Router order delays are reaching more than a year. Specifically, orders are taking up to 60 weeks to be completed, this figure being more than double the waiting periods that the industry handled until now. Among the reasons for this shortage we find the slowdown that the industry suffered with the confinements, and the increase in demand by users to work remotely.
The companies are buying the chips in advance
Router makers like Zyxel say they have asked their customers to order the products a year in advance, as chipmakers like Broadcom are taking more than a year to deliver the chips. Some manufacturers are expanding capacities in their warehouses to buy chips in advance to avoid running out of them and having to stop production.
At the moment there has not been any operator that has had supply problems with routers, but there have been times where it has been very close. And in the next six months there is again the risk of shortages. Zyxel herself was hit by the Suez Canal jam, where her routers went both on the Ever Given and on the ship behind. In addition, shipping costs have increased tenfold in the last year.
Broadcom has already sold 90% of the chips it will make in 2021
To get an idea of the high demand for a company like Broadcom, one of the largest manufacturers of router chips, 90% of all 2021 production capacity is already sold and has been allocated to manufacturers. Thus, a snowball effect is taking place, where shortages and the prospect of shortages lead to more capacity being purchased, which in turn leads to more shortages. Some manufacturers are hiring the 300% of its productive capacity. It is not surprising that the operators demand to return the router when they unsubscribe, due to its high cost.
Beyond processors, Zyxel says the shortage is also beginning to affect other components such as memory chips and power management chips. The global supply problems do not look like they will be solved this year, and we will probably have to wait until 2022 before we can begin to see the light, as confirmed by some manufacturers.