Supply Chain Shortages Seen Into Next Year, Say Pro AV Panelists

A rAVe poll surveying integrators, end users and manufacturers found 97% of respondents had been affected by supply chain shortages and 74.8% said shortages got worse in the past year. The categories experiencing the biggest product delays were switching and control systems.

“This is not going to be resolved overnight,” said Hintze, saying some participants in the supply chain say it will be 10 years before the supply chain is normalized. Crestron’s supply chain director, Keith James, outlined Crestron’s and the industry’s supply chain challenges at the Home Technology Specialists of America spring meeting (see 2204040034), saying vendors were competing with carmakers and the military for scarce components and predicting “some relief” in 2023.

Hintze held to that timeline last week, saying by “the middle of next summer, we’re going to start to feel pretty good,” with further improvement by year-end. The supply chain was “susceptible to disruption all along," he said.

In the meantime, integrators are struggling to complete projects. “Only the strong will survive,” said Heather Sidorowicz, president, Southtown Audio Video, Hamburg, New York. If Sidorowicz places an order for a $100,000 project, “I’m paying out of my own cash flow,” she said, saying she can’t get payment until the system is installed. “It’s not been an easy year,” and “some companies are not going to make it,” she said. Sidorowicz increased her line of credit and has been transparent with customers about delays due to supply chain shortages and product substitutions. “If you’re honest with customers, they’re going to be more responsive.”

Bluesalve Partners’ Avi Rosenthal said port congestion has eased. A year ago 109 cargo ships were waiting to dock at the Port of Los Angeles, and last week there were two, he said. “Ports are flowing,” the supply chain is more normalized and the price of a 40-foot shipping container "is down from $12,000 to $2,000,” Rosenthal said, though some webinar participants said in chat they were still experiencing much higher prices. “I’d love to know who’s offering 40-foot containers shipped from China for $2K,” one said, saying his company had eight containers “at $15K each.” Another noted fewer container ships coming out of China, “so it doesn’t necessarily mean catching up.”

The car industry has “caught way up,” said Rosenthal, saying foundries are no longer making components just for cars, freeing them up for smaller industries. Rosenthal cited component lead times of 24-48 weeks, down from 52-60 weeks. He also noted Japan-based audio industry chipmaker AKM, which suffered a crippling fire at its Nobeoka semiconductor factory in October 2020, “is back online putting out chips.”

Chip shortages resulting from the AKM factory fire, coupled with COVID-19 shortages and supply chain disruptions, came at a time when the residential electronics market had a surge in demand for entertainment, control and work-from-home technology, and the industry wasn’t prepared. The AKM fire “kicked off the whole supply chain disaster,” Rosenthal said, and then “the other dominoes fell,” including COVID-19 and shipping disruption. “We have to learn from this mistake, and we are,” Rosenthal said.

The global supply chain was “always at risk,” said Hintz, calling the COVID-19 pandemic events a “perfect storm.” Just-in-time manufacturing made the supply chain susceptible to disasters, Hintz noted, saying companies have been trained to place an order that will ship in 48 hours. That wasn’t Crestron’s model, he said, saying the company fills its warehouses to have product on hand. “When we saw long-lead-time components going out to two years, that’s when we shifted our model and told dealers to order,” he said. “That doesn’t mean we can bring long lead times back down to what it was before,” he said.

Aurora Multimedia, a networking and AV systems provider for the commercial market, managed through the past two years by “knowing how to adapt,” said CEO-Chief Technology Officer Paul Harris. The company redesigned circuits when confronted with a component shortage and has “different revisions based on where the supplies are.” If engineers see securing a particular microcontroller will be a problem, “we spec something else in.”

Re-engineering with another component from a chipmaker a company doesn’t already have a relationship with isn’t always workable, said Rosenthal. If the new chip supplier has a long-term customer order the same part, “the device you redesigned for isn’t there anymore,” he said, giving the example of an audio company trying to compete with an automaker for parts.

A new part can also affect performance of the final product, and in an audio manufacturer’s electronics, it can make a perceptible difference to the end user. “There’s no tougher audience than a CEDIA integrator,” Rosenthal said: “If you slip by 3 dB, somebody’s going to notice.”