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Plan Ahead: The Evolving Semiconductor Automotive Supply Chain and the Rise of Electric Vehicles

The automotive semiconductor supply chain has swung back from deficit into surplus. With few exceptions, the allocation and supply constraints are done. However, how has the shock of the last two years fundamentally altered the supply chain? How will the rise of electric vehicles (EVs) challenge semiconductor sourcing, and can automotive manufacturers manage supply risk?

Semiconductor evolution, and the subsequent discontinuations of older versions, is a fact of life. A semiconductor’s lifecycle is a factor of technological progress, as wafer-fab geometries shrink, driving demand for smaller form-factor IC packages. These discontinuations were flagged well in advance by the Original Component Manufacturers (OCMs); and are therefore predictable and manageable. Component lifecycles and their predicted EOL dates can be monitored and tracked using industry data tools. These tools use a combination of the manufacturer’s data and algorithms to estimate the remaining product lifespan.

Crises often trigger a step-change. Over the last two years, where market demand outstripped supply, the semiconductor manufacturing chain was forced to take stock and prioritize scarce resources toward the most valuable technologies and products. Investment flooded into new wafer fabs and the most economical of package styles. As the market flips from excess demand to excess supply, choices are being made to prune older, less profitable fab technologies and IC packages.

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Older “material-heavy” packages, such as DIPs, PLCCs, and even smaller SOICs, are becoming discontinued across the board. Traditional lead-frame-based packages have more complex and tooling-rich supply chains. Investment is being focused on smaller substrate-based packages, with simpler supply chains, and more economical assembly.

Independent third-party fabs and packaging specialists represent a substantial share of the semiconductor manufacturing supply chain. As a result, the decision to terminate a fab process or package style is no longer exclusively under OCM control, leading to unpredictable discontinuations. Traditional algorithm-based forecasting meets its limitations.

As OCMs divested large sections of the semiconductor manufacturing process to cheaper specialists, a similar process happened at the main car manufacturers. Specialists manufactured and, crucially, took complete design control of the major automotive subsystems. When demand suddenly exceeded supply post-COVID, many car manufacturers were unaware of which semiconductors were in their platforms and failed quickly to secure enough supply. The unthinkable happened and production line-stops became endemic.

Subsequently, car manufacturers have strengthened their purchasing, component engineering, and risk-management functions to understand the full details hidden in supply chains. While product responsibility will still reside with the tiered system suppliers, there will be much more hands-on risk reduction initiatives throughout the chain.

These supply challenges come at a time when new EV car registrations have grown to represent roughly 20% of the market. The rate of growth will be a function of the speed at which the price differential narrows between EVs and petrol and diesel equivalents, but also confidence in the charging network, improvements in EV range, and economic outlooks.

A conventional car requires, on average, 500-to-600 chips, as the design and control of the standalone sub-systems leads to control duplication. New EVs can require 1,200-to-1,300 chips for increased links to networked information and self-determination. Only a fundamental rethink of subsystem responsibility and controls will allow for semiconductor design consolidation and the eventual reduction in the number of utilized semiconductors.

Even the inevitable decline in petrol and diesel cars, as they are legislated out of the new car market, will prove challenging. Last-sell dates change and there are huge uncertainties about the length of after-market support required.

Forecasting the future semiconductor needs of the EV and Petrol change-over and the components required, against a backdrop of unpredictable semiconductor lifecycles, means that car manufacturers need:

  • A component-level understanding of their platforms.
  • Shared data, especially for critical parts lists.
  • To understand the details and risks within the semiconductor manufacturing supply chain, such as fab technologies and package risks.
  • Duplicate authorized supply sources wherever possible, who are ready to provide an instant back-up in times of crisis.
  • A partnership with an authorized after-market semiconductor supplier, who can offer additional supply flexibility when last-time buy (LTB) forecasting is difficult.

A key requirement in the automotive industry is product longevity. Although models may change year to year, the underlying components and assemblies can remain in use for many years. Often a 10-year minimum lifecycle is a requirement. However, with the life expectancy of many vehicles extending well beyond 10 years, product manufacturers need to address the lifecycle over the complete production, aftermarket, and repair requirements.

Rochester Electronics’ focus on providing a continuous source of semiconductors aligns strongly with the long lifecycle and quality requirements of automotive manufacturers.

With our comprehensive market analysis, Rochester Electronics offers customers a valuable and unparalleled perspective on component risk assessment. Our expert team provides independent advice that serves as an extra layer of protection, allowing businesses to mitigate potential risks and avoid costly repercussions from prematurely terminating production or in-service support due to obsolescence. By leveraging market-wide viewpoints, we empower customers to make informed decisions and ensure the seamless continuation of their operations.

By sharing critical parts lists for long-term programs with a trusted authorized supply partner, customers gain a comprehensive understanding of project risks and proactively develop plans to mitigate them before obsolescence becomes a concern.

Planning for the unexpected is a crucial part of the risk management process. Rochester Electronics is the world’s leading authorized after-market semiconductor supplier. Rochester provides instant stock availability in times of supply crisis; authorized EOL stock directly from the OCMs, and the ongoing production of semiconductors from wafer, years after the normal discontinuation date.

Trusted and authorized by major semiconductor manufacturers, Rochester can provide ongoing component availability after the normal end-of-life (EOL), as well as unique insights into industry-wide technology trends in wafer fabrication and IC-packaging supply chains.

Rochester Electronics is IATF 16949:2016 certified for the manufacture of semiconductor components at its US-based facilities. Developed by the International Automotive Task Force in conjunction with the international standards community, IATF 16949 is the industry’s highest standard for quality management systems in the automotive sector.

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