With the global chip shortage, businesses continue to experience supply chain disruptions as they wait for microchips to become available. Limited manufacturing capacity at semiconductor foundries has left them unable to meet the demand from global and fabless companies.
The shortage that started in 2019 and worsened due to the pandemic has heavily disrupted industries like mobile, electronic, and automotive, forcing companies to spend more time and money to control their supply chains. Furthermore, integrated device manufacturers are decreasing their manufacturing capacity due to their dependency on foundry companies.
The economic impact on Asia-Pacific could be significant, constraining the growth potential of high-value manufacturing sectors well integrated into global value chains. As semiconductor manufacturers like GlobalFoundries ramp up production capabilities in hubs such as Singapore to meet global demand for chips, how can companies create a digital infrastructure to unlock efficiency, ease disruptions, and future-proof their functions?
Create a secure and direct connection to improve supply chain visibility
The majority of the world’s semiconductor foundry companies are located in the East Asia-Pacific region. In 2020, Taiwan controlled 63% of the market share, with South Korea at 18%, and China at 6%. As these regions continue to dominate the market, companies around the globe rely heavily on them for production.
Also, many fabless companies are located in Silicon Valley in the United States, relying on multi-location R&D on a global scale. The physical geographical distance between foundry and fabless companies proved to become a vulnerable point in the industry as the pandemic created constraints on the global transportation system.
As supply chains slowly recover, it is clear that businesses need to start investing in a digital infrastructure that enables direct communication across borders, helping them interact and transact in real time via secure connection points to protect their designs. Promoting real-time information exchanges can help mitigate the bullwhip effect, a supply chain phenomenon in which demand forecasts yield supply chain inefficiencies — illustrated by the current semiconductor shortage.
Building a robust digital framework can also aid in synchronised planning. As the semiconductor network is complex with multiple players, digital models help facilitate capacity planning, demand, and supply alignment across a mix of stakeholders while remaining adaptable to any varying requirements and external forces. Illustrating the complexity of production networks, Accenture research has found that each segment of the semiconductor value chain has, on average, 25 countries involved in the direct supply chain, and 23 countries involved in supporting market function.
Build an IIoT platform to scale productivity and production
Companies deploying more agile digital infrastructures can improve their production by bringing edge resources and services closer to partners. For example, digital infrastructure architected using an Interconnection Oriented Architecture strategy eliminates the distance between IT services, users, and fabrication plants, optimising the data exchange among various entities across clouds and networks over secure private interconnections.
Due to great strides in technology, the semiconductor industry is extremely fast-paced. To keep pace and remain efficient, companies can invest in creating a robust Industrial Internet of Things (IIoT) platform. The technology helps companies link the physical processes with their internal systems to fully visualise manufacturing operations.
This approach drives agility in companies’ manufacturing and prototyping efforts, and provides support for efficient pre-production processes such as design and proof of concept. This also enables them to easily adapt to innovations and releases by adjusting and learning from data in real time, making their supply chains more responsive, proactive, and predictive.
Leverage seamless remote working operations
Remote work and government-mandated lockdowns also played a role in exacerbating the semiconductor shortage, with businesses ill-equipped to deal with digital working and management. Communication, an essential key to any ecosystem, broke down and caused disruptions in the industry. As a consequence, many factories registered decreases in production capacity.
For non-production workers in the industry, such as product test engineers, developing a tool that makes it possible to perform validation testing remotely reduces disruptions in the process. By creating digital infrastructures available to employees, partners, stakeholders, and networks, businesses can future-proof their operations, even if they are working from home or located in a different country.
Connected cloud architecture
As supply chains work to catch up on the existing demand pile-up, companies also need to look to the future. The market for smart devices is only becoming more competitive, requiring chip designs to be smaller and more complex.
As electronic design automation (EDA) test and development environments tend to have high levels of concurrency, there is a limit to the number of current jobs or I/O operations that can be run at any given time. Bandwidth limitations from storage devices thus becomes a performance bottleneck and impacts EDA job run times.
An interconnected infrastructure can mitigate the effects of storage-related slowdowns. Multi-cloud, easy-to-use storage solutions empower companies with low latency and unparalleled access to all the right places, partners, and possibilities to achieve digital transformation at scale.
Semiconductor companies can leverage cloud EDA applications (such as Azure) and AI/ML technology without worrying about latency issues. This enables them to build their ideal IIoT platforms for factories to improve quality, productivity, and production, as well as to unleash engineers’ full capabilities to design next-generation sub-10nm silicon chips.
The future is digital-first
The pandemic has highlighted how the semiconductor sector and many similar industries are rooted in traditional systems, increasing their exposure to risks that may arise from future disruption. While the rate of technology adoption remained low pre-pandemic due to concerns over security and innovation capacity, the urgency of the situation has forced many companies to accelerate the adoption of new technologies in their systems.
With real-time data exchange, visibility into operations, and the ability to communicate and act swiftly on data-backed insights — in collaboration with global stakeholders being key to success — manufacturers and businesses should structure their operations with a connected digital infrastructure at the core. This will be mission-critical not just to ensure business continuity, but also unlock efficiencies and new revenue streams for digital-first organisations under the right circumstances to maximise their potential in a digital-first economy.