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Dearth of electronic components zaps firms

Pity not the busy folks at Jabil Circuit.

The St. Petersburg manufacturer is running almost full bore, three shifts a day, to keep up with the sizzling demand for circuit board assemblies used in personal computers and other electronic products.

Jabil, along with its high-tech peers in Tampa Bay and elsewhere, could take on even more business. There's just one tiny problem.

The demand for PCs, cellular phones and other gotta-have gizmos is far outstripping the supply of components used to make them.

"We could do 20 percent more business if we could find the parts," said Jabil Circuit chief Tom Sansone.

It's becoming a familiar refrain. The global mismatch of demand and supply means Jabil and other area companies, like Tampa's Reptron Electronics and Group Technologies, are losing potential sales. And it is forcing new costs on these companies as they join the global hunt for components.

"We've never seen a supply shortage as widespread as we have today," complained Reptron vice president Stephen Gold.

Strong demand means plenty of opportunities for Reptron, he said. "But the lack of supply means we're losing revenues and making it more expensive to manage our business."

A few key components for PCs, such as memory chips called DRAMs (dynamic random-access memories), have been in short supply for more than a year. But recently, shortages have spread to other types of memory chips, monitors and CD-ROMs used for hot-selling computer games. Even mundane parts like voltage regulators are hard to find, say officials at some area companies.

Why the component crunch? Everybody is electronics-crazed, say area manufacturers and analysts. Here's why:

Consumer interest in owning or upgrading personal computers is soaring as competitive PC makers continue to cut prices. Lately, PC demand in less-developed nations has taken off as well.

Consumers worldwide bought about 48-million PCs in 1994. By 1999, close to 100-million will be sold in a year, predicts research firm Dataquest.

New generations of PCs, especially portable laptops with huge advances in speed and capacity, are now becoming widely available. Those advances have prompted a huge demand for the new machines and also have trimmed prices for older PCs.

Newer software increasingly requires massive amounts of memory and faster chips to operate. Also, the arrival later this summer of Windows 95, Microsoft's much-heralded PC operating system, as well as the rising popularity of the Internet have people scrambling for more powerful PCs.

Memory chips that once were used almost exclusively in computers now are popping up in more and more "smart" products, from cellular phones and answering machines to home heating systems and cars. For example, Reptron, with 1,000 employees, assembles circuit boards to help run the automatic teller machines made by Ohio's Diebold Inc.

That ever-widening demand for chips is aggravating their limited availability.

A so-called "gray" market has ballooned as a result of the shortage of chips. The international market, ill-defined and volatile, is made up of middlemen who charge companies high prices for chips whose origins and quality are sometimes hard to determine.

"When there's a shortage," Reptron's Gold said, "we find alternate sources. Unfortunately, there's always a premium to pay to secure components in that fashion."

Don't look for the supply of computer parts to catch up with demand anytime soon. Opinions vary, but high-tech execs expect the squeeze on computer chips and other parts to last for months, and possibly years.

Group Technologies, which contracts with PC companies to manufacture portions of their computers, has the demand to operate three production shifts. But the company is stuck at 1} shifts and about 1,500 employees because of supply limitations, said Gregory Tymn, vice president and chief financial officer.

Component shortages are not unusual, Tymn said. But they have increased in the past three months. "We're managing, but it has affected revenues by about 5 percent," he said.

At Jabil Circuit, Sansone says the work force has swelled 30 percent in the past three months to handle its manufacturing load. And with 800 of its more than 2,000 employees working in its local plant, Jabil is still hiring.

For consumers out shopping for a new PC or cellular phone, all these shortages so far have not translated to higher prices. Far from it. Competition, if anything, continues to drive down the retail prices on most electronic goods.

So who's likely to pay the higher cost of hard-to-find components? Some of the expense may fall on some of Tampa Bay's high-tech companies, Gold said.

"Will someone get squeezed? Yeah. You're talking to him," he said.

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