Could Chip Shortage Push Automotive Towards a More Sustainable Future?
Despite automotive only representing 10% of semiconductor demand, it has been hit the hardest by the global chip shortage. With the crisis showing no signs of letting up, could a Semiconductor Circular Economy put the brakes on the supply chain crisis?
The Impact of the Shortage on Automotive
The global semiconductor shortage has caused carnage across the automotive supply chain, so much so that the everyday consumer has now become affected. Consulting Firm AlixPartners has estimated that the supply chain crisis has cost the industry a staggering $210 billion in revenue in 2021 alone. Shocking but not entirely surprising if you look at the growing list of OEMs that have had to either halt production or shut factories completely, including Daimler, Toyota, Ford, JLR, and most recently Opel.
As would be expected, there are continuing disputes over how long the shortage will last. The year 2022 is being cited by many industry professionals as the holy grail. However, such predictions indicate that there is going to be a definitive end to the draught. The truth is that there has been an imbalance in the semiconductor supply chain for many years now, far before the recent geopolitical shifts, natural disasters, and pandemics (of course). And with the car industry now rapidly pivoting to electric vehicles, attaining a semiconductor supply chain equilibrium seems almost impossible.
A Semiconductor Circular Economy
This dire supply chain scenario has finally forced organisations to take notice of innovations that support a semiconductor circular economy in order to address the current global supply chain imbalance while mitigating future shortages (AZO). More importantly, the model would push us toward a more sustainable future within both automotive and the wider electronic industry.
While electronic goods have revolutionised our daily lives, in this tech-hungry world, we are eating through electronic devices at an alarming rate. Each year a staggering 50 million tonnes of e-waste is produced and, if current trends continue, it is forecast to reach 120 tonnes by 2050. Sadly only 20% is recycled.
Sundar Kamak, Head of Manufacturing Solutions of Ivalua Inc. discussed with Forbes the need for manufacturers to turn their attention to reusing and recycling chips from older devices and equipment, “Not only could this help ease the burden on supply chains, but it will also have a positive impact on the economy and encourage regenerative design to reduce reliance on finite resources”.
How can we Move from Linear to Circular?
For decades the semiconductor industry has relied upon a linear economy model, and therefore, the move to circular won’t exactly be ‘straight’ forward for organisations. However, as highlighted by the UN, moving to a circular approach will open doors to new markets for businesses and provide opportunities to increase market share, cut costs and risks, push innovation and align performance with public expectations.
“Successful businesses of the future will be ones that deliver excellent value with minimum resource use and environmental impacts while moving rapidly toward nature-positive solutions and net zero carbon emissions” UN.
For three decades now, Retronix have been helping businesses adopt the Circular Economy ethos of refurbish and re-use. As previously highlighted by Kamak, everyday, millions of dollars of brand new and high-value components are scrapped by manufacturers simply because they are attached to faulty/obsolete PCBs.
Retronix have developed a process to recover and refurbish these electronic components including BGA chips, to enable reuse. This process meets the component manufacturer’s specifications of maximum reflow cycles allowed on an electronic component, adhered to extensively by both OEMs and CEMs.
In 2020 Retronix recovered nearly 3 million components from approximately 650,000 PCBs that would otherwise have gone to scrap or landfill. We expect this number to be double this year as due to the component shortage, more and more organisations discovered Component Reclaim as a viable and valuable solution to their component souring issues.
