Semiconductor is the key element in modern electronics and you can find them in smartphones, mobiles, laptops, and automobiles. It comprises of integrated circuits, memory modules, microprocessors, and other devices. However, the supply chain of semiconductors outlines the network of processes like designing, manufacturing, testing, packaging, and distribution. Today, we’ll discuss semiconductor supply chain issues; steps involved in the SCM process of semiconductors, and how to deal with them.
Semiconductor Supply Chain Management
Semiconductor supply chain management deals with the complicated network of businesses and companies. It focuses on designing, production and manufacturing, testing, packaging, and distribution of semiconductors. Some of the main stages involved in the semiconductor supply chain management are as follows;
Development & Designing
Semiconductor manufacturing companies also go by the name of “fables companies;” and their job is to develop and design new chips either in-house or with the coordination of other businesses and companies. The reason for their name “fables” is because they don’t fabricate the chips that they design, develop, and market.
The production and manufacturing of semiconductor chips happen in specialized factories and they go by the name of “foundries.” The chip design comes from the fable companies or foundries, and they employ customized equipment in the development of chips from the silicon wafer.
Assembling and Testing
After the production and manufacturing of chips, the company should test them to make sure that they’re performing and functioning properly as required. A separate would perform this role that has the special expertise in testing and assembling. Once the chips have gone through the testing stage, it requires assembling into products that would further be employed in various electronic devices.
The final step is the packaging and distribution of chips to the client companies. They would either utilize them in their products and devices or sell them to the end consumers; directly or with the assistance of a distribution channel.
Along with the abovementioned stages, some of the steps involved are as follows;
- IP (intellectual property) licensing
Some of the main supply chain and logistics stages for semiconductors are as follows;
- Inventory management
- Order fulfillment
- Transportation logistics
Semiconductor Supply Chain Issues
Some of the main Semiconductor supply chain issues are as follows;
Sulfuric Acid Shortage
Sulfuric acid is the key material element involved in the production and manufacturing of semiconductors and its supply is at great risk. According to an estimate by TECHCET, the demand for sulfuric acid will increase by more than 50% in the US by the end of 2026. The focus of TECHCET is to recognize the material disruptions, dependencies, and weaknesses within the SC network and processes.
Neon Gas Shortage
The war between Russia and Ukrain has also disrupted the SC network and processes of semiconductors. For instance, Ukrain is the top supplier of neon gas, and the war has caused the SC disruption, material shortage, and chip on chip fabricators. It has also jeopardized the production and manufacturing of semiconductors and stress among chip fabricators. The US and Asian chip manufacturers are heavily reliant on the neon gas of Ukraine.
Roadblocks and extreme ocean freights contributed significantly jeopardizing the production and manufacturing of chips during the pandemic crisis. In order to deal with the disruption, the CMC (critical material council) companies offered shipping and logistics at the ports to implement mitigation strategies to deal with further interruptions of supplies.
Severe Weather in Taiwan
Taiwan is the top manufacturer and producer of semiconductor chips, and the country experienced a severe drought in the summer of 2021; it has greatly impacted the production output of chips. It impacted because of the limited availability of ultra-pure water to clean the silicon wafers employed in microprocessors.
Cryptocurrency Amplified Demand
The usage and development of cryptocurrency need a lot of data mining in special computers with a specific set of chips. The increasing demand for cryptocurrency data mining machines caused a shortage of chips in the market. Soon after the collapse of the cryptocurrency market eased the supply and demand of chips.
US & China Trade War
US and Chinese governments have conflicted relationships over the years. The US commerce department has implemented various types of restrictions on China. On the other hand, China is the world’s largest manufacturer and producer of semiconductor chips. Restrictions and regulations have made it difficult for the country to sell them in the US market.
The SC disruption of Semiconductors has become apparent due to the complexity of the network and various other reasons and factors; natural disaster is among of them. For instance, the tsunami and earthquake of 2011 significantly impacted the supply of Semiconductors. It results in the form of market shortages and increases in price.
Conclusion: Semiconductor Supply Chain Issues
After an in-depth study of the semiconductor supply chain issues; we have realized that SC issues have greatly disrupted the supply of semiconductor chips. If you are learning about the supply chain issues of semiconductors, then you should keep in mind the abovementioned challenges.
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