Semiconductor Supply Chain Overview

Semiconductors lie at the very center of the modern world of technology and digital devices. Semiconductors chips such as microcontrollers give us a level of control that wasn’t possible before. The demand for semiconductors and ICs from companies that build consumer devices is extremely high and they expect high quality finished goods in half the time and price. With the semiconductor business booming as ever, this is as good a time as any to take a deep look at the semiconductor supply chain and discuss better practices so that it can better keep up with the increasing demand.

Every semiconductor supply chain is different and adapted to the nature of the company and the products they specialize in. In order to ensure that you experience success with your business model for your supply chain, you have to make sure that it is tailored for you and your products in particular. Supply chain managers envision a supply chain that accelerates product cycle, reducing the time to market, without compromising on the integrity of the traditional supply chain. Is it possible?

There are some best practices that are applicable for everyone in the semiconductor manufacturing and supply business. The key is to incorporate integrations that facilitate the process and enable you to best conduct your business by minimizing the potential for mistakes.

Best Practices in a Semiconductor Supply Chain

When it comes to a traditional semiconductor supply chain that is taking place almost entirely within the confines of your own manufacturing company or site, there is clear visibility and sense direction at every step of the way. This means that you are able to visualize and locate everything in the supply chain, from the raw materials to the finished product at the end, as well as the middle processing part where the semiconductor fabrication or manufacturing actually takes place.

If you are a fabless operation that is outsourcing the semiconductor supply chain as opposed to investing your own resources and premises for the manufacturing and storage process, the element of visibility is significantly reduced, and sometimes even completely absent at certain points in the chain. In an outsourced semiconductor supply chain model, you let an external company run the supply chain for you. The best practice in regards to an outsourced supply chain is to do as much as you can to increase the visibility and control you have in the process at every step of the chain. You have to remember that while you are leveraging the premises, technology, and skills of a subcontractor, you are still the rightful owner of the materials that you have supplied to the company. As such, it is important to keep track of the movement of these materials throughout the manufacturing process with the help of proper communication.

The supply chain for an electronic product is not a simple five link chain that goes from the supplier to the wafer fabrication company to the subcontractor, then the distributor, and finally to the consumer. Long term planning is a critical component that must be integrated into your semiconductor supply chain to ensure that you can keep up with the production demands and orders.

Activities

Major semiconductor foundries provide now assembly services (such as WLCSP) and testing services. Letting a fab run your assembly and test internally could help you simply the supply chain. The same goes for OSAT vendors that provide both assembly and testing service – they can cover the backend part of the supply chain for you.

Yield

Who do you blame is something goes wrong? If you are managing the supply chain, it’s your responsibly to identify and repair defects and yield loses. Therefore, an access to a failure analysis lab would be a great help if you need to analyze a failure in wafer or package level.

Priority

It important that you know the processing time of each step in the process and the shipping time from the different factories. Ask for WIP (work in progress) reports from all the vendors you are working with and follow SOD (ship out dates). Be aware, that big chipmakers such as Qualcomm and Broadcom have large orders and likely get higher priority with their projects.

Forecasting

To begin with, initial analysis and first deployment of the product into the market should give you an idea for how much production needs to take place. This is the forecast you receive from your customer market. As a supplier, you also have to keep up with the demand of the distributor that is directly engaging with your buyers. Once you have the forecasts and the demand orders, you must have a system in place to compensate for them with purchase orders to the wafer fabrication plant who should in turn communicate with you regarding the status of the batch and notify you once it is shipped out to the contractor for further processing.

Shipping

Your goal should be to attain the ability to track and trace the movement of your goods and supplies down the line. This can be done with lead tracking and monitoring at the appropriate and accurate times when the order is being shipped to the next link in the chain and is being unloaded at the recipient. You should be aware of when the products are in transit, when they are shipped or received, and just how much product is being transported in a batch.

Capital

Some say that supply chain management is all about matching your own capital and market demand. Do you keep buffers in the various stages? Do you keep ICs in inventory? What is your payment terms? And what is your customer payment terms? All these questions are only related to your own capital and how wisely you spend it.

Your own capital is the oxygen of your supply chain. Without it you will not be able to pay for wafers, assembly or test.