IPCs and delivery problems of electronic components

These last weeks, I had the opportunity to talk to many stakeholders of industrial automation. Not only several Industrial PC and controller manufacturers, such as Beckhoff, Pepperl+Fuchs, Siemens, WAGO, but I also talked to their customers, like machine builders and system integrators. A recurring theme was the unprecedented long delivery time and the steep price increase for electronic components and automation controllers. Particularly the buyers of IPCs suffer strongly from it. Several system integrators and machine builders said that they cannot deliver their machines and systems on time, as IPCs and PLCs are essential parts of their products. These delays can and will lead to penalties. 

The reason is the ‘empty’ market not only of CPUs and GPUs, the basic building blocks of automation equipment, resulting in an extreme shortage of almost all electronic components, according to IPC manufacturers and their customers. Buyers see themselves forced to turn to so-called "broker exchanges" for electronic components, where astronomical prices are demanded and paid. Consequently, this has led to a significant increase in the price of controllers. 

The fact that there are such long delivery times for automation controllers, sometimes up to more than 50 weeks, is without precedent. This is mainly due to the very high demand resulting from digitization and the continued high demand for more automation in all industrial sectors. In addition, the manufacturers of electronic components have not managed to expand their capacities in time. Currently, Taiwan, the USA and Europe are investing heavily in new production facilities for electronic components. This means a boom in the semiconductor industry, but it is struggling as they miss exactly the components, they need to produce them. 

The shortage of computer chips, especially for industrial buyers, has a variety of reasons. These include the aftermath of the pandemic when a steep incline of demand from consumer and office electronics collided with strained production. Some have evolved over time like the ongoing dependency on a few global producers, mostly situated in Asia. While automation is a major industry, we have to realize that, when it comes to computer chips and other electronic components, we are in direct competition to gigantic industries like e.g. the consumer electronics industry. 

A short-term easing in the market is not to be expected, as order books are full and the high demand for IPCs and other controllers remains unbroken. We will go into this in more detail in our upcoming global market study for IPCs. Patience and flexibility are required from machine builders, system integrators, plant engineers and end customers. With this in mind, stay calm and reassure your customers.