Tariff impacts chris church

Circuit Break Podcast #127

Tariff Impacts with Chris Church

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July 5, 2018, Episode #127

Chris Church talks about the potential impact on the Electronic Manufacturing industry by the latest Tariffs.
  • Chris Church
  • What kind of items in the Tariff list will impact US Electronics Manufacturing?
    • Passives, actives excluding ICs and diodes, mechanical components like switches, connectors, etc
    • Assembled PCBs from China
    • Biggest impact on pricing will come from the mechanical components, and specialty actives like high-current FETs
    • Shouldn’t see a huge impact from LEDs, while China has grown from 10% of the market of production in 2010, to over 65% now, the majority of their production — 95% — is used internally in assembling LED lighting for sale
    • Beware of counterfeit parts.
  • Short Term Impacts on the Market
    • Pricing on most things won’t increase until existing stock gets depleted from inventory at US warehouses
    • Initial impacts will be slightly increasing prices, potentially rapidly moving stock as buyers look to lock in current pricing
    • Overall, we’re predicting from about 2%-10% increase in COGS for most electronics produced in the US until all ICs are included, at which point the impact to COGS will increase dramatically
  • Long Term Impacts on the Market
    • We’ll see more assembly shifting away from US to places like Mexico which have lower tariffs on components between China and them, and little to no tariffs on final goods coming into the US
    • Flex has been downsizing their high margin/mid volume segment, laying off 10% of their workforce as demand for telecom and datacom equipment has dropped, and focusing on higher volume and lower margin builds in the US
    • NAFTA is not going anywhere anytime soon
    • Tariffs this is a boon for NAFTA, but not necessarily for US manufacturing
  • Impacts of Tariffs on the current Component Shortages
    • Expect the bidding to get hotter on high-volumes of short-supply passives, esp. w/ automotive ratings, and you’ll need to get closer to the manufacturers and other consumers in the supply chain to keep costs from ballooning on these line items
  • We are already seeing parts having gone up from half a cent to 10 cents on some high-demand capacitors at volume, this is before tariffs kick in
  • Overall, it’s not going to affect the availability of passives right now, as passives aren’t discretionary purchases, the increasing price won’t necessarily increase the supply in the short-term
  • Consumer goods?
    • No Tariffs on complete consumer goods yet
  • Will this hurt hobbyist/makers?
    • Those that are sourcing their goods from China, not really – de minimus for customs is $800, so if you’re importing less than $800 a time from an overseas vendor, these tax rates won’t impact you
    • Big issue is going to be around vendors who sell made-in-china boards (not final products), these companies are going to have a harder time covering the spread
    • Companies that make a lot of their goods in the US, like sparkfun, adafruit, etc. will have lower overall price increases, which will vary from product to product
  • Tariff list
  • Madell Pick and Place

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Chris Church of MacroFab

Chris Church of MacroFab

About the Hosts

Parker Dillmann
  Parker Dillmann

Parker is an Electrical Engineer with backgrounds in Embedded System Design and Digital Signal Processing. He got his start in 2005 by hacking Nintendo consoles into portable gaming units. The following year he designed and produced an Atari 2600 video mod to allow the Atari to display a crisp, RF fuzz free picture on newer TVs. Over a thousand Atari video mods where produced by Parker from 2006 to 2011 and the mod is still made by other enthusiasts in the Atari community.

In 2006, Parker enrolled at The University of Texas at Austin as a Petroleum Engineer. After realizing electronics was his passion he switched majors in 2007 to Electrical and Computer Engineering. Following his previous background in making the Atari 2600 video mod, Parker decided to take more board layout classes and circuit design classes. Other areas of study include robotics, microcontroller theory and design, FPGA development with VHDL and Verilog, and image and signal processing with DSPs. In 2010, Parker won a Ti sponsored Launchpad programming and design contest that was held by the IEEE CS chapter at the University. Parker graduated with a BS in Electrical and Computer Engineering in the Spring of 2012.

In the Summer of 2012, Parker was hired on as an Electrical Engineer at Dynamic Perception to design and prototype new electronic products. Here, Parker learned about full product development cycles and honed his board layout skills. Seeing the difficulties in managing operations and FCC/CE compliance testing, Parker thought there had to be a better way for small electronic companies to get their product out in customer's hands.

Parker also runs the blog, longhornengineer.com, where he posts his personal projects, technical guides, and appnotes about board layout design and components.

Stephen Kraig
  Stephen Kraig

Stephen Kraig is a component engineer working in the aerospace industry. He has applied his electrical engineering knowledge in a variety of contexts previously, including oil and gas, contract manufacturing, audio electronic repair, and synthesizer design. A graduate of Texas A&M, Stephen has lived his adult life in the Houston, TX, and Denver, CO, areas.

Stephen has never said no to a project. From building guitar amps (starting when he was 17) to designing and building his own CNC table to fine-tuning the mineral composition of the water he uses to brew beer, he thrives on testing, experimentation, and problem-solving. Tune into the podcast to learn more about the wacky stuff Stephen gets up to.

Special thanks to whixr over at Tymkrs for the intro and outro!

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