Since the 4th quarter of 2020, we had been seeing the chip cost increasing and short supply. We had double checked with Chip manufacturers and distributors, and the market trend has already verified, so we have to face the commerce affecting among Chip manufacturers, PCBA manufacturer(BQC) and our esteemed customers, so as to run all orders smoothly.
When we looked into the causes of cost increasing and short supply, we can find the following negative factors are simultaneously affected:
1. The news of Covid-19 vaccine availability, along with the Pandemic alleviation, lead to the V-curve increasing market demand, the chip manufacturers received many orders which were beyond their original plan. But, Summer and Autumn in 2020, the key component of chip: 8(200mm) wafers were extremely short supply because wafer manufacturers (in Europe, Japan and Malaysia etc.) reduced wafer production or even suspended production. Even they gradually resume full production, they also cannot meet the demand, So the contradiction between supply and demand was sharply highlighted.
2. Fell into 2020, the industries like AI, 5G, Electric cars and new medical were booming, the giants like Apple, Huawei, Tesla etc. kicked off tremendous orders to chip manufacturers, and this aggravated the demand and supply contradiction for the regular chip made of 8(200mm) wafers.
3. The above contradiction wouldn’t be relieved in short time (at least 6-12 months), customers try to have more stock and place many long-run orders to chip manufacturers, the market become panic. So chip manufactures initiate “Priority Supply Plan” which covers: existing orders and forecast for the calendar year 2021 should be attached a NCNR (Non- Cancellable, Non-Reschedulable) guarantee letter; orders of the second 6 months would be regarded as priority; the earlier orders and forecast confirmation will be taken the advantage of priority care.
Based on the above market situation, BQC have the conclusions and take measures are as follows:
1. Accept the official price increase of the chip, and immediately place all existing orders to the chip manufacturers or distributors, so as to avoid futile price negotiation and delaying the supply.
2. At the same time, our purchasing Department will keep a close eye on the lead-times and require the chip manufacturers or distributors to supply in time or to deliver as quicker as possible, so BQC can help you meet the delivery plan.
3. We hope you, our esteemed customers can place yearly orders to BQC for the whole calendar year 2021 to meet your continuous supply plan.
4. BQC would have to attach a NCNR letter to chip manufacturers. accordingly, we also need you, our esteemed customers to sign NCNR letter with BQC to evaluate and validate the accuracy of existing orders and yearly forecast.
Thank you for your attention and supports, and we will continue update you as we work through these challenges.
