The Chip Shortage is Dead- How to Get Cost Savings

With the excess market, there’s a lot more going on below the surface.

Now is the time to start earning cost savings to offset the exorbitant chip costs of the past two years.

Starting in December of 22, the market began to shift from a shortage market to an overage market. Although there are still some pocket shortages, the tide is shifting to there being more parts in excess than in shortage. The top three reasons for the shift in the market are as follows:

• FEAR– Due to the extreme shortages, many OEMS overbought safety stock
• GREED- Seeing an opportunity to profit, many OEMs (and brokers) loaded up on highly sought after parts
• TIME- Normal supply and demand factors typically correct shortage markets and thereafter lead to oversupply

As a result, OEMs have been forced to redesign in order to get product out the door and now a year later have no need for the components that have come in and many orders cannot be cancelled. 

Oftentimes, OEMs will look to their regular distribution sources, see no stock, and draw the conclusion that a part is on allocation. Typically, they do not have the visibility into the excess market on any particular item. Inventory is now becoming available through distribution and the excess market for less than companies originally paid, leaving manufacturers and contract manufacturers with excess they are faced with selling at a loss. iBuyXS has OEM customers sending excess offers daily that are not posted on search engines that we can supply to you at a cost savings.

iBuyXS, an Inc. 5000 company, has always been Excess first. That means, not only are we great at maximizing excess for our OEMs, but we have access to a huge volume of parts that do not show up to the regular distribution channels. If it’s a shortage part you are looking for, we have a much better chance of getting it, and, if it is available in distribution, it’s likely we can provide significant cost savings. Additionally, we utilize our proprietary system Bidchips.com to enable OEMs to buy and sell excess at the current market price.

Send us your Bill of Material with your standard costs and we will cross match your RFQ with our excess availabilities to enable you to get substantial cost savings.