Telecom Supply Strained

A shortage of electronics parts is curbing sales at telecommunications-equipment makers, forcing them to scramble for supplies as manufacturers that slashed production fail to restore capacity fast enough.

Telecom-gear firms say they are hunting for new suppliers, paying higher prices for components and rushing deliveries by plane. Parts suppliers are hiring more workers, deferring plans to shut factories and rationing parts to their best customers -- but demand still outstrips supply. The problem stems from the recession, when electronics-component manufacturers scaled back production. That created fewer parts to sell to companies, such as Alcatel-Lucent SA and Telefon AB L.M. Ericsson, that make network equipment for wireless carriers. In recent months, demand for that equipment has accelerated, as wireless carriers need it to increase their network capacity. The proliferation of smartphones is taxing wireless carriers' existing networks, and the shortages are mainly of basic parts used in equipment to build and upgrade network capacity.