Navigating the Challenges of Semiconductor Supply Chain Volatility

Semiconductor Review | Tuesday, July 25, 2023

Businesses can more easily traverse the difficulties caused by semiconductor volatility and ensure a more robust supply chain by taking a proactive and adaptable strategy.

FREMONT, CA: Several OEMs and contract manufacturers are finding their inventory out of balance due to increased purchasing during the electronic component scarcity and a decline in demand that persisted through the first quarter of 2023. The golden screws, or pieces required to finish production, are still lacking, even though they have an excess of some electronic components. Consequently, businesses will continue to spend a large portion of the remainder of the year attempting to sell or absorb excess inventory and buy those essential items to guarantee the success of their manufacturing processes.

The predicted super cycle is expected to start in 2024, with EV, AI, IoT, 5G, and other technical advancements serving as primary drivers. However, once the excessive supply is depleted, there will be a significant surge in demand for more chips. In spite of the unchanging demand, the IT infrastructure that has been developed to meet it will still need to be fully operational. This will result in supply chain unpredictability until 2025.

Stay ahead of the industry with exclusive feature stories on the top companies, expert insights and the latest news delivered straight to your inbox. Subscribe today.

Manufacturing re-shore is underway, and new semiconductor production facilities are being constructed and will become operational in the coming years. Even with increasing manufacturing, it is predicted that the supply chain will experience volatility due to component restrictions in some areas and, to a lesser extent, inventory mix difficulties until 2030.  This instability will be fueled partly by the supercycle's expansion as industry and consumers adopt newer technologies at an unprecedented rate, driving even more demand for chips. 

The next generation of technology will need thinner wafers and more complicated advanced nodes, which will be produced by the new fabs that are being constructed to relieve more pressure on the supply chain. However, the inventory mix will continue to be a concern. The demand for older chips, which are necessary to sustain products with extended lifecycles in important areas like medical and automotive, will remain exceptionally high. Even so, it is still being determined whether the new semiconductor production facilities will be capable of supporting the manufacturing of these components.

With a clear understanding of the demand for products in the super cycle, it becomes easier to plan effectively for the appropriate inventory mix. As greater visibility is achieved regarding the component requirements of products still under development and progress is made in the power and infrastructure build-out, a greater understanding will emerge regarding the supporting elements to stabilise the supply chain.

More in News

PCB design software is now becoming increasingly inseparable from workforce issues for electronics companies. This challenge goes beyond having access to a good platform for engineers; many organizations find themselves facing problems when trying to adopt software due to their inability to recruit experienced PCB experts or provide proper training programs. This challenge tends to appear most strongly in companies scaling up electronics capabilities with limited hardware design teams in place. PCB designs continue requiring highly specialized skills, particularly when it comes to routing, signal integrity and manufacturing processes that might not be immediately obvious at earlier stages of the process. The increased complexity of software plays a big role here as well. Some PCB design environments incorporate extensive feature sets that have been gradually built up over years in the industry, meaning that veteran engineers can easily feel at home in them while relatively new professionals find difficulty adjusting to the workflow of such systems. This challenge creates an interesting disconnect between software features and engineering teams' ability to adopt the platform effectively. Managers who invest money in state-of-the-art software often find out that the time required for onboarding is longer than anticipated or that a few senior PCB designers end up being involved in almost all key layout-related decisions. These issues have a significant impact on how electronics organizations are preparing for product development in terms of staff planning. Companies are competing more than ever to recruit engineers who are comfortable with moving from schematic designs to layout reviews and further to manufacturing without undergoing extensive training programs. PCB software skills are now becoming an important topic in recruitment interviews rather than just preferences of engineers. Training issues themselves create further challenges for electronics organizations in their efforts to scale up their capabilities. Mentorship has always been a major aspect of developing PCB skills, yet shorter deadlines make it more difficult to engage experienced workers in the process of onboarding new recruits who can take over their jobs in a year or two. Collaboration through remote channels has also made a difference, since it enables electronics companies to become more flexible when recruiting talent, but reduces interactions through which newer employees could gain insight into layout-related processes or manufacturing issues that emerge during project implementation. Some electronics organizations respond to such challenges by limiting the complexity of some parts of the workflow or restricting software usage to essential features available for broad implementation across teams. Others continue prioritizing highly specialized design environments despite their longer onboarding process needs. Software vendors might find themselves under greater pressure related to user interface, features and training as a consequence of current workforce-related concerns among buyers. Those companies will start focusing more on how long it takes to turn new recruits into productive members of the design team independent of experienced engineers. It seems that these workforce challenges cannot go away anytime soon. The PCB designing process remains highly technical and tightly connected with manufacturing requirements, meaning that electronics organizations have to be careful not to simplify everything too much. Still, the discourse surrounding PCB software adoption is beginning to extend into a discussion of workforce issues. ...Read more
PCB software purchasing processes have become more focused on preparation for manufacturing, at least among businesses working in a tight development schedule and producing fewer prototypes per cycle. Its an indication of growing concern regarding a practical situation within the industry. Completion of a design no longer means it will be manufactured efficiently. Engineering teams spend more time checking whether design outputs and documentation provide a clean transfer without requiring further clarification from manufacturers. It has been an ongoing problem. The recent state of production, however, seems to draw attention to the consequences. Component swapping, procurement complications, and fabrication schedule changes can reveal gaps in the documentation process that would otherwise go unnoticed under normal production conditions. Purchasing conversations related to PCB software have begun addressing the issue. Design tools that allow to update the bill of materials, provide consistent fabrication outputs, and communicate design rules effectively across teams are being prioritized. Software is judged based on the amount of ambiguity it leaves after design and before production. It creates even greater pressure for small-volume PCB manufacturing. Independent electronics developers and specialized device designers frequently work with external fabrication vendors that produce devices for multiple clients at once. In such a setting, poor documentation can lead to a rapid drop in priority. The issue is further complicated by emerging problems with component procurement. Routing and board redesign due to sourcing requirements may impact the size, thermal properties, and other factors that need to be considered throughout the rest of the development process. Software environments lacking proper revision tracking may introduce complications with understanding which designs and outputs need to be applied. Such discussions have expanded beyond individual engineers' concerns to cover overall team experience. A successful completion of the layout work does not automatically guarantee smooth production. Many cases have seen manufacturing teams identify preventable errors during their reviews. In certain settings, such incidents can be attributed to software workflow problems. There are also financial ramifications. A delay in the prototype creation may interfere with testing schedules and customer demonstrations. In such a case, a design system capable of minimizing production-related clarifications may be considered more valuable than one providing additional features that engineers never use. The competitive environment in the industry is likely to change as a result. Feature enhancement is traditionally the cornerstone of vendor strategy when selling a PCB solution. Some potential customers, however, place greater value on consistent preparation for manufacturing than in increasingly complex design tools. It does not necessarily mean the advanced features lose importance. There remains a high demand for comprehensive simulation and layout management for complex electronics. Still, many users care about their consistency rather than capabilities. Overall, there is an emerging shift in value assessment criteria. Instead of evaluating performance in the engineering department, the discussion begins addressing productivity issues during production, communication with the supplier, and revision tracking. ...Read more
Shrinking timelines for hardware engineering have arrived in areas where many teams developing printed circuit boards do not feel prepared. Revisions of the product that took longer times to make and move to manufacturing review are expected to be completed far faster, particularly in industries with electronics associated with connected devices, industrial equipment or compact consumer devices. These conditions are changing expectations of PCB design solutions. Customers are looking carefully at the speed of moving design modifications across stages of layout reviews, simulations and fabrication preparation without producing new verification bottlenecks further down the road. This does not relate to the need to incorporate additional capabilities into design platforms; the goal here is the reduction of bottlenecks between stages already stuffed with dependencies. Increasingly dense circuitry designs, higher density of component placement and greater interplay between electrical and mechanical engineering teams cause delays when it comes to handling revisions. Engineering teams used to thinking of PCB design platforms as tools for drafting the layout now pay more attention to the software as a layer of coordination between decisions about the layout and the schedule for production. This affects software purchasing conversations in practical terms. Workflows for importing designs, managing revisions and matching manufacturing needs now play a more significant role, as redesign iterations are becoming costly. Small hardware companies seem particularly susceptible to this trend. Big corporations can cover additional verification rounds with engineering capacity, while smaller operations are forced to rely on a few experts who will perform layout validation, comply with requirements and arrange fabrication in parallel. Any delay in handing off the design will cause the postponement of procurement or prototyping by days or even weeks. PCB solution vendors find themselves dealing with more divided audiences as well. While some customers seek simulation capabilities, others will look for consistent output or a strong library management system. These differences have produced a fragmentation in the industry because each engineering challenge has its own definition of what a streamlined process looks like. A new problem has appeared regarding onboarding. Experienced engineers are still hard to replace, although some software requires high levels of familiarity with the workflow. Training time has become a factor in evaluating solutions for PCB design, particularly for electronics engineering teams that include embedded software developers or people responsible for production. Distributed engineering also complicates matters. Reviews of the printed circuit board layout could involve employees operating from different locations or independent contractors working on a limited basis. Software platforms that confuse the user on versioning or the owner of a particular design can introduce issues in fabrication reviews, which are detected much later down the line. None of this means that there is an impending revolution coming to the PCB design solutions segment. Many teams prefer well-established design platforms and are reluctant to change their existing workflow. The work with the layout is too close to fabrication for electronics engineering teams to replace existing solutions easily. Nevertheless, conversations about PCB design software are starting to go beyond the questions of interfaces or feature sets. Engineering deadlines vary considerably across electronic markets, which prompts discussions of whether there might be too much room for delays in design processes. ...Read more
Ultrashort laser pulse solutions are redefining possibilities across high-precision industries and scientific fields. Known for their exceptional control and minimal heat impact, these lasers enable clean, accurate processing of delicate materials and biological tissues. Their applications span from advanced micromachining to groundbreaking medical procedures and ultrafast scientific experiments. By offering unmatched precision and versatility, ultrashort laser pulses are becoming essential tools in driving innovation, efficiency, and discovery in modern technology and research. Precision in Micromachining and Material Processing Ultrashort laser pulse solutions are transforming the field of micromachining and advanced material processing. These lasers emit pulses measured in femtoseconds or picoseconds, allowing them to interact with materials in an extremely controlled and localized manner. Because the energy is delivered in such short bursts, there is minimal heat transfer to the surrounding area. This results in high-precision cutting, drilling, or structuring without causing thermal damage or creating unwanted deformations on sensitive substrates. This level of precision is particularly beneficial for industries working with delicate or composite materials, including medical devices, semiconductors, and aerospace components. Renesas Electronics Corporation supports advanced semiconductor development through integrated hardware, software, and system design capabilities. For instance, in electronic manufacturing, ultrashort laser pulses can create micro-holes and intricate patterns in thin films and multilayered boards without impacting adjacent structures. This capability supports ongoing miniaturization efforts while preserving the integrity and performance of critical components. These laser solutions are ideal for processing transparent or brittle materials like glass, sapphire, and ceramics. Traditional methods often struggle with these materials due to cracking or chipping, but ultrashort pulses can process them cleanly and efficiently. The non-thermal interaction mechanism allows for superior surface quality and edge sharpness, making this technology a key enabler of next-generation precision manufacturing. Miller Sales Engineering supports precision manufacturing through engineered solutions that enhance component performance, reliability, and process efficiency. Advances in Medical and Scientific Applications Ultrashort laser pulse technology is also making significant contributions in medical procedures and scientific research. In the biomedical field, these lasers are used in procedures requiring extreme accuracy, such as eye surgeries and microscale tissue ablation. The ultrashort pulse duration promotes faster healing, minimizes collateral damage to surrounding tissues, and reduces the risk of complications. Surgeons and researchers benefit from the high level of control, which is essential when working in sensitive biological environments. In scientific research, ultrashort laser pulses are enabling breakthroughs in imaging, spectroscopy, and diagnostics. They are used to generate high-resolution images at the cellular or even molecular level, helping scientists understand biological processes in unprecedented detail. Their ability to produce high peak intensities also makes them useful for nonlinear optical experiments, where multiple photons are absorbed simultaneously to reveal information that is not accessible through conventional light sources. These laser systems are used in time-resolved studies to observe ultrafast phenomena, such as electron movement and chemical reactions. Researchers can use this data to develop more efficient materials, study complex biological systems, or enhance drug development. By delivering extremely short, high-intensity light pulses, ultrashort laser technology opens new frontiers in precision and discovery across disciplines. ...Read more