You may have seen reports recently about pressure on the global semiconductor market, largely due to the fast-tracked investment in AI infrastructure as well as supply chain disruptions because of the political unrest in the Middle East. We wanted to be transparent with our customers on what this means for us, and for you. 

Firstly, the sharp increase and investment in AI infrastructure is putting pressure on the global semiconductor market. As a result, manufacturers are prioritising high-bandwidth memory and AI-grade components, which is reducing production capacity for the standard embedded memory chips used in many smart cards and credentials solutions that we supply. 

Secondly, recent events in the Middle East are creating additional uncertainty across international shipping and air freight routes. A significant volume of global goods transit through or over this region which may lead to longer routes, increased transport costs and occasional delays. 

There is currently no immediate cause for concern. However, we believe in being transparent and helping our customers plan wherever possible to avoid unexpected costs and delays. Please find more information below. 

If Your Organisation Runs a Large ID Programme 


As these developments continue, you’re most likely to be impact if you: 

  • Issue high volumes of credentials on a regular basis 
  • Operate a multi-site access control system 
  • Run regular onboarding or ID refreshes 
  • Use specific smart card chip technologies for enhanced security 


If any of the above applies to your organisation, even small increases in lead times can create operational pressure if replacement stock is ordered too late. 

For this reason, we’re recommending that you review your current stock levels slightly earlier than usual. 

What This Means for ID Card Programmes 


We supply and distribute numerous products that typically use embedded chips including, but not limited to: 

Smart cards including: 


As the production rates for these types of products start to reduce, we anticipate that the most likely outcome will see a gradual extension in lead times, a reduction in the flexibility of specific chip specifications, inconsistent and fluctuating component and freight costs as well as a longer turnaround time for custom and encoded card orders. 

Now we want to be very clear. We’re not currently experiencing any dramatic shortages, and we are hopeful that supply demands can continue to be met, but we are seeing that the market is tightening which leads us to encourage a little more forward planning than usual. 

Shipping 


We have been briefed on potential delays and increased costs as affected areas are having to be avoided. Of course, we’ll aim to protect against any sudden price increases as much as possible, however, if this then becomes unsustainable, we’ll have no choice but to review costs and look to pass these on. 

Currency Fluctuations 


We can never be 100% sure what the daily exchange rates will do, but any fluctuations in GBP v USD or EUR will affect material costs. As with shipping and logistics fees, we’ll be doing everything we can to protect this, but it may impact our costs. 

How We’re Managing This 


Our priorities around this remain extremely clear. We want to make sure that your ID programme continues to operate smoothly with as little disruption as possible. 

To ensure that happens, our purchasing team is actively monitoring and reviewing the semiconductor supply demands and any developments. As well as that we’re continuing to: 

  • Monitor and track global shipping and air freight developments 
  • Working closely with our existing network of manufacturers and distributors 
  • Securing stock strategically where possible to prevent delays 
  • Advising our customers to contact us to plan and order in advance or to discuss potential alternative solutions 

Looking at out supply chain and ensuring that our UK and European based suppliers can assist where this remains cost effective and can meet your needs 

What We’re Recommending Customers Do 


Be proactive, practical and plan well in advance. Specifically, to avoid any potential delays or changes in the supply chain, we’re recommending that you: 

  • Audit and review your current stock levels earlier than usual 
  • Plan and forecast your usage and issuance needs for the next 12-24 months 
  • Consider any planned growth, acquisitions, onboarding needs or other forms of expansion 
  • Where possible, we recommend placing orders 2-3 months earlier than usual 

By ordering ahead you’ll be able to secure the products you need, protect against sudden pricing changes and reduce the risk because of any potential delays. 

Please Contact Us for Help 


If you would like to discuss your current stock position or future requirements, please contact our team. 

A short conversation now can often help prevent unnecessary disruption later. 

If helpful, our team can also review your current ID issuance programme and help forecast your card and consumable requirements.