General > General Technical Chat

Low cost products and the chip shortages

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Jester:
Most of my career was spent developing low volume high cost products that had very large markups, so when a component became difficult to source, we always had the option of going to a broker, if we normally paid $10 for the part, even if we were forced to pay $100, it was not a big deal when the product used one such component and sold for say $50,000

At the other end of the spectrum there are companies producing low cost products with perhaps one $5 microcontroller with total (pre Covid) BOM cost of perhaps $20, and now the brokers want $50 for that one microcontroller. The increased cost of that one device might equate to the entire profit for a low cost device. So for those in that situation what are you doing, marking up the price or stopping production?

Redesign seems like a game of whack-a-mole

SiliconWizard:
High volume low cost products for a western company is kind of a suicidal business model these days anyway.

Now for the the chinese companies that can actually profit from this business model, I'm sure they have it a bit easier to get ahold of semiconductors than we do. So... Just a thought?

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