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Blog: The 2021 Global Semiconductor Chip Shortage, What You Need to Know

A shortage of semiconductors is currently halting production operations in key industries, one example being the automotive industry. Compounded by a rapid increase in demand, some automotive manufacturers are having to navigate very difficult waters due to the global shortage. In fact, the void in semiconductor supply has become so great that the Biden administration has asked several Federal agencies to help relieve the domestic semiconductor shortage. The Biden administration has also requested $37 billion to quickly increase domestic semiconductor production.

Unfortunately for automakers, it will take some time for legislation and semiconductor supply to catch up. Some industry experts are projecting that this shortage could last well into 2022, adding pressure on automotive manufacturers for whom semiconductors are essential.

What is Driving the Global Semiconductor Shortage?

The global semiconductor shortage can be attributed to the basic principle of supply and demand. Despite the Covid-19 pandemic, many industries and manufacturers ramped up semiconductor supply requirements while automotive manufacturers decreased theirs. As demand continues to rise, manufacturers are quickly having to readjust and increase part supply requirements.

To a lesser extent the shortage can be attributed to geopolitical factors such as tighter regulation of semiconductor orders from Asian foundries such as Samsung and Huawei.

Tips for Navigating the Global Semiconductor Shortage from the Team at Criteria Labs.

Before sourcing semiconductors and components during this difficult time, please consider a few recommendations from the team at Criteria Labs:

  • Take steps to expedite project schedules in other program areas, such as new part qualifications. Qualifying automotive parts to AECQ100/Q200 specifications typically takes months to complete, parallelize design for electrical testing and burn in boards to help reduce the non-recurring Engineering (NRE) lead time.
  • Monitor inventory levels as closely as you can. This will mitigate double ordering and overordering.
  • Consider changes in technology and geopolitics when planning high-volume order purchases from abroad.
  • Ensure that your organization is not relying on one or two semiconductor manufacturers for essential devices and large part orders.
  • Confirm what your semiconductor supplier is telling you in sales conversations. When considering lead time and testing standards it’s worth it to verify.

Global Semiconductor Shortage Final Thoughts.

From an automotive semiconductor sourcing perspective, ramping up production of semiconductors is challenging for foundries both domestic and abroad. As such, it will take an unknown amount of time for the semiconductor supply to meet the demand. Significant investment in domestic semiconductor manufacturing will be required to meet the rapidly increasing demand forecasted in the years ahead.

Criteria Labs Automotive Engineering Solutions.

Dedicated to providing the best automotive engineering and qualification services possible, Criteria Labs can deliver unique solutions to complex technical problems, improve program schedules, and complement automotive manufacturing partners with external capabilities that meet AECQ100/Q200 specifications.

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