Go to press overview

Bürklin Elektronik refers to semiconductor bottleneck

„Semiconductor sales in the first quarter quadrupled.“

Many semiconductors are in short supply these days. Anyone who wants to cover short-term semiconductor requirements needs a good nose. A look at Bürklin Elektronik's webshop is worthwhile: there, even highrunners from well-known manufacturers are available immediately. A conversation with CEO Jürgen Lampert (Bürklin Elektronik) and Karin Zühlke (Markt & Technik).

Furthermore, we see demand for semiconductors increasing by more than 20 percent in 2021. The forecasts assume that the market will almost double in the next ten years. This means that demand is and will continue to be much greater than the market, resulting in the current semiconductor crisis.

Which product areas are particularly affected in the semiconductor segment?

Jürgen Lampert: Basically the entire field of semiconductors, such as discrete devices, microcontrollers, programmable logic, memory ICs, optoelectronics, to name a few.

Which industries are suffering the most from shortages and why?

Jürgen Lampert: In general, the shortage affects the entire economy, since semiconductors are built in virtually everywhere. Suppliers in the industrial and automotive sectors in particular, where 8-inch wafers are used, are suffering badly. Here, many companies have already had to file for insolvency or short-time work. Semiconductor manufacturers have also shifted their production to other areas and customers, especially 5G applications, consumer electronics and smartphones. This in turn means that semiconductor manufacturers are dividing semiconductor production resources and priorities among diverse segments, again creating bottlenecks in a growing market. Because semiconductor production is complicated and can take several weeks, increasing production is not readily possible.

What does this mean for customers' production chains?

Jürgen Lampert: Currently, many production sites are also being relocated. This means changed production chains, possible production stops and even products that have to be redesigned. This is necessary because customers, both EMS and ODMs, are waiting for ordered goods.

As of today, it is impossible to say when the situation will ease again. Forecasts assume that the situation will even worsen. At present, there are no signs of a stabilization of availability and prices. Some predict an improvement in 2023 at the earliest, but depending on the product area, not until 2024.

From our point of view, an important strategy for the future is to increase production in Europe. In this way, we can reduce our dependence on Asian production in the long term. To date, Europe produces less than 10 percent of global consumption. The first steps have already been taken in this direction: Intel is building two chip factories in Magdeburg for 17 billion euros. Infineon has opened a new high-tech chip factory in Villach, Austria, in 2021 for 1.6 billion euros.

What do you think are the economic consequences for the market?

Jürgen Lampert: The risk of economic damage is great. Often, rising demand causes a shortage on the market, resulting in sharp price increases. The permanent risk of production stops also increases the danger of short-time work. In addition, there are financial burdens on manufacturing companies due to the long-term advance financing of goods, claims for damages or contractual penalties in the event of delivery delays. All of these factors increase the risk of insolvency.

What does the situation mean for distribution?

Jürgen Lampert: We are seeing massive delivery problems with distributors who have not filled their warehouses in time. It is currently impossible to predict when out-of-stock products will be available again. This makes disposition difficult to plan and results in extreme price fluctuations. Some distributors currently show neither prices nor delivery times. Only those who have stocked their warehouses well and have purchased the right products in good time can cover current requirements. We at Bürklin Elektronik have several hundred semiconductors from various manufacturers in stock in large quantities.

Bürklin Elektronik acted with great foresight. Frankly asked: Was that simply situational luck or strategy?

Jürgen Lampert: We recognized early on that our own availabilities have a positive impact on our business development. Our strategy is forward-looking stockpiling and purchasing activities based on annual volumes with a good supplier network playing a central role here. We conclude call-off orders in many product areas, e.g. programmable logic, microcontrollers, memory ICs, operational amplifiers, voltage monitoring as well as interface ICs, at an early stage to minimize production downtime.

As is well known, high inventory levels also entail risks...

Jürgen Lampert: That is correct. But we deliberately take the risk of price erosion during a recession, which can lead to high inventory values and customer cancellations.

Bürklin Elektronik galt am Markt lange Zeit eher als Kleinmengen-Lieferant. If we are talking specifically about semiconductors: What delivery quantities can the customer obtain from Bürklin Elektronik?

Jürgen Lampert: Customers already increasingly perceive us as a distributor who also supplies medium quantities for production series. The average order value has risen continuously in recent years and this year is certainly even 30 to 40 percent higher than last year, also due to the special market situation.

How far does Bürklin Elektronik's delivery radius extend?

Jürgen Lampert: Our foreign share is around 20 percent. We export worldwide, also for our German customers at production sites in Asia, of course except to embargo countries.

Bürklin Elektronik was not necessarily positioned in the market as a proven semiconductor specialist. What is your strategy in terms of semiconductor linecard in the longer term?

Jürgen Lampert: Customers are increasingly perceiving us as a reliable and competent supplier in this segment as well. We quadrupled our semiconductor sales in Germany in the first quarter of this year. We even receive semiconductor inquiries from China.

We strive for an even more intensive cooperation with well-known manufacturers such as Microchip, Intel, Texas Instruments, Lattice Semiconductor, Infineon Technologies, Analog Devices, Xilinx, Cypress, Silcon Labatories, Maxim Integrated etc., so that a long-term source of supply for Bürklin Elektronik is guaranteed. Of course, we are guided by customer needs and trend applications in order to ideally design our product portfolio. In this way, we provide our customers with a high level of availability of a wide range of semiconductors over the long term. However, the availabilities still depend on the market situation.

What we don't want to do is massively stock products that are not relevant to the customer. In this context, our focus is also on delivering on our value proposition, i.e. our delivery promise: Ordered by 6:00 p.m. and delivered the next day in Germany. We don't think it serves anyone's interests if we add a massive amount of products but at the same time totally dilute our delivery promise.

I am convinced that even in a situation like now, there is an opportunity to strengthen our brand even further. We are convinced that the market will develop extremely positively, doubling in the next ten years. And semiconductors ultimately account for 65 to 70 percent of electronics sales.

We also take this into account visually: Our logo has the wording "All electronics"; this is also a commitment to a long-term semiconductor strategy.

To what extent are you still drawing on resources for semiconductors in terms of personnel?

Jürgen Lampert: We are in the process of recruiting a CPO (Chief Product Officer) from the industry to help us further develop supplier relationships and also strategically realign the semiconductor portfolio.

What advice do you have for customers in 2022 to keep their supply chains running as smoothly as possible?

Jürgen Lampert: Customers with long-term contractual commitments, a smooth logistics system and clean forecasts fare best, because we were able to take action for them at an early stage. Stock build-up is hardly possible because everything is bought away. To ensure supply reliability, we ask our customers to work closely with us and to plan their requirements early and over the long term, as set out in framework agreements, for example.

Finally, what is your message for the current year?

Jürgen Lampert: A reliable supply chain is the key. The euphoria of buying components from all over the world has diminished in view of the current situation. I am convinced that we have a very good starting position: Last but not least, I see our warehouse in the Munich district, in the heart of Germany's electronics industry, as an advantage and a great opportunity for the future.