January 18, 2022

Crisis of electronic components: the concern of regional companies

The tension in the voices of business leaders facing the global shortage of electronic components is palpable. In Occitania, as everywhere on the planet, everyone is obsessed with this difficulty which threatens to paralyze – or already paralyze – their activity. The lack of visibility over the term of this shortage, which comes in the wake of the Covid health crisis, is slowing down the economic recovery.

Many fields of activity are affected due to the now very frequent and unavoidable use of semiconductors.

In Occitanie-Est, from Montpellier to Nîmes via Alès, concern and anger are mounting among business leaders, trapped by this global deficiency. The Soledge company, based in Clapiers near Montpellier, not only designs and produces high-end and connected hi-fi devices but also offers its patented technologies to manufacturers of loudspeakers and / or consumer electronics.

Obstacle course

« Our hardware technology needs electronic components, no less than 200 on each electronic board! If we lack a single one, we cannot make a card ”, explains Maryam Bini, Co-Founder and Marketing Director of Soledge.

She adds :

« Last year, a Japanese factory burned down, we had to change the reference on their component, and it took us six months to find another one, redevelop a new board and redesign the circuits with the new components! “

Non-substitutable components and surreal delivery times

The manager is worried about the sustainability of economic activity:

“We are on deadlines of 120 weeks on certain components, which completely paralyzes our production.. Fortunately, our design office continues to work, which dampens the fall, but if we only had electronics, we would have already closed! “.

And she warns:

“We design the prototypes that we have produced by service providers who have already put people on technical layoff. There is a snowball effect: if we stop, our service providers stop! “

The situation of the Montpellier agritech ITK, which designs decision support tools for agriculture and uses electronic components for its sensors manufactured in Nantes, is also critical.

« On some electronic components, we are on deadlines of one, two or even three years, underlines Éric Jallas, President of ITK. This is especially true for microcontrollers. However, these are specific non-substitutable components … We get our supplies in particular from STMicroelectronics in Grenoble, but they themselves have the components manufactured all over the world and a large part is reserved by the Chinese. Result: some components are paid 7 times the price! This increases costs by 30% when we are bound by contracts and we cannot increase our prices like that. In addition, it generates a significant need for working capital, but there is zero aid to finance this additional cost, while we did help the cafes during the Covid! “

SMEs last served, with unbearable delays

Same story in Nîmes, at XAP Technology which designs, manufactures and maintains electronic equipment mainly in the field of motor racing, but also in hostile environments. The company includes a design office and a production unit (14 employees, between 1.3 and 1.5 million euros in annual turnover).

“We use general electronic components and a few specific ones, says Jérôme Bousquet, CEO of XAP Technology. Suppliers primarily serve major contractors such as Peugeot or Renault, which leaves little stock for the others and leads to delays. 12 to 24 months! It makes the load unbearable for SMEs, we’ve never seen that! “

Its order books are full, but the company is only producing 1 / 5th of its usual level. Jérôme Bousquet tears his hair:

« How to take an honest order and commit to a deadline? We have our own design office so we could change the cards, but that implies requalification and revalidation processes, and we come up against a purely economic problem: what cash flow to do so? Our product renewal rate will be longer, which makes us less relevant and less competitive with the Chinese. We do the round back hoping that it passes quickly. We can last three or four months like that … “

The shortage of components is coupled with a shortage of raw materials

Based in Deaux near Alès (Gard) and specializing in industrial engineering for the automotive, home automation, aeronautics or agrifood sectors, 7Tech designs and assembles production machines, test benches or prototypes. It employs around ten people in the Gard and around twenty on its Tunisian site, for a turnover of 1.6 million euros in 2020 (2 million in 2019).

“The bulk of our activity is for the automotive sector, for example manufacturing machines for Valeo, but we are also in great demand from startups who want to develop prototypes of specific machines”, specifies Christophe Meyrueis, president of 7Tech. “We therefore need to buy components, in which there is a shortage, sensors, but also raw materials such as aluminum, steel, titanium, etc., the prices of which have risen sharply. “

“It is the man who will compensate for the shortage of equipment! “

He adds :

« Overall, today, we are touched everywhere! Today, we have established, in our contracts, validity dates of fifteen days instead of three months until now … This situation has consequences on our profitability especially, and potentially on the cash flow when we are in waiting to deliver machines. We are going to have to spend time to find alternative solutions, without knowing how to finance it. We discuss with our suppliers on the availability of components, we can imagine making a double or a triple design to have several options of components. This is the reason why we do not put anyone on technical unemployment: it is the man who will compensate for the shortage of equipment! “

60 weeks delay

The Montpellier startup Koovea (25 employees, 2 million euros in turnover in 2021) has designed a connected service for monitoring temperatures in the transport and storage of temperature-sensitive products in the health or agrifood sectors.

“We are making our own sensors and, since the start of the year, we have been taking the electronic components crisis head-on, testifies Adrien Content, CEO of Koovea. We are living in a paradox: Koovea’s activity is boosted by the health crisis, but penalized by this shortage of components. We use a hundred of them on our card, and it takes from one to three months to get them in normal times, mainly in China. Today, we have gone to 60 weeks! We had placed orders before the crisis, so that helped us a bit, but today we spend our time with resellers. Our customers need our products for health transport, so we have priority over deliveries and we can pretty much find the components. But it’s a black box, we don’t know how the suppliers define their priorities. “

Three months of visibility

At T.zic, a Montpellier startup that is developing an instantaneous disinfection device for water by Led-UV, Thomas Séchaud, co-founder and president, explains using electronic components to generate disinfection:

« The heart of our product is an electronic card. We therefore use very specific components and classic components. For the moment, we are navigating between the drops but it is costing us more and we have to block cash to secure the supplies or finance the design if we have to change components. We have visibility for the next three months but, after that, it could get complicated. What worries us is that we have to finalize the current developments to adapt to the market in 2022, and this shortage is a real brake. »

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