Again and again we receive requests from customers to diversify their supply chains. After the hard Corona lockdowns, especially in China, there are considerations to spread the risk.
Typical requests for this so far have been:
- Can we qualify a 2nd source in Africa or South America?
- In the future, we would prefer to produce in Europe, which European manufacturers can you offer us?
- India is said to be cheaper as a production base, can we switch to an Indian manufacturer?
It is important to know that most LCD manufacturers are located in Asia. Namely in China and Taiwan, and for higher-quality products in Korea or Japan. In addition, there are production facilities in Southeast Asian countries, but these often belong to groups from the countries mentioned, mostly Chinese. In some cases, only certain production steps are relocated to these countries.
For companies that deliver to the USA and therefore have to do without Chinese products due to protectionist regulations, outsourcing to Vietnam, for example, can be an alternative. The LCDs continue to be produced in China, but a significant part of the assembly takes place in Vietnam, so the LCDs are not considered a Chinese product. For these companies, manufacturers from Taiwan continue to be a possible choice. We have corresponding contacts.
The situation is different with complete independence from Asia. This is generally not possible. In western industrialized countries, there are only smaller LCD lines, if at all. In particular, the back-end process, i.e. the assembly from the LCD to the LCD module, is often not interesting in terms of price due to the higher labor costs. This is also true for Eastern European countries. Nevertheless, we can offer you module production in Germany through our own assembly.
Other low-wage regions such as India, Africa or South America are also not available as alternatives. There is simply no LCD production there. The infrastructure that has grown in Asian countries over decades is also generally lacking: cleanroom specialists, machine manufacturers and material suppliers have all settled close to their customers. The highly specialized personnel needed to control the very sensitive production process of an LCD are also only available on the Asian market.
So what can you do to better secure your supply chain?
- 2nd-source strategy: If you purchase appropriate quantities, you can distribute them between two manufacturers. Conceivable are manufacturers in different regions of China or a mixture of China and Taiwan. In doing so, you must be aware that the costs are somewhat higher, as you purchase smaller quantities in each case and thus lose volume advantages.
- Qualification of alternatives and avoidance of exotic components: Already at the beginning of the project, you can qualify alternative electronic components so that, for example, different ICs can be used, between which the manufacturer can switch depending on availability on the market. Not only LCD production can be a bottleneck, but also the components used.
- Early ordering: Time and again in recent years, supply routes and productions have been disrupted. Buy early and plan your warehouse sufficiently large. A side effect of buying early is the use of the sea route and thus the reduction of CO2.
We can gladly make concrete suggestions for your project. Please contact us!
