When The Chips are Down

When The Chips are Down

How our agnostic approach is allowing us to switch silicon, upgrade our devices, and keep customers supplied

The global shortage of Integrated Circuits (ICs), which are used to control everything from laptops to life support machines, has demonstrated just how interconnected international supply chains are. The last 18 months demonstrated how dependent we all are on those tiny stacks of silicon wafer which underpin our digital lives and our daily deliveries and which account for nearly half a trillion dollars in sales each year.

Aside from the obvious impact of the pandemic, which initially slowed production in Wuhan’s chip factories in 2020, February’s Texas storms slowed production at Infineon, the drought in Taiwan affected production at TSMC and Taiwan Semiconductor, and the fire at Renesas Electronics’ silicon plant in Japan and the blocking of the Suez Canal in March have all exacerbated the global shortage of integrated circuits.

Car manufacturers, computer vendors, crypto-miners and games console brands are now fiercely competing for an increasingly precious resource.

The automotive manufacturers have been particularly impacted by the chip shortage. Ford announced that its production would be slashed by 20% in the first quarter owing to the lack of chips. General Motors reduced output at its factories in US, Canada and Mexico. Mazda reduced production by 7,000 cars. Mercedes paused production of its GLC. Honda temporarily closed its plant in Swindon, UK and slowed production at five of its US factories. VW, Fiat Chrysler and Nissan all reported that production had been affected by the shortage of ICs. In June Ferrari appointed the former head of the sensors division at STMicroelectronics as its CEO, underlining the importance of silicon supply chain influence within an industry that was disadvantaged by its just-in-time processes.

How chip makers have responded

Intel announced in March that it was investing $20billion to build two new fabrication plants in Arizona.

In June the US Senate passed a new bill which commits $52billion to increase semiconductor production, research and development in the US.

Ministers from the European Union have also discussed a $60billion investment to increase chip production in Europe.

Taiwan’s largest chip manufacturer, TSMC, has announced its plans to expand production of its 28-nanometre chips in Nanjing China. However, it may be a year before its additional chips reach the market and the US and European initiatives will take even longer.

How long is the shortage likely to last?

Meanwhile, remote working, crypto-mining, and resumption of car manufacturing are all driving up demand for ICs.

As a result, industry analyst, Gartner, has predicted that chip shortages will last until the second quarter of 2022. Gartner has advised original equipment manufacturers to scrutinise their supply chains to identify potential constraints and encourages them to partner with other organisations to increase their buying power with chip foundries. Gartner also advises diversifying supplier bases to reduce risk to manufacturing.

How Omni-ID has responded

Omni-ID designs and develops asset tracking products using a spectrum of technologies select the technology that best fits the application that our product is seeking to serve. Our agnostic approach gives us the freedom to explore new suppliers and partnerships that enable us to continue delivering products to our customers and partners.

To ensure the optimum performance of our devices, our design engineering team constantly review the latest IC technology. As a result, we are upgrading our products as follows:

  • Products using an inlay (including IO, Flex and Exo ranges) will be upgraded to the new M730 IC from Impinj.
  • Omni-ID’s SMT bonded products (including FIT 220 HT & 400 and the Exo 400 HT) will be upgraded to the Monza R6-P IC from Impinj.
  • Omni-ID’s Wire bonded products including the Adept 500, FIT 210 and Max Rigid will be upgraded to the EM4124 IC from EM Micro.

These upgrades not only insulate our customers and partners against supply chain issues, but also provide them with performance increases of 20% or greater across Omni-ID’s whole product range, delivering some or all of the following benefits faster read speeds, longer read distance, smaller device footprints and more universal performance across international territories.

Products that use an Inlay including:-

IQ, Flex and Exo ranges

Products that are SMT bonded including:-

FIT 220 HT & 400 and the Exo 400 HT

Products that are wire bonded including:-

Adept 500, FIT 210 HT and MAX Rigid

Upgraded to the new M730 IC from Impinj Upgraded to the new Monza R6-P from Impinj     Upgraded to the EM4124 from EM Micro

 

As a company of experienced engineers and problem-solvers, we recognise that every threat is also an opportunity for change and improvement. Therefore, we’ve used the current supply chain issues as an opportunity to move away from silicon that’s almost a decade old to using the latest silicon that’s available. We’ve undertaken a comprehensive programme to transition our product range to ICs from Impinj and EM Micro and that is offering significant benefits to our customers and partners.

We invite you to join our webinar on 17th of June where we’ll be talking more about Omni-ID’s transition to the new ICs – Click Here to Register

You can also see what products have now transitioned by clicking here.

References:

CNBC, Goldman Sachs says disruptions from the chip shortage should diminish in the second half of 2021’, June 8th 2021 https://www.cnbc.com/2021/06/08/goldman-disruptions-from-the-chip-shortage-should-improve-soon.html

Daily Telegraph, ‘Carmakers fear Suez blockage will make critical chip shortage worse, March 24th 2021 https://www.telegraph.co.uk/technology/2021/03/24/carmakers-fear-suez-blockage-will-make-critical-chip-shortage/

Daily Telegraph, ‘Chip shortage halts car factories,’ January 12th 2021

https://www.telegraph.co.uk/business/2021/01/12/chip-shortage-halts-car-factories/

Carwow, Microchip shortage – how car production is affected, May 25th 2021 https://www.carwow.co.uk/news/5302/microchip-shortage-how-car-production-is-affected

Financial Times, ‘Global chip shortage to spur price hikes,’ January 27th 2021 https://www.ft.com/content/84487014-bf25-4837-8562-2f41a035776a

CNBC, Intel is spending $20billion to build two new chip plants in Arizona, March 23rd 2021

https://www.cnbc.com/2021/03/23/intel-is-spending-20-billion-to-build-two-new-chip-plants-in-arizona.html

 Reuters, ‘Biden presses for funds to boost chip manufacturing amid shortfall,’ February 24th 2021 https://www.reuters.com/world/china/biden-press-funds-boost-chip-manufacturing-amid-shortfall-2021-02-24/

 Financial Times: China needs allies not isolation to solve its chip shortage, Yuan Yang, May 25th 2021 https://www.ft.com/content/8abc1f31-66b2-44eb-8897-8399e2339535

 Financial Times: Beiing’s secret chipmaking champions US-China tech war: Beijing’s secret chipmaking champions | Financial Times (ft.com), May 12th 2021

Forbes: The War Between Gamers And Cryptominers—And The Scarce Global Resource That Sparked It (forbes.com)

 CRN: https://www.channelweb.co.uk/news/4031154/global-chip-shortages-rage-deep-2022-gartner-predicts

 

 

 

 

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When The Chips are Down

How our agnostic approach is allowing us to switch silicon, upgrade our devices, and keep customers supplied The global shortage of Integrated Circuits (ICs), which are used to control everything from laptops to life support machines, has demonstrated just how interconnected international supply chains are. The last 18 months demonstrated how dependent we all are […] Read More