The electronic parts market sits at $428 billion today. Sound staggering? That total will explode to $847.88 billion by 2032, experts say.

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With electronic and “smart” features becoming the future of product design, the competition is hungrier than ever. That cuts deeply for small and mid-sized OEMs who still need their slice of the component supply pie.

Today’s cutthroat sourcing landscape is exactly why you must place top value on an agile, predictive electronic component supply chain system. This guide will help you understand what’s happening around the world, why, and what to do about it.

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Since early 2020, the only supply chain certainty has been uncertainty. With predictions (and realities) ping-ponging back and forth, it’s been hard to translate the specific impact to your business.

The universal truth is: There's still an electronic component shortage in 2025, though there’s more nuance to the situation than in 2020-24. Some component streams have settled a bit, while others — especially high-demand ones for AI, automotive, and defense — are still turbulent.

Semiconductors are a prime example of these still-rough waters. The complexity of their manufacturing process, which can take up to 6 months, led to a significant extension in lead times for years. One industry that is reigniting demand is artificial intelligence, which requires a staggering amount of computer brainpower and energy.

Lead times

Suppliers of other parts may face delays due to upstream dependency on semiconductors

Prices

Tight chip supply makes dependent components more costly to produce or procure

Seller Priority

With limited stock, suppliers may favor high-volume or -margin buyers

Design

You may have to redesign your end product to work with whatever components are available

Why 2020’s Electromechanical Component Shortages Are 2025’s Problem

A recap of recent supply-demand dynamics reveals multiple waves rocking the supply-chain shores here and abroad:

SOURCE #1: High Demand in Key Markets

Sectors like automotive, consumer electronics, and IoT have heightened demand, leading to competitive angling for big component hauls. This leaves the “little guys” fighting over scraps.

SOURCE #2: Unpredictable Surges

Trends such as generative AI, electric vehicles, and advanced telecommunications (5G, 6G) have caused sudden demand increases, and may do so again. No one could have fully predicted the strain AI is putting on data centers and server rooms. Who knows what sudden shock could strike the supply chain next?

SOURCE #3: Global Drama

The global shutdowns of 2020-21 sunk component production and raw material stock. Despite a return to near pre-pandemic levels, the industry has continued to battle these types of disruptions in recent years.

Unfortunately, COVID was just the first in a series of hits to the purchaser’s ability to source confidently.

U.S. tariffs and trade restrictions – and retaliatory taxes enforced by target nations – are putting additional pressure on the electronics market. Ongoing U.S.-China trade tensions in 2025 have led to increased tariffs on semiconductor-related imports, raising costs for manufacturers and limiting supplier options.

Overseas, political strife has further shaken up the component supply chain. Russia, a key supplier of chip materials, remains heavily sanctioned due to its aggressions toward Ukraine, limiting availability of raw metals and minerals. At the same time, Ukraine’s two largest semiconductor-grade neon producers – responsible for 90% of the U.S. supply – shut down following the 2022 invasion, straining neon gas supplies critical for chip manufacturing.

Israel, another major chip hotbed, has its own concerns. Escalating regional conflicts are poised to disrupt production and exports, adding further uncertainty.

Shield your supply chain by staying up on tariff news & tips:

SOURCE #4: Raw Material Shortages

Recent trends and conflicts have also damaged the beginning of the supply chain – the raw materials themselves.

The industry is heavily reliant on materials that predominantly come from overseas. Clean copper and FEP (fluorinated ethylene propylene), in particular, are notable hot-button materials for cables and their insulation. These materials remain in high demand throughout 2025, creating price and availability uncertainty.

SOURCE #5: The Achingly Slow Production Process

In a sad piece of irony, lead times for the chip-making equipment itself is at 18-30 weeks. (At least it’s improving from the 18-month arrival times buyers were given in 2022.)

The American semiconductor industry, for instance, will need an additional 67,000 workers by 2030 to meet the demands of new production, Sourceability predicts. Some companies have delayed factory launches as they struggle to find qualified personnel to operate this complex equipment.

To get a broader outlook on 2025 part shortages – and how to survive them – read this:

1. Lead Times

While lead times for many electronic parts have improved since the peak chaos of 2022, it’s still not “business as usual” – especially for industrial cables. Some OEMs still face waits of 6-8 months for specialty cable assemblies due to material shortages, supplier capacity, and unpredictable politics.

Recognize this as a call to batten down the hatches, not just a warning. If your distribution network isn’t a calming, proactive presence, it’s time for a new one.

See what else can stop your operation dead in its tracks:

2. One Supplier Rules Them All

Likewise, even the world’s best electronic component supplier isn’t invincible.

It’s no longer safe to count on a single stream for key components, and probably won’t be anytime soon. If you’re falling behind because you don’t have a plan B or C, it’s time to bulk up your investment in electronic component sourcing.

3. Pricing

Struggling teams are questioning whether the engineering team really needs that high-demand part when a less pricey, more readily available alternative may suffice. Meanwhile, purchasing managers are exploring more cost-efficient ways to buy and manage electronic component inventory.

If your setup involves direct buys from manufacturers, you’re probably paying even more for these parts (unless your company’s huge and buys in bulk).

4. Distributor Isn’t Franchised

Looking to switch product lines? If your distributor won’t accommodate new lines, you’ll have to decide which is worth more – the distributor or the components.

If the change isn’t profitable for the supplier, it might bid you farewell.

5. Your Partners Don't Add Value

Sometimes it dawns on buyers that their existing DIY setup or distributor agreement leaves service or quality gaps. Many OEMs prefer to tap into supplier-distributor networks that also offer:

Supply forecasting
Fulfillment services (more on this below)
Inventory management
Kanban systems

6. Bad Experiences

Trust your navigational instincts. Don’t get used to these situations that are clear indicators it’s time for a more equal partnership:

Unresponsive sales reps
Recurring mistakes resulting in poor quality or lead time
Merger/acquisition is disrupting service

Managing electronic component procurement at an OEM – filling gaps, juggling projects and sources, being expected to possess oracle powers – is a lot. If your network makes you feel on edge or on the backburner, it’s time for a change.

Read about all 7 signals in greater detail:

In today's parts procurement environment, your company needs supply chain expertise more than ever. There are proactive moves you can make today to navigate the choppy seas of electronics supply management:

1. Follow 2025 Inventory Management Best Practices

Despite the constraints of this shortage, there are more ways than ever to be flexible and make your life easier:

Consider availability in the design phase: Early in your project’s timeline, look at what’s available now and what might be available closer to launch.
Use multiple sources: Explore distributors and software for diverse routes to securing any critical or obscure parts – especially if you rely heavily on tariff-affected regions
Make blanket orders: Buy enough components (with forecasted release dates) to clear initial production runs so you can launch ASAP once testing validates your design.

If you’re ordering a vital part that could shut down production if unavailable, stock up even more.

2. Use Component Database Software

Third-party component databases (i.e. SiliconExpert) offer a looking glass into millions of components from thousands of suppliers. Its many uses include:

Obsolescence forecasting – Advance notice on shortages & life cycle changes
Inventory data – Real-time looks at availability, matched to your bill of materials
Compliance info – Notices on restricted & conflict materials

Use of a verified and up-to-date database also minimizes order-specific issues, such as counterfeit batches.

AI algorithms, meanwhile, can predict market trends, optimize inventory levels, and even suggest design alternatives based on component availability. By integrating AI into your supply chain strategy, you can enjoy:

Fewer shortages – Better prediction of supply-demand trends
Faster quotes – ID optimal suppliers & price points
Better designs – Assisted component selection & substitution

3. Work With an Awesome Distributor(s)

While single-sourcing a critical component is increasingly risky, leaning on a reliable, established distributor for your broader needs is the opposite.

When you’re desperate for electromechanical components, you’re at greater risk of allowing low-quality or fake parts into your supply stream. Working with trusted electronics suppliers and distributors virtually eliminates those risks, offering:

Franchise pricing
Inventory management
Forecasting
Warehousing
Other turnkey services

Prioritize relationship management with suppliers, engaging early and often to secure resources. Don’t swim to a supplier’s ship during a crisis and expect a lifeboat on-demand.

4. Adapt Your Design

Some of the best improvements you can make to your electronic component sourcing situation are at the engineer level.

Adapting your design for component availability is possible in more ways than you might realize:

Redesign

Can the engineers remove a non-essential component causing delays?

Replace

Can a more common material or component still meet your specs?

Reprioritize

Is it easier today to improve an existing design vs. releasing a new one?

Anchoring inventory management to your design process requires effort from and visibility for several teams – procurement, supply chain management, design, and production. Involve your design team in supplier discussions! Your product will evolve for the better.

5. Reshore!

Times have changed (again). Today, reshoring your electronics supply chain can restore lead times, quality, and even reputation to your company’s products.

A similar, more conservative change some business leaders are making is nearshoring. The goals are similar – i.e. improve efficiency – but it involves outsourcing to a close-by country rather than bringing operations all the way back home.

Challenge	Where Offshoring Can Cost You
Cost of Business	Unpredictable tariffs, increasing customs, & rising labor prices in traditionally low-cost countries
Disruption Resilience	Global political tensions, natural disasters, & health crises
Quality & Oversight	Ensuring consistent quality is more challenging when there are language & cultural barriers
Lead Time & Response	Time zones & language differences can hinder communication
IP Protection	Higher risk of IP theft or cybersecurity lapse

Challenge	When Reshoring Might Work
Cost of Business	Automation innovations & U.S. government incentives are offsetting the higher cost of onshore labor
Disruption Resilience	Local sourcing lessens the impact of international crises on availability
Quality & Oversight	Reduces the risk of counterfeit parts and damage during long-distance shipping; clearer communication (no language barriers)
Lead Time & Response	No major time zone differences, customs delays, or slow interaction from language differences
IP Protection	U.S. companies are more committed to cybersecurity; “made in USA” approach aligns with growing buyer & partner preference for local sourcing

Earthquakes in the Middle East? Pirate attacks off the China shore? Both affect your production less when your partners work stateside.

Advances in technology are further smoothing the surface for competitive domestic production. Companies can take advantage of these technologies to reduce costs and improve efficiency without offshoring.

That’s not to say new domestic production lines are springing up by the minute.

It takes time to source machinery and materials, build facilities, and find people willing to work in them. Even with government agencies offering incentives for new construction, it takes at least 2 years to get a plant up and running.

Still, there are real signs of reshoring progress. The volatility of politics and world events has turned U.S. manufacturing into an increasingly viable and strategic option.

If nothing else, 2025’s tariffs and trade wars have already made it clear: Relying too heavily on one region for components is risky business.

If you’re still reading, you’re probably ready to make a change, or at least broach the subject with your peers. One question you or your boss might bring up: Can we deal with this in-house?

Where does your company fall? We’ll let you be the judge.

Buying From the Manufacturer – The Good

With convenience in mind, some purchasing agents skip the middleman and buy directly from regional manufacturers. Potential positives of this approach are:

Cost-effectiveness – Purchasing electronic components directly may result in lower per-unit costs, especially at large volumes.
Authenticity – There’s little risk of counterfeit, low-quality parts.
Customization – Manufacturers may offer more flexible options for big orders, catering to specific requirements.
Direct communication – This potentially leads to better understanding and quicker resolution of issues.
Fresh product info – You’ll have a direct line to the latest information, support, and updates.

Buying From the Manufacturer – The Bad

The in-house approach – especially the “buying directly from suppliers” part – can go awry for a variety of reasons:

Cash flow – You’re liable for bringing in and storing all material, tying up your budget. Some part suppliers won’t even sell directly to individual companies unless volumes are sky-high.
Space – You’ll need the warehouse capacity to house orders. Someone will need to manage the logistics of stockpiling hundreds of parts per project from dozens of suppliers.
Staffing – You’ll need more purchasing employees in-house, which means paying for salary, benefits, and training. A key employee suddenly getting sick or quitting could grind your project to a halt.
Inexperience – Overwhelmed teams tend to buy whatever’s easiest and cheapest in the moment, which may cause quality issues.

Multiple sources – Established distributors have broad networks, offering quicker access to alternative sources when a part isn’t available.
Inventory management – Some distributors will manage stock levels under their own roof so you’re not stuck balancing 1,000s of part numbers from 100s of vendors.
Forecasting – Distributors can anticipate market changes and proactively manage obsolescence & last-time buys with bulk orders.
Quality – A good distributor will only work with good suppliers, ensuring you avoid fake or bad parts. It may also have design experts on staff who can spot flaws and suggest alternative components. This avenue is usually quicker than trying to get in front of the manufacturer.
Other turnkey solutions – Some distributors provide kitting, packing, respooling, & custom labels to reduce your internal workload and boost efficiency.

Uptime your biggest worry? See 6 ways a distributor adds operational efficiency:

Going Through a Distributor – The Bad

Most of the following are easily avoidable simply by picking the right electronics distributor, but they’re still worth noting:

Cost (potentially) – The distributor may mark up prices compared to direct manufacturer purchases, particularly for smaller orders.
Dependent on one expert – If the distributor has its own challenges or shortcomings, it could severely impact your operations.

Limited manufacturer engagement – This path may limit your opportunity for direct negotiation or relationship building with the manufacturer.

Inventory

What do you carry?
Do you stock product?
Do you offer inventory management?
What are your stocking limits?

Delivery

Do you deliver on time?
How do you address availability?
What’s your service radius?
Can you schedule shipments?

Cost

What are your prices and terms?
Are policies flexible?
Can you help us save money?

Quality

Any QA processes?
Any certifications?
Do you specialize in certain markets or components?

Relationship

What’s your supply network?
How big is your organization?
17. How long have you been doing this?
Any other value-added services?
What can I expect from Customer Service?
What makes you different?

#1: What lines/items do you carry?

A distributor should provide a comprehensive list or catalog of its product lines and components. This will help you determine if they are a one-stop-shop for all your component needs or if you'll need multiple sourcing avenues.

Make sure the seller can meet your typical bill of materials (or has the technical know-how and referencing tools to recommend replacements).

#2: Do you stock product?

Not every distributor is a stocking distributor. However, most distributors carry at least some basic components in-house so your operation stays snappy.

Besides quantity and variety, investigate:

Whether the distributor can consistently meet your demand
Minimum order requirements
How it ensures accuracy of stock numbers

#3: Do you offer inventory management?

This is a big one – outsourced supply management can reduce downtime while also avoiding wasteful surpluses.

Good inventory management is about proactive practices – warehousing, tracking, and forecasting.

Ask your distributor about the capacity it has to manage your inventory and its operational practices. Make sure your investments won’t degrade prematurely due to temperature, moisture, or static discharge issues in your partner’s facility.

#4: What are your stocking limits?

The vendor may restrict your stock by:

Quantity
Dollar amount
TIme

The length of time a distributor will hold your product without penalty can vary, but 1 year is a common policy. Knowing the size and cadence of orders helps you manage tight budgets and flow concerns.

#5: Do you deliver on time?

Your distributor can be either part of the efficiency solution or part of the problem. Inquire about the typical lead times for components that are:

Stocked in-house
Ordered as needed
Out of stock

#6: How do you address product availability issues?

An overly reactive approach to electronics sourcing can result in sudden hiccups (or slow-building ones) that cause late delivery and production stoppages.

Don’t buy into a distributor’s plan unless it includes contingency plans and preventative measures:

Component sourcing tools
Ability to recommend alternatives for high-demand, obscure, or discontinued parts
Policies for back ordering & allocation

#7: What's Your Radius of Service?

Does the distributor have a local presence? Even the best supply chain management services become less effective at great distances. A distributor with strong support in your region can offer faster delivery and lower shipping costs.

Can the distributor ship worldwide? Consider your potential vendor’s geographic location and whether it’s a realistic fit with your business model. If you’re a billion-dollar company with locations all over the world, can your distributor support that effectively?

#8: Can you schedule shipments?

Do you have to take the whole order at once?

Scheduled shipments allow you to nail inventory orders to specific dates on your production timeline. They also keep your facility space open (or prevent you from having to invest in more space).

#9: What are your prices and payment terms?

An electronic parts distributor pays less per component because it buys in bulk from its suppliers. Investigate how the dealer might pay it forward to you as the relationship develops:

Price breaks & volume discounts
Blanket-order discounts
Discounts for shorter payment terms
Discounts to take an entire order at once vs. warehousing it

Beyond sticker prices, there may be terms that impact your cash flow. Knowing a distributor’s credit limit policy is, say, $100,000 helps you plan payments more wisely.

Get the full, objective part-pricing story here:

#10: How flexible are your policies?

No relationship goes smoothly 100% of the time.

Check the vendor’s return policy. Get a grasp of its procedures for defective or damaged components and its responsiveness to resolving these problems.

Stocking late fees may also come into play if your needs shift post-order. Check whether there are penalties (and their size) if the warehouse holds your stock beyond the agreed-upon time frame.

#11: How can you help us save money?

Yes, it's obvious that you’ll want to secure the lowest rates possible. However, you might not be aware of some of the ways a distribution partner can help here:

Blanket-order discounts
Discounts to take an entire order at once vs. warehousing it
Value-added services

#12: How do you handle QA?

Electronic components, especially in high-risk industries like health care and aerospace, face some of the world’s highest quality-assurance standards.

Here a steps a vendor should take on your behalf:

Basic program to identify quality issues
Vast network of reputable suppliers
Audit records
Uses (or works with partners who use) a defined process to weed out bad parts

#13: Do you own any certifications or hold suppliers to certain standards?

What better proof of quality than approval from the world’s top standards and agencies? Verify that your partner understands how to work with:

ISO 9001:2015 distributor certification
UL-friendly labeling
RoHS
REACH
Conflict minerals

#14: Do you specialize in certain markets or components?

You may see better results if your supply partner has expertise in your business vertical or the type of components you use most. Look for:

Understanding of requirements, resulting in personalized advice
Established supplier relationships in your vertical
Predictable inventory levels based on knowledge of industry patterns
Better product design thanks to experience recommending parts to similar customers

#15: What’s your supplier network like?

An electronic component distributor is only as good as its supply network. These partnerships influence quality, availability, lead time, and discount pricing.

Ask who and how many lines the vendor has franchised with.

#16: How big is your organization?

The size of the distributor can indicate its capability to fulfill large orders, as well as its level of customer service.

Larger distributors might have more robust supply chains and greater resources, which can be advantageous in times of high demand. On the other hand, smaller distributors might offer greater flexibility and more personalized service.

#17: How long have you been doing this?

The 2020s have seen a rise in internet trading and an influx of small operations basically acting as brokers, diluting the overall quality of component sourcing streams.

Do business with vendors that measure their experience in decades, not years. A track record is the surest sign of future success. Imagine the damage if a partner suddenly goes under or stiffs you.

#18: Do you offer other value-added services?

When a top-notch electronics distributor offers extra services, you might as well take advantage. Getting several “value adds” in one place saves labor and transportation overhead.

Besides inventory management, a distributor may offer component kitting, repackaging, other fulfillment services, and even design consulting.

#19: What kind of relationship can I expect with Customer Service?

You value trust, reliability, and long-term relationships. Believe it or not, electrical component suppliers often want the same.

Before you agree to anything, ask:

How responsive are reps?
How do they address poor or late orders?
Will they prioritize certain “favorites” over you?

#20: What makes you different?

Ask the distributor to highlight unique aspects of its service. These could include:

Exclusive products
Technical expertise
Packaging or manufacturing support

Don't accept “great customer service” as an answer – everyone says that. Probe a little further for examples of the vendor's so-called legendary service.

Your Educational Map

If you’re experiencing the stormy skies and other warning signs we’ve discussed, don’t wait for your vessel to break down. Take these omens seriously – don’t assume “things are fine because COVID’s over.”

Yes, electronics supply chain management is about jumping on deals and opportunities, but it’s also about knowing when to jump ship when the charted course is dangerous. If a more robust system isn’t possible inside your company, look outside for a distributor with a healthy network and reputation. Investing in high-quality software can steer you toward faster quotes and help your engineers stick the landing on their designs.

As always, lead times vary widely depending on part type, packaging, and fabrication capacity. Still, you’re manning the ship here – blaming outside forces will only get you so far. Strategic sourcing and long-term forecasting remain critical. Your company will struggle to meet production goals if you don’t take supply and demand just as seriously as you did in April 2020.

Early education and communication are key – don’t wait until you’re lost at sea!

For sourcing tips that are more actionable and situation-specific, see our companion guide:

Simcona-Electronic-Procurement-Guide-CTA

To learn what to expect from a component distributor's supply network, see our manufacturer list:

2025 Electronics Supply Chain Guide for Component Sourcing