Audio Shipments Are Being Hurt By Chip Shortage

After battling lackluster sales in 2001, car audio retailers say they are now faced with product shortages due to a rebounding economy. In addition, back-orders are being aggravated by a general chip shortage in both the home and car markets, said suppliers.

Several car audio retailers told TWICE that product shortages during the past two months were the worst the industry has seen, and they have impacted all leading vendors.

"There's definitely chip shortages in the Orient and its impacting home and car," explained Kenwood sales and marketing VP Bob Law. "I think the chip manufacturers became very conservative last year and either cut back or didn't add to capacity, and now the surprise rebound in demand for consumer electronics is certainly aggravating the situation."

Law said the parts affected include a variety of tuner ICs, power ICs and memory chips. "Indications are that supplies should improve as we move into the second half, but some of that is still unclear, frankly," he said.

Alpine warned that supply problems may grow more severe later in the year. The company said its CD player sales are up a staggering 30 percent to 40 percent this year and that it air-shipped products every two weeks in April.

"It appears now that deliveries are meeting market demand. However, there is some concern for later this year as parts shortages have been identified with primary suppliers of power ICs," said marketing VP Stephen Witt. "So dealers need to order inventory now."

Tom Coronia, JVC's merchandising VP for car audio noted that lags in supply generally take up to four months to correct. "I think everyone was cautious in their purchase plans with the factories and I think they didn't anticipate a rebound for 2002," he said.

Several retailers said they are seeking out new vendors beyond their main brands to compensate for the shortages.

Coronia said his phone has been ringing a lot lately. "We are getting calls from dealers looking to upside their current purchases, and we're taking a close look at supplying them, but right now we don't think its possible because we need to supply our current pipelines," he said.

Dan Jeancola, mobile electronics VP for Tweeter, Canton, Mass., noted, "It's been a tough year. There seems to be a chip problem, although everyone has a different excuse."

He continued, "I'm seeing delays in introductions. What should have come out in February, came out in April, and what should have come out in April will come out in June. Luckily, we have enough vendors, so it hasn't impacted sales, but its been a lot more work."

Tom Olla, buyer for The Specialists, Tuscon, Ariz., said, "It's the worst I've ever seen. Alpine has been having trouble shipping the new amps and the head units are so spotty. There's nothing available for reorder; you sell out and it goes on instant back-order. We're looking to pick up another line, possibly JVC."

Joe Monahan, president of Car Stereo City, Portland, Ore., agreed, "It's the tightest it's ever been, particularly with Pioneer and Sony. It's on all CD players and MP3 players. We haven't added any more lines but some of the lines like JVC and Blaupunkt are picking up some market share because of it."

Similarly, Tom Seere, general manager of Beach Auto Sound, Huntington Beach, Calif., said, "We're back-ordered on every brand we carry: Sony, Kenwood, Alpine, everyone. Some products are over a month behind and sometimes they come in right away if you happen to order just when they get a shipment in."