Category: Electronic Component Shortage

Cheap as Chips | A Road to Recovery for Automotive

Posted on by Maulin Buch

Cheap as Chips | A Road to Recovery for Automotive

The chip shortage is back for Year 2 and, the automotive industry continues to bear the brunt as semiconductor manufacturers continue to neglect their cheap chips. 

Nvidia Corp recently led a string of predictions from fellow chipmakers at the J.P. Morgan Tech Forum with its forecast for the chip shortage. With a consensus that there will be minimal improvement to the situation before the middle of 2022, maybe not even then.    

A somewhat alarming outlook for a sourcing issue that dates back to March 2020 but, of the endless problems thrown at companies by Covid-19, the global chip shortage appears to have been one of the most destructive. Companies should count themselves lucky to have avoided the disruption inflicted by the lack of chips which has caused backlogs for products, including vehicles, consumer electronics, and household appliances.

Legacy Semiconductors

Perhaps no other industry has been as affected by the semiconductor deficit as automotive, with carmakers large and small relying on these tiny computer chips to power everything from infotainment systems to steering wheels and much more. According to US-based consulting firm AlixPartners, shortages related to semiconductors cost the automotive industry a whopping $210 billion in revenue in 2021.

The automotive OEMs aren’t holding their breath about the situation letting up anytime soon, either. As reported by Reuters, Ford has taken the tough decision to suspend production at eight factories following a slump in share. Even Elon Musk has announced that because of the chip shortage, there will be no new Tesla models released in 2022. 

As with most things in the convoluted automotive industry, there are countless reasons why the chip shortage has been so severe. What might be surprising is a route cause to the situation is the type of chips used. Yes, while automotive technological advancements have progressed significantly over the years, cars use a lot of older, lower-tech legacy chips, which cost mere dollars to produce. 

Therefore, mature vehicle chips, which can date back to 2005, deliver a lower profit margin, and ultimately there is less incentive for chip manufacturers to invest in more capacity. Both Infineon and Apple Inc’s Tim Cook have agreed that the market for mature chips would remain tight as semiconductor makers have an incentive to focus on the newest and most expensive chips (Reuters). 

If the semiconductor giants have their way, the days of the automotive industry relying on these cheap commodity chips are numbered. In the meantime, before more factories close their doors, there need to be shorter-term solutions to this relentless chip shortage.  

Component Recovery

While currently there is a lack of capacity for legacy semiconductors, it doesn’t mean that there are no chips out there. However, these mature components might be attached to obsolete PCBs, gathering dust in storage. Retronix has a component recovery service that provides a means to safely remove chips from PCBs and return to a like-new condition. We combine our rework, re-tinning, re-balling, ICOS coplanarity testing, electrical testing, and re-packaging services, to ready components for your new builds. 

What’s more, with legacy components dating back to as early as 2005, six years before the RoHS directive, there may be a requirement to convert parts from Pb to Pb Free. Our fully automated alloy conversion system will ensure that your devices aren’t exposed to excessive heat or abrasion, meeting the stringent High Reliability standards of GEIA-STD-0006. Retronix is one of the few companies that offer a full bill of material (BOM) conversion process.

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Could chip shortage push automotive towards a more sustainable future?

Posted on by Maulin Buch

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.

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The Automotive Industries Component Shortage Crisis

Posted on by Maulin Buch

The Automotive Industries Component Shortage Crisis: Component Reclaim Eases Burden on Supply Chain

With the chip crisis forecast to hit the production of 3.9m vehicles this year, the automotive industry is to lose a staggering $210 billion in revenue in 2021 alone. 

With the ability to quickly recover valuable components that organisations desperately need while enabling a Circular Economy that positively impacts the environment. Component Reclaim is offering businesses a viable solution out of this dire supply chain crisis.

When will the chip shortage end?

As would be expected, there are several disputes over how long the shortage will last. However, it’s difficult to ignore the forecasts of the chip makers themselves. Unfortunately for the likes of GM and Ford, who have had to shut down production at many of their plants, it’s not looking promising. 

Arm Holdings Chief Executive, Simon Segars, is predicting that the crisis will prevail until at least the end of next year, citing that the “This isn’t a short-term problem with a short-term solution.” Intel CEO, Pat Gelsinger, shares the same bleak outlook, believing that the industry won’t be back on track for another couple of years (Techspot).

With chip lead times pushing 26+ weeks alternative ideas and technologies are beginning to be explored as a means of helping to speed up recovery. 

Alternative ideas & technologies

As discussed in Forbes, Sundar Kamak, Head of Manufacturing Solutions of Ivalua Inc. has called for manufacturers to turn their attention to reusing and recycling chips from older devices and equipment.  

“Each year millions of devices and equipment containing chips are scrapped or thrown away – the UN found there was 53.6 million metric tonnes of e-waste in 2019 globally, of which just 17% was recycled. Not only could this help ease the burden on supply chains, it will also have a positive impact on the economy, and encourage regenerative design to reduce reliance on finite resources”, Kamak said (Forbes).

Component Reclaim may seem like a new phenomenon, but not to us. At Retronix, we have been recovering components from PCBs and returning to a ‘like new’ condition for three decades now. Operating to IPC-9592 STD, our leading technology, including Laser Reballing, delivers the safest recovery and refurbishment service in the industry. 

Our process to recover and refurbish devices, including BGA Chips, not only reduces the amount and cost of scrap going to landfills but also seriously damages the counterfeit industry. With five electronic components on average making up to 60% of the value of an entire assembly, we have seen customers recover £120k worth of chips from just one board.

Retronix is carrying out this service and other bespoke services for hundreds of customers across the world, so what you may think is a unique issue you are facing we might already have a solution for. Our Component Shortage Service encompasses a range of solutions that could solve your sourcing issues quickly and safely: 

Click HERE to learn more or get in touch today via the contact form below. 

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Electronic Component Shortages

Posted on by Maulin Buch

The Electronic Component Shortage

At the start of the year, Retronix had reported on the critical semiconductor shortage threatening to hamstring production lines of the world’s largest carmakers – demand is high, supply is tight.

Fast forward to today and that looming threat has become a stark reality with the world’s biggest carmaker Toyota, having just announced that it is to slash worldwide vehicle production by 40% in September. Volkswagen, the second-biggest car producer, has warned that it may also have to slash production (BBC News).

What has caused this disruption?

As reported by the Harvard Business Review there has been a multitude of one-off factors that have caused this situation that likes of Samsung, VW and Apple find themselves in today. From fires in Japan, storms in Texas to more unnatural Geopolitical factors, these unrelated occurrences have created a domino effect of disruptions that have caused a severe in-balance in the semiconductor supply chain.

However, as highlighted by Business Line, “supply chains in all sorts of industries have dealt with shortages resulting from catastrophes before” and have managed to pull through. So, what’s different this time?

The Electronics Supply Chain

The truth is that this imbalance in the supply chain was present far before any of these “freak” occurrences. Direct Components explain that the shortage of multi-layer ceramic capacitors (MLCCs) is a consequence of the rise in demand for portable technology and automotive advancements. In turn, this has exasperated the availability of tantalum capacitors, a well-known MLCC alternative. Harvard Business Review calls for large manufacturers in automotive and other sectors suffering from this component shortage to take a long hard look at their supply chain strategies and ask themselves “Where have they prioritized cost reduction at the expense of risk management?”.

Certainly, if we have learned anything from the pandemic, supply chains are extremely volatile, and while the vaccine is picking up pace in the fight against COVID-19. The shortage in components doesn’t seem to be going away any time soon.

How can Retronix help?

From Retronix perspective, we have seen customers reporting that they are having to step outside of the approved suppliers to source the components they require. This has seen an upturn in our testing services as we act as a third-party test house to help our customers verify their new suppliers. Our Component Reclaim Service also offers a much-needed solution for customers by safely and quickly recovering and reworking components for builds.

Click HERE to learn more about our Semiconductor Shortage Solutions Service or get in touch today via the contact form below.

Component Shortage Infographic

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