Why is it that some brands are able to supply better quantities than others when it comes to car radios? And why does it seem Tier 1 is having more issues than Tier 2 brands in many cases?
First, remember that overall sales are up. Tier 1 vendors say they are shipping but can’t keep up with demand– a demand that is still riding high after a 30 to 40 percent increase last year. But here is what many industry members say privately about head unit suppliers in general.
Many Tier 1 vendors supply car makers and fulfilling OEM contracts are a priority.
Some Tier 1 companies use chips from the AKM factory in Japan that suffered a fire causing it to be off line for months. But Tier 2 brands may be using chips from factories in Malaysia, China, South Korea or elsewhere.
Many Tier 1 companies still adhere to just-in-time inventory, versus stockpiling for the future. Even if they veered away from that model last year, it was hard to predict that in July of 2021, there would still be this level of demand. As of late last year, chips had to be purchased nine months in advance at higher than normal prices. Few thought the car stereo boom would last past the first quarter at that point, and so some companies may have bought more conservatively.
Larger, more established brands may find it more difficult to change out chips. For example, say Radio Tuner Chip A is out of stock, and another chip that works great is available but it won’t show the radio names, only the station numbers. This might be acceptable to a Tier 2 vendor but not to a top vendor.
We are also told by several industry members and analysts that larger orders in general have become a problem. The pricing on parts is rising so rapidly that a factory that has a finished goods contract for a large order may lose money on the order by the time it’s in production because the price of parts has risen dramatically even over a very short period of time.
We know of one Tier 2 supplier that is deliberately spreading out its orders among many factories because the plants no longer want to take on larger orders due the risk. Even if you place an order today, the cost of parts may go up by the time the order is produced.
Interesting times indeed Mr. Thompson, I’ve been in car audio and window tint since the ’90s and never seen anything close (shortages in electronic products) Let me know if I can be of any help.
David Thompson, the AKM fire affected the supply of, DSP’s, ADC’s and DAC’s, not power FETs or Class D drivers. It is not the only factor causing shortages, either. Even US suppliers are running way behind.
Right? What an odd reply from someone at MMATS….
Well we all know the IC shortage is created, right? Fires in Japan cause Malaysia made parts to run out in the entire world!? Old enough to know the gas shortages of the ’70’s? Gas prices doubled and never went back down…only up from there. Oddly enough, they stayed at around $2.00 per gallon for 4 years…must have been a fluke. I have 2500 pcs. IRF20957’s and 2200 pcs. IRF2844 IC’s that we use in our American Made amplifiers right here in Jupiter, Florida. Need to add this angle to your article Amy as this is the real value of made in the USA. Now, if I could only find labor to help me build…interesting times for sure!