Early this year, reports concluded that Honda Motor Co. was reducing its vehicle production due to a shortage in semiconductors used for vehicle control systems. However, Honda was not alone in this, as Nissan, Volkswagen, Toyota, and Ford all announced similar reductions to their manufacturing projections for the same reasons. Although carmakers are attempting to regulate shortages with production adjustments and other short-term solutions, some have had to shut down their manufacturing facilities temporarily.
Like many other problems affecting the global manufacturing community, this results from the COVID-19 pandemic, but for different reasons. In this case, chipmakers had been reassigning their production lines to handle the demand for smartphones, games, and other consumer electronics currently in high demand. Simultaneously, the automobile market’s recovery from the pandemic was faster than expected and exceeded the number of computer chips available for new production.
While automobile makers have been the ones to deal with this problem, there is also the possibility of the global chip shortage affecting other industries. For this reason, it is essential to understand the chip shortage and how its effects could spread. Fortunately, there are several ways that electronic manufacturers can avoid the microchip shortage from 2020.
The Microchip Shortage of 2020
2020 was undoubtedly the year of the unexpected. Within a few short months, the pandemic had changed how people the world over lived their lives. With less income and nowhere to go due to social restrictions, the automobile industry scaled back its production and orders for semiconductors. Since the demand for consumer electronics like game systems and computers rose, the semiconductor industry pivoted to building the products in higher demand.
Surprisingly, the automobile industry rebounded faster than expected. Chipmakers, who were more focused on consumer electronics, couldn’t support both industries simultaneously. It took time to ramp up auto semiconductors’ production again, which is exacerbated by the need to continually support the growing demand for home electronics. The problem is mostly affecting the carmakers at this point, but there is the potential that the chip shortage could spread into other markets. Already there are reports of some consumer electronics being difficult to find, which may indicate that the microchip shortage is growing.
How the Shortage Could Impact Electronics Production of 2021
Microchips are built on silicon wafers, and these wafers are available in different sizes depending on the manufacturing needs and the type of chips being fabricated. The larger the wafer, the more chips can be processed by the foundry at one time. The 200mm or 8-inch wafer is historically one of the more popular sizes, but it was supposed to be replaced by the newer 300mm wafers. Regardless, the 200mm or 8-inch wafer has retained popularity due to the manufacturing technologies that were perfected for it over time. Perfected processes mean lower production costs and many customers have chosen to stick with this wafer size instead of porting their designs over to the newer wafers. New devices are generally targeted for the larger wafers, but standard microchips, like those used in the automotive industry, are still built on 200mm wafers.
The popularity of the 200mm wafer plus the unexpected need for the chips produced on those wafers has bottlenecked the auto industry’s manufacturing of semiconductors. It has also started to affect the consumer electronics market. Many of the standard devices required for home electronics also are built on the 200mm wafer, and it is becoming increasingly difficult to find production capacity for those wafers. Chipmakers responded to this problem by bringing more manufacturing capacity online during 2021, but it takes time and money to do this. It also takes time and money for electronics manufacturers to move their designs to new production facilities, and as a result, the chip shortage is becoming more wide-spread. The issue now is how to mitigate these shortages’ impact, and here’s where your local PCB contract manufacturer can help.
How a Local PCB Contract Manufacturer Can Help
PCB contract manufacturers are uniquely positioned to understand the semiconductor industry trends and recognize potential component shortages on the horizon. The CMs procurement staff already has a wide range of component manufacturers and distributors that they regularly work with, and this gives them several advantages:
- PCB CMs have advance notifications from their supply chain network of component life-cycle changes.
- Their experienced procurement specialists use this information to forecast potential part shortages.
- PCB CMs purchase parts in advance to maintain a stock of components that could be at risk of running short, ensuring continual PCB production for their customers.
- The procurement team is trained to identify potential risks in the supply chain to avoid other problems such as counterfeit parts.
At VSE, we understand these trends in the semiconductor industry and have taken steps to help our customers avoid part shortages. One of these steps is the bonding program that we have in place with our component distributors. This program continually supplies us with the most up-to-date information on component life cycles, changing lead times, and stock levels.