Dear Valuable Customers and Partners,
Jassway wants to use this communication to brief you on several Critical Supply Constraints currently facing everyone globally. Please work with our Sales team to address your demands when forecasting and/or placing orders. We need to work closely together to face this challenge and act as soon as possible.
Lead-time and Price Increase
-Raw Materials
Steel: Iron Ore prices increased from $60 per ton in April 2020 to $155 per ton in end of December 2020. Steel prices during the same period rose more than 82%. This will impact the sheet metal for chassis, enclosures, data centers, and much more.
Steel Should Continue To Rise In 2021, And Producers Will Benefit (NYSEARCA:SLX) | Seeking Alpha
Copper: Prices continue to rise, predicted at end of 2020 for a 17 percent increase at $3.5/lb. or $7,716/MT. As of February 5, 2021, the LME (London Metal Exchange) price at $7,936.5 already exceeds the previous estimate. This increase will impact printed circuit board, wire harness, and cables.
LME official copper prices and averages | Fastmarkets Copper Price (ycharts.com)
-IC/Passive/PCB
Semiconductor (Power IC, MOSFET, Memory): Due to capacity constraints, major IC Foundries such as TSMC and Samsung Electronics have both pushed out delivery, some over a year, and, while prices keep escalating, we still can’t curtail the growing demand. Electrical Vehicles, 5G Telecommunications and Infrastructures, Home and Game Computing have consumed most if not all of the output.
Global shortage in computer chips 'reaches crisis point' - theGuardian
Poor Planning Led to Carmakers’ Massive Semiconductor Shortage - Bloomberg
6 Causes of the Global Semiconductor Shortage – Nasdaq
Passive Components: Major MLCC manufacturers such as Murata have pushed out their lead-times. Although they are improving the yield and capacity, the supply still can’t catch up with rising demand. also re-allocated its production capacity for high yield products, making some lower-end resistors/capacitors even scarce to get.
Printed Circuit Board: With the increased price of copper, and the rapid demand for Electrical Vehicles such as Tesla, manufacturers have increased their lead-times, and now require a forecast and a deposit to secure capacity and future delivery.
Freight Charge Skyrocketed with Less Capacity
-Common Carriers
First the COVID-19 Pandemic during Q1/Q2 in 2020, and later the demand increase and reduced capacity by airlines and vessel companies have caused freight constraint across the Pacific shipping lanes. Notably, major Carriers such as DHL, FedEx and UPS already announced their delayed delivery and are adding 3-5 days to their OTD.
-AIR Freight
Air freight prices rose as high as 700% per kilogram from Shenzhen to San Francisco since March 2020. Air freight is expected to increase even more if the COVID-19 Pandemic continues.
Lack of passenger flights squeezes air freight capacity in peak season | Reuters
Peak shipping season for air cargo heats up to full boil - FreightWaves
-OCEAN Freight
Since June 2020, Ocean Freight prices have been adjusted 8 times, to an increase of more than 280% now. Both FFE (Forty-Foot Equivalent) and vessel sailing schedules are reduced, making material planning difficult to schedule without a firm Estimated Time of Arrival (ETA).
An ‘aggressive’ fight over containers is causing shipping costs to rocket by 300%
Evertiq - Is This The Perfect Storm?
Exchange Rate between US Dollar and CNY
The value of CNY continues to appreciate and reaches historic high lately. As of Thursday, 29/4/21, the Exchange Rate is $1US Dollar to 6.47CNY. The CNY dramatic appreciation against the U.S. Dollar has imposed great difficulties on our cost structure.
US Dollar (USD) to CNY exchange rate history (exchangerates.org.uk)
Action Required
As the lead time and price for raw materials have increased tremendously this year, we strongly recommend that you can work with our Sales team closely to address your demands or forecasting. We will then try to arrange the parts ASAP to meet your demand as early as possible to avoid any shortages.
Thank you for your understanding and cooperation.
CEO
Daniel Wan
