SEMI explains semiconductor supply chain initiative

SEMI President and CEO Ajit Manocha advocates redesigning the supply chain – specifically for the semiconductor industry.
31 May 2023

Here’s a supply chain initiative by SEMI for the semiconductor industry. Source: Shutterstock

• A shift in supply chain focus will help the semiconductor industry.
• SEMI has set up an Industry Advisory Council.
• Aims to give companies a blueprint and technological tools to ease supply chain woes.

The pandemic forced all semiconductor supply chain players to reassess how much inventory they need to hold. In fact, the disruption of the supply of raw materials and components drove a reassessment of how much stock companies needed to hold to keep running smoothly.

The semiconductor industry eventually moved away from a just-in-time inventory system in favor of more just-in-case stocking. “The just-in-time phenomena did work very well. But not anymore, especially with the geopolitical issuesexport control restrictions, calamities due to climate change, and many other natural disasters that seem to be going out of control. That has created and will continue creating many problems in the supply chain,” SEMI President and CEO Ajit Manocha told Tech Wire Asia on the sidelines of the SEMICON Southeast Asia 2023 last week.

Manocha is advocating the need to redesign the supply chain – specifically for the semiconductor industry. “With SEMI, when the chip shortage happened, we tried to understand how to increase the capacity, but the rude awakening was that if you want to add more capacity, you need to make more equipment, and equipment needs chips to make them. In short, we needed chips to make more chips.”

He highlighted how the traceability of sub-components was a nightmare during the pandemic, and that needs to change. “A chip before it is made travels more than 25,000 miles in terms of everything needed to make the chip before the silicon is ready for customers. That shows how the world depended on multiple countries to make the final product,” Manocha added.

The chip supply chain learned a lot during the pandemic. Chips are significantly more complex than cake…

That being said, SEMI–the global industry association that unites the electronics manufacturing and design supply chain–has been working on a Supply Chain Management (SCM) initiative that brings together industry leaders to advance a more resilient and agile electronics supply chain.

“If there is one thing we are certain of, it’s that calamities won’t stop happening; geopolitical issues, on the other hand, are ongoing. That is why we plan to create a blueprint which companies can take and customize for their own proprietary supply chain process,” he explained.

Within the SCM initiative, SEMI set up an Industry Advisory Council (IAC) composed of a select number of SEMI member companies and industry partners from the global electronics design and manufacturing ecosystem to help identify industry challenges, and prioritize and execute solutions that benefit SEMI members and the entire industry. 

“So far, around seven or eight companies have joined, and we hope to get to maybe 20 companies together. The SCM IAC will be a decision-making leadership council identifying critical supply chain capabilities for the electronics industry,” he added. The IAC began in February 2023 with members like Google, Intel, Infineon, Merck, and TSMC.

Manocha explained how the industry body would expand to include a broad representation of companies (materials, capital equipment, device, packaging, and test, PCB and Assembly, and systems manufacturers) and geographies to create a collective and collaborative blueprint for a more resilient and transparent supply chain. 

What are the IAC’s plans when it comes to the semiconductor supply chain?

The regional or segment-specific sub-teams, under the guidance of the global IAC, will drive specific workstreams contributing to overarching initiative goals and objectives.

Those specific goals include:

  • By Q1 2023: Establish a core team of five to six Global Industry Advisory Council members
  • By Q1 2023, expand to 15-20 Global IAC members, with balanced geographical and segment representation.
  • By Q2 2023: Elect IAC Chair and Vice Chair to facilitate IAC activities and ensure effective outcomes.
  • IAC members may serve up to two 2-year terms.
  • Quarterly face-to-face IAC meetings in conjunction with major SEMI events (ISS (January), SEMICON West (July), SEMICON Taiwan (September), SEMICON Europa (November), or Japan (December).
  • Hold regular online meetings as needed.

“I think the supply chain for a company is very strategic, and maybe even proprietary in many cases, so we are not going to tell them here how they should work their supply chain. Instead, we’re going to give a blueprint with scenarios and many technological tools – for example, what role AI can play to ease the situations,” Manocha said.