributors and sourcing specialists of electronic components to see just how the experts are dealing with the current semiconductor shortage and what tools they have in place to cater to the needs of their clients. This time we’re talking to Mikael Coffre, COO at Alantys Technology.
Since the start of the pandemic the situation surrounding the supply of components have only gotten worse, how would you describe the past year in terms of operations?
“2021 was a nightmare for most of OEMs, CEMs and distributors. Indeed, the market was moving day by day, and the notices were extremely short and customers not well prepared to see the situation last and getting worst every month,” Mikael Coffre tells Evertiq and continues.
“Before the crisis, Alantys was known as a preferred PPV as well as a franchised partner, dealing mostly with call-off delivery deals and long term supply. But ever since the crisis customers are mostly coming to us to source complicated MCUs, Mosfets and so on, which we are pretty able to do thanks to our global network. The timeframes and decision making are totally different since then, and reactivity and efficiency are now the key points in terms of operations. Not to mention that we had to extend our testing and laboratory capabilities to be able to test fast and avoid traffic jam in the lab.”
The COO continues to explain that as the situation continued to develop, Alantys noticed a major shortcoming within the market.
“We noticed that customers were poorly informed by manufacturers and their franchised distributors, so we tried to play a role here with the market data and intelligence. Adaptation has not been easy for most of us, and the market was in real need of some real information on what would be next to come in terms of lead times,” Mr. Coffre explains.
“Of course, defending our backlog base was a hard task, but overall we succeeded to avoid most supply chain issues and of course we fixed a lot of shortages, serving customers with quality stocks, fast.”
In the past, during periods of component shortages, we’ve seen an increase of counterfeit components hitting the market – what kind of measures does Alantys have in place to catch these?
“Overall, traceability and testing on the devices is a must, since a long time. Customers are being offered this as standard with us. As the situation is here to last, one must secure it’s supply chain and keep traceability of the goods.”
“In today’s market, buying semiconductors from the open market could lead the customers to major issues, more than ever as the crisis is stronger than ever. We, at Alantys, have added some heavy restrictions on our suppliers base first, and amended our testing procedures to meet the market expectations. Not a single chip is served to our customers without being either from the franchised network or fully inspected with bunch of different testings – such as visual inspection, Xray, decap, CSAM, acoustic microscopy, electric testing, wire bond, and failure analysis. We also provide third party test house solution. Also, in order to ensure customers, we adapted our liability insurance, to fit with our customer needs.”
However, there are – as the COO points out – other issues related to faulty components besides counterfeits.
“On the other side, not only counterfeit products are being advertised on the market; many oxydated, badly stored items are on the market, and it’s important to perform solderability testings, and control the suppliers on the way they store materials. We mostly deal with ANSI S20.20 warehouse equipped suppliers, because it’s as essential as detecting counterfeit products.”
Which specific product group that has been the most affected by the shortage?
“MCUs were the most affected during the two first quarters of 2021, then came the Discrete portfolio and basically all semiconductors, with violent waves on three of the most well known manufacturers during the last 15 months. Since end of 2021, we see that most FPGAs are strongly impacted also, as each week we get information that is not positive. It is important to understand that this shortage is structural and possibly here to last a few years.”
“Now, we also see some tensions on connectors, some families of relays, and most lately on cable assy because of the ongoing Ukraine war situation. Basically, the reality is that any electronics has at least part of the portfolio impacted by the crisis.”
What are your feelings about the current market situation as we enter 2022?
“This shortage is structural, it’s unfortunately not something that will disappear from one day to another, and its causes are multiple and deep,” Mr. Coffre says and continues. “For example, since end of 2021, we see that most FPGAs are also strongly impacted with sometimes lead times of above 500 days, and some Mosfets can be served in 70-80 weeks. Effects of all this lead time announcement is that the prices are only going up, and speculation is taking the lead on our industry.”
“We assume that at least the whole year will be as hard, but the difference now is that most OEMs are very aware and took plans to avoid this as much as possible: their booking backlog is full, and when they have a shortage they are able to move faster on the market. This «dual strategy» is most probably the most efficient, and we can only encourage our customers to split their strategy between long lead time order placing to get a «position in the queue at the factory» and source stocks fast when they need, with some preferred quality partners able to mitigate quality risks.”
Mr. Coffre continues to say that we also cannot expect the lead times to go back to normal in the semiconductors space, as the conflict in Ukraine is impacting the supply of key materials on the medium term.
For 2022, what plans does Alantys have in store to further deal with the problem at hand?
“Quality is above anything else. Therefore, we are now extending our laboratory capability in our Shenzhen WH and in our HQ, in France. We have to stay reactive in this sudden shortage solving business raise.”
“Then, manpower is also very important, so as of today, we are seeking for at least 50 new sales reps, purchase and quality staff to join us short term, as this will enable us to keep constant service level with our customers and keep the most precious thing is this market; our reactivity.”
The COO concludes by once again bringing up the importance of up to date market data and intelligence.
“Lastly, we now have an IT solution that is enabling our staff to quote very fast any BOM, and give a clear update on the current market situation to our customers, so they can either source stock with us, or implement second source items from our franchised lines in no time. We assume this will help OEMs and EMS to move even faster and wisely, in this crazy market conditions. “