Though the peak of the global chip shortage (2020‑2023) has eased, many UK industries continue to face shortages across semiconductors, capacitors, resistors, and other passive components. Complex supply chain issues like capacity constraints, mergers in the supplier landscape, and obsolescence are maintaining long lead times and allocations for critical parts.
SMEs that make electronic devices and telecoms equipment have been hardest hit, scoring just 38/100 on the Manufacturers’ Health Index, due to component shortages and skills gaps. Larger firms fare better, but costs and inefficiencies remain high.
To make matters worse, many UK firms who were sitting on inventory overhangs caused by post‑pandemic over‑ordering now have a combination of high stocks of some lines and shortages on others, bringing cash flow risks as the market recovery begins.
Studies show over 35% of businesses attribute component shortages to Brexit, followed closely by COVID‑19 and more recently tariff uncertainties Supply shocks have cascaded into higher inflation and uncertainty, reflected in significant fluctuations in UK stock and inventory levels.
How businesses can respond with the volatility…
While some of the larger contract electronic manufacturers (CEMs) with robust inventory systems remain relatively stable, other manufacturing bases, smaller suppliers, SMEs and startups are struggling. Industry commentary suggests a market bifurcation between financially healthy and loss-making providers.
Businesses at the smaller end of the scale, in order to remain competitive are turning to:
– Flexible design frameworks that accommodate multiple interchangeable components
– Advanced demand forecasting and bulk purchasing, often planning 12–18 months ahead
– Reshoring of component sourcing to the UK or nearby regions to reduce lead times and logistical risk
Broader Economic Impacts…
Supply squeezes have increased wholesale costs for goods, affecting pricing downstream for consumers. Uncertainty over raw materials and global tensions hampers investment planning and inhibits innovation. Government bodies have highlighted the strategic necessity of securing semiconductor supply within UK critical infrastructure.
The Policy and Strategic Landscape…
Calls are mounting for the UK Government to lead a coordinated semiconductor and components strategy, potentially through a dedicated taskforce or Office for Semiconductors. Industry voices also emphasise the need for consolidated trade‑association representation to engage more effectively with policymakers.
In related policy news, UK businesses and charities are urging the government to scrap VAT on refurbished and repaired electronics, arguing this would reduce consumer costs, cut e‑waste, and support the development of green jobs, for an economic and environmental win. They estimate potential job growth of 31,000 by 2035, rising to over 80,000 by 2040.
But what needs to be done now?
Moving forward…
The electronic components shortage is no longer just a temporary supply hiccup, it has become a complex, structural challenge that impacts the very foundation of UK manufacturing, innovation, and competitiveness. Businesses that thrive in this environment are those that embrace adaptability, proactive sourcing, and innovative design thinking.
At Ignys, we specialise in supporting organisations through:
– Design for Availability: Our engineering team helps you redesign your products around component availability without sacrificing functionality or performance. By identifying and integrating drop-in replacements or alternate parts, we help keep your projects on track. Even when global supplies are uncertain.
– Alternative Component Sourcing: Through our deep supplier network and market insight, we help clients find validated alternatives and equivalents to restricted or obsolete parts. Whether you’re working with passives, ICs, or highly specific components. We guide you through the risk and compliance landscape.
– Supply Chain Foresight & BOM Risk Management: Our experts review your bill of materials (BOM) to flag high-risk components and propose long-term procurement strategies, reducing the chance of production delays and costly redesigns down the line.
– Flexible Support Models: From one-off sourcing consultations to full-scale product redevelopment, we tailor our services to suit the unique needs of start-ups, scale-ups, and established manufacturers alike.
– Continuous Innovation: Getting ahead of the market while competitors are distracted with supply chain.
In times of disruption, the ability to adapt quickly is your biggest advantage. A partnership with us means building supply-resilient products, accelerate time to market, and reduce the impact of component volatility on your bottom line.
Contact us today to learn how we can help turn your electronic design challenges into opportunities.