How to Manage Semiconductor Industry Supply Chain Risks in 2023

Supply chain issues with semiconductor devices can significantly impact the manufacturing and operations of various industries, such as the electronic, IT, automotive, medical, and industrial industries.  

Supply chain disruptions such as natural disasters, fire, geopolitics, labor strikes, the economy, and demand fluctuations can cause component shortages, lead-time delays, and production and delivery delays. A weather event, political unrest, or supplier site incident can trigger issues that impact your entire supply chain.  

For example, early this month, on January 6, a fire occurred at a Welnew plating plant in Wuxi, China. Welnew is a plating supplier and the sub-tier supplier to several semiconductor manufacturers, including Infineon, Vishay, BOSCH, and OSRAM. The plating lines at Wuxi were severely damaged by the fire impacting the manufacturing and delivery of key commodities such as MOSFETs, RF Small Signal, and LED Drivers, which can have a ripple effect on various industries.  

Natural disasters, weather events, heat waves, and pandemics are also major supply chain disrupters. For example, last year Toshiba, Murata, and Kioxia suspended operations at a plant in Japan due to earthquakes. Texas Instruments, Intel, Onsemi, and Foxconn suspended operations in China because of power outages due to heat waves. Renesas, Samsung, Foxconn, and many other companies had to shut down their productions due to COVID shutdowns.  

Regulatory issues can also impact the semiconductor supply chain. The production of electronics and semiconductors is energy-intensive and generates significant amounts of waste, which can have environmental impacts. As a result, governments have established various trade and product compliance regulations for producing and distributing such devices. The ever-changing landscape of these regulations can create additional challenges for companies operating in this sector. For example, the EU has recently added nine new chemicals to the REACH regulations. Therefore, staying on top of such regulations can be imperative to businesses.  

The semiconductor supply chain is complex and involves many suppliers, sub-tier suppliers, manufacturers, and distributors. This complexity can make it challenging to identify and address problems when they occur and can also make it difficult to manage inventory and demand effectively. Therefore, ensuring that your semiconductor supply chain operates smoothly and efficiently is essential to product production and business continuity.  

A reactive approach to disruptions can negatively impact your business's stability and profitability, and the ability to mitigate issues that arise quickly is crucial for minimizing disruptions and maximizing efficiency. 

Businesses must develop more robust strategies to navigate and address the underlying vulnerabilities of their supply chains. Building an agile approach to procurement and developing proactive product life cycle management strategies are also essential to businesses.  

Simple strategies to help manage semiconductor supply chain risks and build resiliency in your semiconductor supply chain include:   

• Start with a robust design that includes component alternatives. Plan for crosses in the event of PCNs, EOLs, or other supplier disruptions.  
• Strengthen your procurement by expanding your AVLs. Multi-sourcing and diversifying your supplier dependencies reduces your dependencies and helps you pivot quickly in case of disruptions. 
• Map and monitor your supply chain to understand your supply chain vulnerabilities to strengthen your supply chain proactively and strategically. 
• Use Event Monitoring tools to receive alerts and stay ahead of potential disruptions to your supply chain.  
• Develop a Compliance project management strategy to help adhere to product and trade regulations.    

Digitizing your supply chain and utilizing tools that connect your supply chain can help you stay ahead and pivot your operations as needed to build a robust and durable supply chain.  Data from one part of your supply chain can impact another department. Digitizing your supply chain to create complete transparency in every stage with real-time data feeds of risks and inefficiencies brings visibility to all levels of your supply chain processes and streamlines your business processes.  

Many tools in the industry facilitate Supply Chain Risk Management, but manufacturers' challenge is sifting through the magnitude of data and deciphering relevance to their operations. Adding to the complexities is bridging internal and external data in one usable platform where multiple teams can collaborate and access the information they need.  

Learn more about Z2Data’s Supply Chain Risk Management Platform and tools and how Z2Data can help.