Power Supplies Demand Hype is Being Met by Supply Shortage

If there were no supply problems with active and passive components, the growth rates of the power supply specialists active in the DACH region would probably be even higher.

Whereas order books are full until 2019, power supply specialists are now planning in advance their supply of components and materials until 2020.
Stable, with healthy growth development, this is how manufacturers and distributors describe the development of the power supply market in the DACH region (Germany, Austria and Switzerland) in the run-up to electronica. Double-digit sales growth, compared to the previous year, now seems to be the norm among leading providers. The consequences of the protectionist trade policy under US President Donald Trump are quite obviously not yet reflected in the order books of European power supply specialists.

Their business is primarily industrial applications. In the DACH region, the Machinery and Equipment (M&E) industry certainly plays a dominant role here. Kai Heinemann, General Manager Development and Product Management at Block Transformatoren-Elektronik, describes the mutual dependence as follows: “A growth of about 5 percent in the machinery and equipment market has resulted in double-digit growth in our power supply business in recent years.”

Even though the order books are full and sales are rising, the industry is facing a very special problem: the difficult situation of the supply chain in the components sector, which has led, and continues to lead, to extended delivery times, also for the power supply specialists. “We expect growth of around 15 percent over the year,” reports Herman Püthe, Managing Director of inpotron Schaltnetzteile, “as long as we still receive raw material.”

He continues to describe the delivery performance of component manufacturers and suppliers as poor. “For months now, we have had to spend about 10 percent of our R&D resources investigating alternative components or compatibility in the various projects,” he states. Without regular meetings twice a week to discuss the present situation and solution strategy “we would no longer be able to serve our customers today,” says Herman Püthe.

“The present situation presents a major challenge that ties up resources,” also confirms Dr. Hans-Peter Lüdeke, Business Development Manager Power Supplies at Murata. It has so far been possible to avoid severe supply disruptions, “however, since the situation in the components supply chain is not expected to improve noticeably until the second half of 2019, this challenge will further restrict possible growth until then.”

In view of this situation, power supply manufacturers have now also started to plan significantly longer lead times with regard to their supply of components. “In the meantime, we are planning with a horizon of 12 to 18 months,” reports Karsten Bier, CEO of Recom. “There’s no other way anymore. Our delivery times have now increased to 8 to 14 weeks, depending on the respective product groups.” This may at first glance not appear bad, but as a manufacturer of standard modules, delivery times at Recom are usually four to six weeks.

Sebastian Fischer, Managing Director of Traco Power, vividly describes the problems faced by power supply specialists in recent months: “For example, we even had a valid order confirmation for ceramic capacitors cancelled and, at the same time, an offer with the same delivery time, but 40 percent higher price, forwarded to us.” That such escapades do not lead to problems is due to the fact that Traco had already increased its inventories by 40 percent last year. Sebastian Fischer also points out that “over the last six to nine months, it was observed that prices for the manufacture of power supplies increased by 3 to 4 percent. If this continues, these price increases will also have an impact on end customers.”

Ulrich Schwarz, Sales Director of TDK-Lambda Germany, considers it a positive development that “in recent months, customers have finally begun to believe us that there is a dark cloud looming overhead. They have therefore now started to widen their planning horizons.” According to Ulrich Schwarz, TDK-Lambda’s book-to-bill ratio was 1.2 in the summer. “However, we believe that this will normalize in the second half of the year.”