INDUSTRY Q&A
What industry sectors have been impacted most by this shortage? Mark Lippett, CEO, XMOS: “Simply put, the automotive sector was badly affected initially, and then their reaction has impacted many businesses across a huge range of sectors. We’re now into the ripples that happened after that.” Alastair Hanlon, PragmatIC: “No sector has been immune from the shortage. Auto was the first to notice the shortage, as it tried to come back online. But many other industries/companies have now also made statements about increasing delivery times due to it. Last year Goldman Sachs estimated that 169 industries were affected – everything from ready-made concrete to breweries.”
What is the estimated financial loss of this shortage? Alastair Hanlon, PragmatIC: “It is difficult to estimate the total impact – global consulting firm estimated the auto industry alone would lose US$210bn in 2021. Other companies have weathered the storm a little better, for example Apple still managed to beat expectations in its January 2022 announcement.”
Are companies looking to alternative solutions to get round this shortage? If so, what is proving a suitable replacement? Mark Lippett, CEO, XMOS: “Yes, but it’s extremely difficult to quickly react. And managing the process can be an extremely intensive task, when business would much rather spend energy and time on innovation. “In the short-to-medium term – before any new fab capacity can be made available – you need to be able to rely on substitute technologies that offer the same set of features that their semiconductors would. Not everyone has that luxury.
“To use our own example, we’re migrating customers to nodes that are less constrained. That’s something that we can do because XMOS’s technologies are software-centric, rather than hardware specific. Some competitors are much more dependent on hardware design techniques that take 1-2 years to come to fruition. “These hardware-reliant companies are trying to change nodes in order to react to a medium-to-long term supply shortage in certain technology areas. That moves the problem around a little bit. “There are supply chain strategies too. We’re trying to provide customers with a full bill of materials wherever possible, and in some cases, they’re choosing to design us into their products because their
existing supplier can’t deliver the required hardware. “You can’t just stop using semiconductors. You just need to find ones that you can buy. Considering as recently as six months ago it really was a chaotic scramble, the situation is improving. But we’re certainly not out of the woods entirely.” Alastair Hanlon, PragmatIC: “There are not many alternatives to electronics per se – some car makers took a renegade step in 2021 shipping some lower value cars with less electronics in them to save the valuable resources for higher value, or better selling vehicles. “What is really needed is an increase in overall semiconductor output. Here at PragmatIC Semiconductor we are ramping up our capacity based on customer demand. While not a direct replacement for most silicon ICs, our products do offer an alternative in some markets as well as opening up new applications based on our unique technology.”
What are the cascading effects of the global semiconductor shortage?
Alastair Hanlon, PragmatIC: “The world depends on mega-fabs to make chips. The latest so-called ‘gigafabs’ take up around 70 football fields, cost tens of billions of dollars to build and make over 100,000 wafers per month. It’s clear that manufacturing has become so concentrated because only those with deep pockets can afford them. “The semi supply chain would be much more resilient if we could distribute this manufacturing into smaller fabs, giving the added advantage of reducing the miles that a chip travels before it makes it into our house while improving their carbon footprints in the process.”
What countries have been most impacted by this shortage? Mark Lippett, CEO, XMOS: “The idea that an entire country, or even a continent, can become self-sufficient for the entire value chain, is a real challenge. The obvious solutions aren’t necessarily the right ones. Just building more wafer fabs isn’t going to cut it.
“There’s so much to it, and it’s so complicated, that I think it’s better to pick a speciality that others need and use that as leverage to get supply. The interconnected nature of the industry isn’t going anywhere.”
If you would like to add further comment to this article then please contact: Michelle Winny
mwinny@datateam.co.uk
MARCH 2022 | ELECTRONICS TODAY 23
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