Workforce Shortages Could Lead to Further Price Hikes

A tight supply of chips has affected costs and prices of pretty much everything electronics in the last year and a half. Now, there is a new problem looming: shortage of qualified workforce to work at factories that build actual products. As manufacturers have to rise wages, sooner or later they will have to pass their additional costs to their clients and they might have to pass it on to end users.

IPC, a global trade association that unites over 3,000 OEMs, EMS, PCB manufacturers, and suppliers, recently conducted a global survey in a bid to determine key problems that participants of the electronics industry face these days.

Shortages of chips and materials as well as their increased costs have affected 90% of IPC members. Tight supply led to delays for 88% of respondents, whereas 31% faced production delays of eight weeks or more. Global inventories are declining further, whereas backlogs are increasing. As a consequence, 58% of companies expect the shortages persist throughout the second half of 2022 and will end late next year at the earliest.

In addition to shortages of chips and costs of materials, labor market remains tight, which makes labor costs the second major problem for the electronics supply chain. 

80% of manufacturers said that they have problems with finding and keeping skilled talent, while half of them experience extreme difficulties. For 68% of companies, labor costs have increased, whereas for only 19% of respondents finding qualified workers got easier. The situation is not expected to change in the following six months and labor costs are projected to increase further, 65% of IPC members said.

Due to rising material costs, labor costs, capacity utilization, and shortages profitability of companies in the electronics supply chain is expected to drop, according to IPC. The trade association and lobbying group it does not  say that its member companies will pass increased costs to the end users, but increased prices of graphics cards, processors, and other components as well as PCs clearly indicate they may be willing to do so.