Feature: Automotive
Recent impacts Te already-stressed supply chain felt the jitters from further Covid outbreaks and lockdowns, struggling to cope. In April 2022, Shanghai – the heart of China’s economy and a global trade hub – entered another lockdown to contain the Omicron variant, pausing factory production, with repercussions felt globally. Adding to the grim picture is the geopolitical uncertainty and wide-ranging impacts from the Russian invasion of Ukraine, as well as a rising global inflation. Additionally, 2021 saw the beginning of “Te Great
Resignation”. On the surface, it may not seem like mass resignations and supply-chain shortages are intertwined, however one issue does amplify the effects of the other. Te supply chain needs smooth and efficient operation and if talent is leaving this impacts the flow of goods as organisations source and train new staff. Tis further shows that the JIT approach is ineffective
[Photo credit Ivana Cajina for Unsplash] More chips, please.....
Huawei was not the only company to place larger orders for
chips. With the other trade sanctions in the fourth quarter of 2020, China’s leading chip maker, SMIC, was forced to place unusually large orders with alternative suppliers, further impacting available stocks. In addition, major unpredictable events continued to cause
production delays and interruptions to the automotive value chain. In 2016, a major earthquake in the south of Japan occurred, followed by a 9 magnitute earthquake off the coast of Sendai, a tsunami and a nuclear power plant disaster. Tese natural disasters have had far-reaching impacts on the single sources of supply for automotive OEMs like Toyota, further highlighting the vulnerabilities the JIT approach presents – especially in the face of disasters. Year 2020 also had a drastic impact on the automotive supply
chain. Te pandemic changed the way many work, and a surge of demand for technologies supporting home working followed, with a further rise in demand for consumer electronics – smartphones, video conferencing systems, video game consoles, etc. Meanwhile, the automotive demand dipped as fewer people were interested in buying new vehicles, leading to automakers slowing production. However, what no one expected was the resurgence of demand
in late 2020. Demand for light-duty vehicles rose by 85% between April and July 2020. Semiconductor makers and their suppliers had already shiſted their limited capacity toward the spike of demands by other industries, selling off their existing standard component inventories as well as custom ASICs. Automakers were leſt scrambling to scale down production. Hence, new chip capacities were required, with lead times increasing several months. Te seeds for a shortage were sown.
going forward. Trough the beginning of 2023, over 70% of lead times are likely to increase. During that time, complex semiconductors (ASICs, MCUs, MPUs, PLDs), flash memory, non-ceramic capacitors, resistors and standard logic devices are all expected to rise in price. Te supply of passive components is not in the same bind as
active components, but here too there are problems, such as lack of raw materials and labour. Tus automakers are forced to make difficult decisions to maintain stability in the supply chain.
Preparing for the future Whilst the shortages are a result of some immediate factors, other trends will continue to place pressure on all tiers of automotive manufacturing. According to market analyst firm Statista, by 2030 automotive electronics will account for 50% of a vehicle’s total cost – a 15% increase over 2010, in line with the rise of autonomous vehicles and the complex electronics they use. Hence, automotive manufacturers have a responsibility
to manage and drive the supply chains forward. When considering devices such as MCUs, OEMs are buying off the shelf, which carries a risk – even though they cost less, they might still not meet demand. OEMs and Tier-1 suppliers should carefully consider their
product designs and strategies, and build in resiliency at the point of design, considering alternative component and alternative supplier options. Tis will mitigate risks from a product’s inception and prevent costly redesigns later, when components might be still more difficult to source. Tere’s greater need than ever to adapt to these changing
times and look further into the future than previously required. Some automotive industry leaders are already committing to greater vertical integration and to make their own silicon. Tis will improve resiliency and control when there are further unprecedented pressures placed on the supply chain.
www.electronicsworld.co.uk October 2022 33
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