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Showing posts for December 2021


22 December 2021

What is causing the surge in semiconductor and passive components?

passive 2

As the world becomes smarter and more connected, the components used in electronic circuits are seeing a surge in demand.

Semiconductors and passive components (resistors, capacitors, inductors, transforms) are seeing a surge in demand as chip-heavy vehicles, consumer electronics and smart, Internet of Things devices are produced in larger quantities.

This demand is creating a shortage of semiconductors, integrated circuits and passive components. The situation today is that the factories that make certain components can’t make enough of them. This squeezes supply chains and ramps up the price, creating a high level of inflation passed down the supply chain.

The surge in semiconductor and passive component demand has reached an inflexion point. Demand has outstripped supply for many components, leading to car manufacturing lines shutting down and companies delaying product launches.

Tailwinds fuelling demand  

  • Smart vehicles
  • Consumer electronics
  • Military technology
  • Internet of Things
  • Data centres
  • 5G
  • Satellites
  • Artificial intelligence and robotics

At no other point in history has there been so many exciting technologies developing at the same time. However, while exciting, these technologies are putting strain on the electronic components supply chain.

Passives surge 

Passive components include resistors, capacitors, inductors, and transforms in various specifications. There are thousands of makes and unit models. They are essential to making electronic circuits. Without passives, there are no circuits!

Cars, electronics, satellites, 5G, data centres, Internet of Things, displays, and everything else powered by electricity, depends on passives. As devices get smarter, more components are needed, creating a cycle that will only go up.

Passives shortage 

Certain diodes, transistors and resistors are in shorter supply than in 2020. This is partly because of the coronavirus pandemic, which impacted manufacturing lines. Still, many manufacturers also shifted manufacturing investment to active components with a higher margin, creating a supply imbalance.

Even without these significant bottlenecks, the supply of passive components is downward while demand goes up. For example, a typical smartphone requires over 1,000 capacitors and cars require around 22,000 MLCCs alone. We’re talking billions of passive components in just two sectors.

Semiconductor surge 

Semiconductors (chips, in this case, not the materials) are integrated circuits produced on a piece of silicon. On the chip, transistors act as electrical switches that can turn a current on or off. So, semiconductors and passives are linked.

Chips are effectively the brains of every computing device. Demand for chips is increasing as circuits become more complex. While chips are getting smaller, manufacturing output is only slowly increasing, creating a supply shortage.

Semiconductor shortage 

The semiconductor shortage was years in the making, but things came to a head when the coronavirus pandemic hit.

At the start of the pandemic, vehicles sales dived. In response, manufacturers cancelled orders for semiconductors and other parts. Meanwhile, electronics sales exploded, filling the semiconductor order book left by the automotive sector. When vehicle manufacturing ramped up again, there weren’t enough chips to go around.

Manufacturing limitations are confounding the problem. It takes 3-4 years to open a semiconductor foundry or fabless plant, but investment in new plants in 2018 and 2019 was low. So, new plants are few and far between.

 

Tags: semiconductor passive components resistors capacitors inductors transform shortage of semiconductors integrated circuits electronic component foundry


15 December 2021

Obsolescence Management Before It Becomes A Problem

component

Like the device you are reading this on, all electronic components become obsolete eventually. As a supply chain manager, it is your job to manage obsolescence and make sure it doesn't become a problem for your company.

The three reasons for electronic component obsolescence are short product life cycles, innovation, and increased demand.

Short product life cycles fuel update cycles that demand better components, innovation fuels new component releases, and increased demand squeezes supply chains, creating new batches of components that replace the old.

The good news is obsolescence management isn't rocket science. With planning, you can safeguard your supply chain from the inevitable. Cyclops can help you do this in various ways, working with you to keep your supply chains moving.

How Cyclops helps you manage obsolescence 

With technologies advancing rapidly, the rate of electronic component obsolescence is picking up pace. Life cycles are getting shorter for many components, and shortages are challenging obsolescence management plans.

At Cyclops Electronics, we specialise in the procurement of electronic components, working with global distributors to source tens of millions of parts. Our staff go further than most to find your obsolete parts, and if we can't source the exact parts you need, we will work just as hard to find appropriate alternatives. 

Here's how we help you manage obsolescence:

Proactive planning

We keep tabs on component supplies for you and provide timely reports detailing risks. By keeping you in the loop, you get a bird's eye view of your electronic components, giving you a competitive edge and greater buying power.

Obsolete component sourcing 

Obsolete components might no longer be made, but we hold 177,232 line items in our warehouse and 14 million parts globally. There's a strong possibility we have the obsolete, discontinued components you need ready to go.

Equivalents 

When obsolete components are unavailable, we can specify equivalents that meet your performance and financial specifications. We can cross-reference many components, such as semiconductors, to find exact equivalents.

Integrated advice 

We can help you identify and mitigate risk when parts and spares become obsolete by integrating with your mitigation plan. We can replace obsolete parts as they age, providing an automated, streamlined obsolescence solution.

Obsolescence is inevitable but manageable 

Component obsolescence occurs when an old component is phased out. Without management, this event can disrupt a supply chain, costing businesses tens of millions (or billions) in lost revenues and corporate costs.

A great example of this is any company that manufactures equipment and supports it over several years, like a boiler company. Electric boilers are supported for around ten years, so the components have to be replaceable over that time.

Obsolescence is a problem because it sends ripples through the supply chain, requiring ongoing management to foresee events and mitigate risks. Cyclops Electronics has seen all this before across all sectors.

Speak with us about obsolescence management 

We're here to help you manage supply chain risks and deal with obsolescence before it becomes a problem. Contact us here.

Tags: electronic components obsolete obsolescence product life cycles components global distributors electronic components equivalents supply chain


08 December 2021

Semiconductor Supply Chain Will Remain Vulnerable Without Robust Investment in Advanced Packaging

component shortage

new U.S. study has found that the advanced semiconductor packaging supply chain needs strengthening to meet the increasing demand for chips.

According to the report, without robust federal investment, the semiconductor supply chain in the U.S. faces an uphill battle to meet demand.

The study also highlights the crucial role of advanced packaging in driving innovation in semiconductor designs. At present, most of the chips in the U.S. are sent abroad for packaging and assembly into finished products. By moving packaging to North America, the entire electronics ecosystem can be improved.

“Semiconductor chips are critically important, which is why IPC supports full funding for the CHIPS for America Act. But chips can’t function on their own. They need to be packaged and interconnected with other electronic components to power the technology we all rely on, from cell phones to automobiles and beyond,” said John Mitchell, IPC president and CEO. “The data in this report shows that North America is well behind Asia in the advanced packaging of chips and in other key parts of the electronics manufacturing ecosystem.”

The big players in the U.S. include Applied Materials, Amkor Technology, Ayar Labs, Lam Research, Microsemi Semiconductor and KLA-Tencor Corporation. These companies have seen unprecedented demand for semiconductor packaging, with growth predicted to rise as the world becomes smarter and more connected.

Other report findings 

The study also found that while the U.S. can design cutting-edge electronics, it lacks the capabilities to make them. This is creating an overreliance on foreign companies, including companies in China, creating considerable risk.

Looking at the most recent data, the study highlights that North America’s share of global advanced semiconductor packaging production is just 3 per cent. In other words, at present, the U.S. is incapable of assembling its own chips.

The study concludes that the U.S. also needs to invest in developing and producing advanced integrated circuit substrates. Advanced integrated circuit substrates are crucial components for packaging circuit chips. Currently, the U.S. has nascent capabilities, putting it behind Europe, China and most other countries.

What can we deduce from the report? That the U.S. is behind in most aspects of semiconductor packaging. Decades of low investment and overseas partnerships have led to a manufacturing ecosystem devoid of domestic talent.

“The findings of this report make clear that, as a result of decades of offshoring, the United States’ semiconductor supply chains remain vulnerable, even with the new federal funding that’s expected,” says Jan Vardaman, president and founder of TechSearch International and co-author of the report. “It’s critical that the U.S. government recognises and responds to industry needs on these systemic vulnerabilities, particularly integrated circuit substrates, where domestic capabilities are severely lacking.”

As the U.S. comes to terms with its poor manufacturing ecosystem, China is ramping up assembly plants. In the face of increasing competition, the U.S. must focus on domestic investment in the near and medium-term. Without robust investment, they could fall further behind and lose out to their biggest competitors.

Tags: semiconductor demand chips supply chain electronics electronic components


01 December 2021

A raw materials shortage is set to hit the EV battery supply chain in 2022

EV

The automotive sector is on red alert amid speculation that raw material shortages will impact the EV battery supply chain in 2022.

The lithium-ion batteries in electric vehicles use a combination of rare earth metals like neodymium, praseodymium, dysprosium, and common and uncommon minerals like cobalt and lithium in great quantities.

Bloomberg blew the whistle in July, predicting that raw material shortages for batteries will be the next big test after the semiconductor crisis.

Recent reports back this, with the global lithium shortage giving EV manufacturers pause for concern. Sky News reports the world needs four new lithium mines per year to make supply meet demand, but the pipeline doesn’t come close to meeting this requirement.

Some EV manufacturers are hoarding raw materials, and the world’s biggest electric car maker, Tesla, is moving away from cobalt to LFP chemistry because they consider cobalt to be the biggest supply chain risk for EV batteries.

The EV industry has a battery problem 

Most electric vehicles have a lithium-ion battery pack because Li-ion has a high energy density for its weight and can charge and discharge at any state of charge. The technology is proven, and manufacturing Li-ion batteries is easy.

However, the growing demand for electric vehicles is fuelling demand for EV battery raw materials like lithium, cobalt, nickel, manganese and rare earth metals.

The mines in operation today are not sufficient to make supply meet demand one year from now, which is a cause of great concern in the automotive sector.

Additional factors could confound the problem:

  • Price volatility in raw materials (the price of rare earth metals has exploded, moving nearly 50% higher on average since March)
  • Battery composition changes (while lithium-ion is the top dog today, solid-state batteries use a lot more nickel and cobalt)
  • Trade tensions between countries (China controls 55% of global production and 85% refining output of rare earth metals).

Making supply meet demand

Accurate forecasting is crucial to making supply meet demand. Manufacturers must anticipate fluctuations in the supply chain and make allowances for events.

For instance, no one can predict the next coronavirus pandemic, but a 25% drop in raw material mining output can be incorporated into forecasts.

Manufacturers might also like to look into alternative battery chemistries. As we mentioned before, Tesla is switching the chemistry of its long-range batteries to reduce dependency on cobalt. Other battery manufacturers can do the same to fortify their supply chains.

The downside to switching chemistries is it is only possible following extensive (and expensive) research and development. The world’s leading EV battery manufacturers won’t invest in this area without proof it will turn a profit.

EV battery recycling is another important future step. Swedish company Nothvolt made the world’s first fully recycled EV battery in November. Today, however, Li-ion battery recycling is not economical on an industrial scale.

Another option is limiting EV battery production, either in total volume or in cell volume (installing smaller batteries). With EV batteries becoming more efficient, smaller capacities might not be detrimental to range in the future.

 

Tags: automotive sector raw material shortages neodymium praseodymium dysprosium lithium shortage ev batteries.


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