Navigating (and Thriving in) the Global Semiconductor Shortage

From the first day of the global pandemic, our industry was classified “essential,” so we were spared most of the worldwide economic fallout from COVID-19. Notwithstanding work-from-home policies, it’s been business-as-usual…mostly.

Send most of the world indoors for months at a time, and you’re bound to have some very specific repercussions. In our case, those consequences manifested as a global chip shortage, with the Harvard Business Review noting that lead times for many semiconductors are one year out.

Of course, the breadth of that shortage varies dramatically. Marketwatch put it succinctly – “Demand for chips powering laptops, gaming devices and internet infrastructure skyrocketed, while chip demand for auto and industrial uses plummeted.”

And that’s hardly surprising. The Coronavirus saddled automakers with the worst business climate since the ’08 recession – even the housing crisis didn’t have empty roads – and the results were predictable, with closures and cutbacks galore.

Across the board, iconic brands like GM, Fiat Chrysler, Kia, Mazda, Aston Martin, Tesla, and nearly every major automaker experienced months-long shutdowns, while entire lines were scuttled or reduced. Earlier this year, Ford announced “significant” cuts to its F-150 production, and all told the pandemic is expected to cost the industry billions.

Our own industry had a much disparate reaction to the global pandemic, and the overall severity of the crisis has been largely application-specific.

“We fight tooth and nail to keep customers’ lines running. Of course, since ROHM produces everything from simple passives to complex microcontrollers and SiC devices, this is a challenge,” said Jay Barrus, President, ROHM Semiconductor US.

Jay also noted a growth in demand, on top of what they had planned for (of 20% and more on some lines), including and especially small signal discretes. And the overall global market is about what you’d expect, with “Cloud-based hardware … also showing strong growth, and even consumer products are showing unexpected demand…laptop producers, for example, simply can’t build enough machines to keep up with the market.”

EPC largely circumvented the shortage via the supply chain.

The company is closely partnered with Episil Technologies in Taiwan, and as Alex Lidow with EPC explains, “Taiwan as a country has done the best job in the world managing the pandemic.” Out of a population of 25 million, Taiwan only had 8 COVID-related deaths, and as a result of stable production in a stable economy, “every part type is in stock and can be shipped immediately.”

Several companies, including UnitedSiC, zeroed in on inefficiencies.

“The shortage has in fact created a lot of opportunity at UnitedSiC for our 650V product line which readily replaces silicon super junction devices which are in short supply and improves end customer efficiency.  This has always been a key design in strategy for us, and tightness in the market has only helped it,” said Chris Dries, CEO of UnitedSiC.

We’ve also seen internal solutions, with Alpha and Omega Semiconductor actively investing in their in-house FAB and assembly/test capacity.

“We have been the pioneer in producing Power MOSFET with an 8-inch wafer since 2003, and we are one of the first major suppliers to upgrade to 12 inch,” said Lei Feng, VP of MOSFET & TVS Product Line at AOS. “With this timely investment in infrastructure, AOS only has to deal with the lesser problem of raw material cost increases.”

And that’s just a small sampling of our industry’s robust reaction to the pandemic (and the resultant chip shortage). Amidst the global economic turmoil, we’ve performed exceptional.