NexGen Digital: `We Believe That the Global Chip Shortage Will Continue in the Next Two Years`
Defence Turkey: Can we start our interview with a brief introduction of NexGen Micro, its organizational structure, fields of activity, and the number of employees?
Didem ÇALIŞKANTÜRK: NexGen Digital, Inc., was founded in 1998 in Irvine, California, as a third-party electronics distributor company. It has been serving internationally and in Turkey for about 23 years. 4 years ago, NexGen Digital established its second company NexGen Micro and started providing distribution services. Our product portfolio includes displays, GPS/GNSS, IoT solutions, power systems, sensors, cables and connectors, and electronic components. It is the distributor of approximately 23 companies.
The company started its activities in the Istanbul Tuzla Free Zone in 2020. Currently, it has a team of 7 people in Turkey. Apart from its head office in the US, NexGen Digital also has offices in China, Europe, and Mexico. In particular it provides services for end-of-life (EOL) products that are hard to find due to the shortages in the global chip market.
Defence Turkey: What can you say about your current business activities, target markets, and capabilities that distinguish NexGen Micro from other companies?
Didem ÇALIŞKANTÜRK: The most significant feature that distinguishes NexGen from other brokers is that it has its own laboratory. In the company's laboratory in the US, all products are quality controlled before being delivered to customers. As a medium-sized niche company, NexGen Micro offers different services and alternatives to its customers with its IDEA certification, export license, and AS 6081 certification that allows for product sales to the defense industry. NexGen is also an approved supplier of several leading defense companies such as Boeing, UTC, L3Harris, and Honeywell. These companies visit our warehouse every year to inspect our activities and renew our certificates. Working globally, NexGen provides services to its customers both in Turkey and abroad (Europe, East Asia, and the Middle East) from its office in Turkey.
Defence Turkey: Can you elaborate on whether you experienced any delay or postponement in your annual activities due to the COVID-19 pandemic? How and to what extent has the COVID-19 pandemic impacted your business operations?
Didem ÇALIŞKANTÜRK: Since the Defense Industry never stopped during the COVID-19 pandemic we did not stop either. On the contrary, our workload increased five-fold compared to last year due to the global chip shortage after the pandemic. It is believed that the chip shortage will continue for about two more years. We are working 24/7 day and night. There are delays in the shipping process after purchasing the product due to the pandemic. When the product comes to us, it must wait for quality control. After we send it to our customers, there are delays in the shipping process again. Therefore, we are going through very difficult and challenging times.
Defence Turkey: What can you tell us about NexGen Micro's performance in 2020? How much has your annual turnover changed compared to the previous year?
Didem ÇALIŞKANTÜRK: Our company has grown around five times compared to last year. We have considerable momentum, primarily because of the chip shortage. Because of the pandemic, there is a significant need for chips globally, and this situation is expected to continue for another 1-2 years. It seems that it will take another two years for the manufacturers to recover after the pandemic. Certain parts that normally used to take about 12 weeks to produce now are being delivered to the customer within at least 52 weeks. Therefore, as an example, a product you buy for 50 cents under normal conditions currently costs around 10 dollars. In other words, prices have increased by about tenfold. Our market is like the stock market right now. You need to purchase on time, or you cannot find that part at that price when you ask the next day. Sometimes the price may have increased, or the product may be entirely out of stock. You need to act fast.
Defence Turkey: What are your expectations and goals for the following years? Are you planning to expand your business activities?
Didem ÇALIŞKANTÜRK: Our main business field is electronic part/component trading. In addition, we have added distribution services, and in the next 1-2 years, we aim to establish a laboratory in Turkey similar to the one in the US. We will perform quality control here. Right now, all products are shipped to the US for quality control, regardless of where we buy from.
We have an X-Ray machine in our laboratory. Here we perform XRF analysis, decapsulation, and solder testing. We also have an industrial drying oven in our head office. The products must be stored at specific conditions (relative humidity, duration, and temperature). Unpacked products are dried in our oven according to the humidity rate in their datasheets, then packed accordingly and delivered to our customers.
Defence Turkey: Have you experienced any problems accessing dual-use electronic products, especially dual-use components, due to the recent embargoes against Turkey?
Didem ÇALIŞKANTÜRK: Since the company headquarters is in the US and all purchases are made there, we do not have any problems acquiring products because our Turkey office is not directly involved in the process. Our orders go to the company headquarters in the US, where they are collected and distributed to our customers.
Defence Turkey: Dear Didem ÇALIŞKANTÜRK, thank you for sparing time for our readers.
