{"id":20302,"date":"2022-08-18T14:13:12","date_gmt":"2022-08-18T18:13:12","guid":{"rendered":"https:\/\/a2globalelectronics.com\/?p=20302"},"modified":"2022-08-19T09:58:05","modified_gmt":"2022-08-19T13:58:05","slug":"2-strategies-for-navigating-the-discrete-semiconductors-market","status":"publish","type":"post","link":"https:\/\/a2globalelectronics.com\/ja\/shortage-mitigation\/2-strategies-for-navigating-the-discrete-semiconductors-market\/","title":{"rendered":"2 Strategies for Navigating the Discrete Semiconductors Market"},"content":{"rendered":"

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The discrete semiconductors market has been plagued by long lead times and shortages. By employing proactive strategies, organizations can minimize their risk exposure. <\/strong><\/h2>\n

Reports currently project the global discrete semiconductors market to increase nearly $15 billion over the next five years<\/a>. In 2022 alone, we can expect a nearly $3 billion increase. As we enter Q2, however, we\u2019ve seen that long lead times<\/span><\/a> are affecting the industry, possibly even accounting for lower demand than usual. The question on the mind of many manufacturers is: Where do we go from here?<\/p>\n

Suffering supply issues<\/strong><\/h3>\n

Discrete semiconductors are integral components of many industries \u2014 especially consumer electronics. During the pandemic, demand for electronics soared<\/a>, which led to widespread shortages affecting these components. Discrete semiconductor supply has not been immune, and the industry is still facing a lead time issue \u2013 in some cases, up to 80 weeks. This shortage has coincided with ever-increasing price spikes<\/a> due to rising materials and logistics costs.<\/p>\n

Because a number of industries rely on discrete semiconductors, any disruption to the supply has major consequences for a wide range of manufacturers. In order to navigate the current shortage, many are beginning to get creative with production and to rethink their connections to fabrication plants.<\/p>\n

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The pandemic effect<\/strong><\/h3>\n

Semiconductor fabrication plants were already running at close to full capacity prior to 2020. And then, like most supply chains in the pandemic<\/span><\/a>, Covid19 compounded the problem.<\/p>\n

When facing immediate demand, chip fabs often manage their supply without looking to future projections. Instead, they avoid investing in the newest or most up-to-date equipment without immediate and direct customer investment. This model places the bulk of the manufacturing ecosystem in a precarious position. Given the unprecedented circumstances of the pandemic leading to further issues, we are currently dealing with an altogether more serious discrete semiconductor supply shortage<\/span><\/a>.\u00a0<\/p>\n

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Strategies for navigating the discrete semiconductors market<\/strong><\/h3>\n

While it can be overwhelming to manage pandemic-related shortages, there are ways to mitigate future losses. Demand forecasting and inventory management are key methods to managing long lead times and a diminished discrete superconductor supply. Let\u2019s look at each.<\/p>\n

1. Demand forecasting<\/strong><\/h4>\n

The inherent variability behind demand forecasting for configure-to-order and build-to-order products makes consistent and accurate forecasting difficult. Original Equipment Manufacturers (OEMs) are much more likely to predict at an aggregate family level, which leads to poor predictions for component attach rates. The resulting effect is a supply chain issue in which component supplies are separated from end-markets, reducing insight into the factors that influence customer demand<\/span><\/a>.<\/p>\n

With this reduction in insight, manufacturers are at an extreme disadvantage and must mitigate these issues by collaboratively forecasting beyond OEMs to retailer and dealer data, as well as marketing intelligence regarding end-markets. Additionally, it\u2019s crucial to develop demand forecasting<\/span><\/a> in detail, as well, by dividing demand projections by horizons in both the short and long term.<\/p>\n

2. Inventory management<\/strong><\/h4>\n

For similar reasons, managing inventory<\/span><\/a> can pose its own set of issues. The key inventory problem facing the discrete semiconductor supply chain is demand data problems. While brand managers will often brag that they are \u201cbuilding to order,\u201d the reality is that many of these chains are built to stock. This leaves the burden of inventory to be carried by suppliers, which can cause supply to bottle neck when suppliers understock.<\/p>\n

Although causes and remedies will vary, key solutions include lean practices<\/span><\/a> that emphasize cycle time reduction along with demand planning. Remember: cycle time is different from lead time. This is a crucial distinction because if cycle time can be reduced, it means that these 80-week lead times will shorten, as well.<\/p>\n

While discrete semiconductor shortages will persist, at least in the short term, by anticipating demand and rethinking the management of inventory, manufacturers will be in the best position to manage their electronics supply.<\/p>\n

Read more<\/strong><\/p>\n