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by Jim Connett, on June 21, 2021

What Does the Chip Shortage Mean for the Semiconductor Industry?

The semiconductor manufacturing industry is a fascinating microcosm of loosely coupled yet highly synchronized systems. From base silicon entering a factory’s front door to the intricacies of a packaged integrated circuit (IC) leaving the back door, the semiconductor industry has seemingly transitioned from a niche market to a commodity that consumers simply expect to exist. And, for most of the last decade, the semiconductor industry has obliged as a result of a relatively stable and mature supply chain supporting just-in-time manufacturing, tight cost controls, and business plans that thrived on low inventory and reduced time-to-market models.

Then, 2020 happened.

As a result of rapidly changing global economic conditions, demand that now outpaces supply, and the after-effects of an improving global pandemic climate, the semiconductor industry is experiencing a “stress test” of sorts, where pillars of its past success have been shifted, cracked, or destroyed. Raw materials are now more difficult to procure. Shipping constraints cause delivery delays measured in days or even weeks. Governmental initiatives in pursuit of cleaner energy mean an unprecedented and immediate demand for ICs of all types. The result of these – and so many other new challenges – have caused semiconductor manufacturers to carefully evaluate and identify opportunities to improve production capabilities to respond to increased demands.

There’ll be plenty of time to reflect upon the full effects of the impact of the global pandemic in every industry (not just semiconductor manufacturing). For now, the world needs integrated circuits, and there is tremendous pressure on the semiconductor industry to respond.

What is the most effective response? At the risk of oversimplification, the answer in one word: Automation. Manufacturing automation is an investment that will pay both short- and long-term dividends for years to come. Automation is not an all-or-nothing proposition. Rather, it’s a series of steps along a continuous path, steps that move you towards increasing levels of automation. Automation isn’t about replacing workers with computers. Rather, automation handles repeatable tasks with precision so that workers can dedicate their efforts toward more complex activities. Automation doesn’t solve every problem in semiconductor manufacturing, but automation does differentiate the good companies from the great companies.

Many pressure-point areas in manufacturing are suited for automation solutions. If you don’t have a manufacturing execution system (MES), get one! Finding a lot of wasted man-hours transferring material from point A to point B? Get an automated transport system. Collecting SPC data into a spreadsheet for analysis? Get a system that collects and analyzes the data in real-time. Missing dues dates? Seeing increasing cycle times and critical ratios that don’t favor your customers? Get a dispatching system. Experiencing material (and financial) losses due to misprocesses? Get a recipe management system. Need a way to process material automatically? Get equipment integration software. Each of these automation solutions provides short and long-term benefits for manufacturers.

Read SYSTEMA’s Guide to Digital Transformation

Are IC makers passing the “stress test”? Only time will tell. But one thing is certain. Demand for ICs will continue to increase and automation will play a key role in differentiating companies that can both ramp up the output to meet demand and respond to a changing world economy from those who aren’t.

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