Amid the coronavirus pandemic and consequent global economic constraints, there is a chip shortage that has broadband providers now facing backlogs of more than a year in ordering internet routers., as reported by the news agency Bloomberg.
In that context, there are operators who received quotes with a delivery wait of up to 60 weeks, more than double the previous waits, according to people familiar with the matter, who asked not to be named because the discussions are private.
Running out of the correct router would prevent an operator from adding new subscribers to its network, which means the risk of losing sales in a broadband market that is very competitive in most countries of the world. In a context, moreover, in which the connection to the network became vital.
“Their supply chains have become a headache because abrupt manufacturing disruptions due to the coronavirus a year ago were exacerbated by a prolonged increase in demand for better home broadband equipment. “, he told the American news agency Karsten Gewecke, Head of European Regional Business for Zyxel Communications Corp, a Taiwan-based router manufacturer and supplier to companies such as Norway’s Telenor ASA and Great Britain’s Zen Internet
Running out of the correct router would prevent an operator from adding new subscribers to its network, risking losing sales in a highly competitive broadband market.
Since January, he added, he has been asking customers to order products a year in advance, because lead time for components like Broadcom Inc. chips has doubled to a year or more since then.
While, Adtran, a US network equipment maker, which gains market share from Chinese company Huawei in Europe, has also warned customers about supply chain risks and extensions in recent months.
In that sense, it expanded its storage facilities in the United Kingdom, more than doubling its inventory and logistics capacity to avoid problems, a spokesperson informed the agency.
No operator was completely out of routers, but supply strain is anticipated over the next six months, so this is likely to happen, according to Gewecke.
Even shipments that were already on the way cannot escape the unforeseen events of world trade. Last week, the Zyxel routers were in and behind the Evergreen ship that blocked the Suez Canal, according to Gewecke.
Broadcom did not immediately respond to requests for comment from Bloomberg. About 90% of its 2021 offer has already been ordered, Hock Tan, chief executive officer, said last month.
Zyxel’s problems began more than a year ago when a factory in China closed for a month due to the coronavirus pandemic.. Since its reopening, supplies have been erratic and shipping costs have skyrocketed tenfold from their previous levels as exporters scrambled to catch up, even competing for space with personal protective and medical equipment.
Also, strong demand for networking products helped Zyxel’s parent company, Unizyx Holding Corp. Its shares soared more than 181% in the last twelve months.
Since Chinese factories resumed their exports, there have been global bottlenecks in terms of chips, all stifled by shortages of parts like silicon foils and supply mismatches.
Since Chinese factories resumed their exports, there have been global bottlenecks in terms of chips, all stifled by shortages of parts like silicon sheets and supply mismatches.
“Semiconductor foundries struggle to allocate scarce capacity, and less profitable work is postponed. Routers have lower margins than smartphones and computers, and furthermore, in the world of routers, those destined for less affluent markets like Eastern Europe use less sophisticated and lower-margin parts.”, Said the agency.
And he added that similarly, smaller telecom operators were hit the hardest, while global companies secured supplies with their purchasing power.