Skip to main content

Workforce Shortages Could Lead to Further Price Hikes

Apple
(Image credit: Apple)

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

IPC

(Image credit: IPC)

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. 

  • AlB80
    Maybe, salary hikes? :unsure: No! No! NOO! Only goods deficit and further price hikes.
    Reply
  • Blacksad999
    If you look at their hiring pay for many of these jobs, they're terrible. It's just like all the other "labor shortages" in other industries: a lack of compelling pay.
    Reply
  • bigdragon
    Maybe companies should spend more money compensating their employees and employ more people instead of concentrating all their wealth in the executive level?

    I know, crazy talk. 🙃
    Reply
  • spongiemaster
    bigdragon said:
    Maybe companies should spend more money compensating their employees and employ more people instead of concentrating all their wealth in the executive level?

    I know, crazy talk. 🙃
    It's not crazy, it's stupid. Despite the disproportionately large compensation packages executives receive vs the average worker, their pay is an insignificant portion of the overall payroll of the company. Look at a company like TSMC. It has nearly 60,000 employees. Let's pretend the CEO makes $50 million a year in cash, which is way more than he makes. If the company decided to pay him nothing and spread that $50 million among the other employees, that comes out to less than $850 a year per employee. The median salary at TSMC is estimated to be about $125,000 (not exactly slave wages). What difference is boosting that to $125,850 going to make? You're not ending labor shortages with that, or boosting team morale. Median salary could be $40,000, and that extra $850 would still have no measurable impact on anything.
    Reply
  • wwenze1
    I work for a DRAM/NAND flash manufacturer...

    My country (which relies on foreign workers) is having labor shortage due to COVID and starting pay is getting higher as a result
    The site achieved record output during 2020 despite COVID
    My pay (which is below median for my education level) increased 6% (so still below median) and the management had the cheek to tell me "this is an outlier"
    Only when I told them I'm going to leave for a job offer that promises median pay (~20% higher than my current) then suddenly the M3 / director wanted a 1on1 meeting.

    My team is still having deficit in headcount, no local graduates want to join, and according to my manager she is offering S-Pass salary to the new hire from Malaysia and still waiting for the S-Pass to be approved. Failed the Aug batch already now waiting for Nov batch. I told her good luck with that during COVID.
    Reply
  • TeoTH
    spongiemaster said:
    It's not crazy, it's stupid. Despite the disproportionately large compensation packages executives receive vs the average worker, their pay is an insignificant portion of the overall payroll of the company. Look at a company like TSMC. It has nearly 60,000 employees. Let's pretend the CEO makes $50 million a year in cash, which is way more than he makes. If the company decided to pay him nothing and spread that $50 million among the other employees, that comes out to less than $850 a year per employee. The median salary at TSMC is estimated to be about $125,000 (not exactly slave wages). What difference is boosting that to $125,850 going to make? You're not ending labor shortages with that, or boosting team morale. Median salary could be $40,000, and that extra $850 would still have no measurable impact on anything.

    Sharing my personal experience here. I make 2.4k as a newbie engineer in a multinational company, and my manger makes about 10k. Back in January, company has decided that they wanted to cut down on staff because the amount of order has dropped.
    Instead of any other better solutions, they want to fire the contract workers, which totally nullifies any training and experience they've got over their time here. I am among one of them. Sure, fire all your employees, what are you gonna do when the economy recovers and you need workforce? Hire new people and spend more money to train them? How is firing a bunch of people that barely makes 2k when you still pay 10+k every month for the higher-ups?

    You know what's even funnier? They decided that they want me back because a new project is coming. I asked for a permanent position and they had to agree to keep me around.
    And that project got delayed. Funniest <Mod Edit> I've ever seen.
    Reply
  • warezme
    spongiemaster said:
    It's not crazy, it's stupid. Despite the disproportionately large compensation packages executives receive vs the average worker, their pay is an insignificant portion of the overall payroll of the company. Look at a company like TSMC. It has nearly 60,000 employees. Let's pretend the CEO makes $50 million a year in cash, which is way more than he makes. If the company decided to pay him nothing and spread that $50 million among the other employees, that comes out to less than $850 a year per employee. The median salary at TSMC is estimated to be about $125,000 (not exactly slave wages). What difference is boosting that to $125,850 going to make? You're not ending labor shortages with that, or boosting team morale. Median salary could be $40,000, and that extra $850 would still have no measurable impact on anything.

    Your little analysis if full assumption holes. First you assume there is only one executive making millions and that every single of the 60,000 TSMC employees is making 125K a year. I would like to be the janitor in that organization. Even with your stupid assumptions I would rather have 40 more high salary employees that actually produce than one 50mil fat CEO.
    Reply