Feature: Automotive
The roots of the current situation date back to 1970, with the introduction of just-in-time (JIT) manufacturing
T The
semiconductor industry should change its practices to prevent future chip shortages
By Richard Barnett, CMO, Supplyframe
he global supply chains of semiconductors have been facing enormous pressures recently, affecting the production of all systems and devices incorporating electronics. Regarding automotive electronic components specifically, although severely weakened by
the Covid-19 pandemic, demand began to rebound sharply in autumn 2020. Demand rose rapidly, despite global vehicle production only rising by single-digit percentages year-on-year. We now expect significant-to-severe constraints on complex semiconductors – like automotive microcontrollers, for example – to persist into the first half of 2023. Analogue component lead times have already passed the 52-week mark, further confirming the forecast that automotive chip constraints will continue well into 2023. Te situation may improve in the autumn of 2023, but not all problems will disappear by then.
Chronology of chip shortages Despite the recent issues that led us here, the roots of the current situation date back to 1970, with the introduction of just-in-time (JIT) manufacturing. Tis is not a technique but a management philosophy, developed and applied by Toyota across its manufacturing plants in Japan. It was soon realised that the approach could be used to
reduce waste, improve product quality and efficiency in production processes. Subsequently, it was adopted across the automotive industry over the following decades. However, the problem with the approach is that it depends on a constant and reliable source of supply. Te automotive industry has had a strong influence over parts
in its supply chain, which enabled it to continue with the JIT approach for many years. But, challenges started to emerge as this supply-chain model moved on to the more-dynamic electronic commodities and standard ICs, with a much wider customer base which includes consumer electronics, smartphones and even 5G base stations. Geopolitical tensions and trade agreements are also a source
of uncertainty and disruption, including the ongoing issue of retaliatory tariffs between the US and China, and specific restrictions on trade with certain companies, such Huawei. Faced with potential sanctions, Huawei partnered with
TSMC in late 2019 to ramp up production of its 7nm Tiangang communications chips. Tese chips are critical to Huawei’s 5G base stations, and a stockpile was required to allow it to continue supplying Chinese carriers through 2021.
32 October 2022
www.electronicsworld.co.uk
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