Fri, Apr 09, 2021 page12

• Chip crunch causing up to one-year delays for routers

  • Bloomberg
  • • 
    • 
    • 

  Broadband providers are seeing delays of more than a year when ordering Internet routers, becoming yet another victim of chip shortages choking global supply chains and adding challenges for millions still working from home.

  Carriers have been quoted order times as long as 60 weeks, more than doubling previous waits, said people familiar with the matter, who asked not to be named because the discussions are private.

  Sharp COVID-19 manufacturing shutdowns a year ago were exacerbated by a prolonged surge in demand for better home broadband equipment, said Karsten Gewecke, head of European regional business for Zyxel Communications Corp (合勤), a Taiwan-based router-maker.

  

  Wi-Fi routers are pictured at the IEEE Global Communications Conference in Taipei on Dec. 9 last year.

  Photo: Ann Wang, Retuers

  Since January, it has asked customers to order products a year in advance, because the lead time for components such as chips from Broadcom Inc had doubled to a year or more since then, he said.

  Zyxel is a major supplier of routers, with customers including Norway’s Telenor ASA and Britain’s Zen Internet.

  Adtran, a US network equipment maker picking up market share from China’s Huawei Technologies Co (華為) in Europe, has also warned customers of supply chain risks and lead-time extensions in the past few months.

  It has expanded its warehouse facilities in the UK, more than doubling its inventory and logistics capacity to avoid problems, a spokesman said by e-mail.

  No carrier has run out of routers yet, but the supply chain looks strained for the next six months, so it is possible, Gewecke said.

  “We have been very close several times,” he said in a video call. “It could still happen.”

  Even shipments already en route cannot escape global trade ructions: Last week, Zyxel routers were on and behind the ship that blocked the Suez Canal, Gewecke said.

  Broadcom did not immediately respond to requests for comment. About 90 percent of its supply for this year has already been ordered, CEO Hock Tan (陳福陽) said last month.

  Zyxel’s problems started more than a year ago when manufacturing in its Wuxi, China, factory shut down for a month due to COVID-19. Since it reopened, supplies have been spotty and shipping costs have spiked as much as 10 times their previous levels as exporters raced to catch up, even vying for space with outbound medical and personal protective equipment.

  Since Chinese factories restarted, chipsets have become a global bottleneck, choked by shortages of parts like silicon wafers as well as supply-demand mismatches.

  Components for other systems such as memory and power management are also affected, Gewecke said.

  “It’s a snowball effect that we’re pushing in front of us, and the situation since then has just become worse and worse and worse,” he said. “When I talk to some of the chipset vendors, some of them tell me that they have something like overbooking of 300 percent of their capacity.”

  With semiconductor foundries struggling to allocate scarce capacity, less profitable work gets pushed to the back of the line. Routers command lower margins than smartphones and computers, and then within the world of routers, those destined for less affluent markets like eastern Europe use less sophisticated, lower-margin parts.

  In a similar vein, smaller telecoms have been worst hit, while global enterprises have clinched supplies with their buying power.

  Some carriers have stockpiled to avoid shortfalls, and some were further insulated by ordering months’ worth of equipment ahead of potential Brexit trade disruptions.
• Most Popular

  • 1

    Central bank announces banknote redesign plans

  • 2

    CDC reports COVID-19 variant case

  • 3

    Japan deploys long-range missiles close to China

  • 4

    Circling Taiwan in style

  • 5

    Nano 4 supercomputer to launch in third quarter