Top 6 Semiconductor Manufacturing Trends That Northern California OEMs Should Follow
by Morgan Zealear, on 1/13/22 9:00 AM
Semiconductor manufacturing issues have rippled across the economic supply chain but, by accounting for current trends, there are solutions. Production issues for Northern California semiconductor original equipment manufacturers (OEMs) have occurred as a result of the impact of COVID-19, and global semiconductor manufacturing value chain challenges. Many industries, such as those that rely on computers, and temperature sensors, depend on semiconductors. The PC and automotive industries, for example, need semiconductors for the computational power they provide. Because of recent interruptions, these industries have faced production limitations that have impacted operations and their bottom line.
Addressing semiconductor manufacturing issues is of the utmost importance for the economy and many of the technology we take for granted. The semiconductor manufacturing interruptions don’t have a quick fix but require a multi prong approach that begins with understanding the current trends and how best to plan for the future. Let’s take a look at these various trends, the production pressures resulting from these trends, and possible solutions.
Top 6 Semiconductor Manufacturing Trends to Keep in Mind
Successfully navigating the current and future challenges of semiconductor production, requires an understanding of several trends to develop long-term solutions. Some of these trends are reducing the number of available semiconductors available on the market. These include increased global demand for semiconductors, decreased manufacturing capacity, and increased use of semiconductors in new products. While others, such as increased federal incentives for semiconductor production, may encourage more production of semiconductors to combat the recent shortages. By taking stock of these trends, semiconductor manufacturers can better capitalize on the changing economic landscape.
1. Increased Global Competition
Several countries have had a recent increase in economic development that has resulted in a more developed infrastructure and further implementation of technology throughout their economy. With these advances has come an increased need for semiconductors. China, for example, has invested heavily in manufacturing and has a large workforce involved in manufacturing. As a result, China has become one of the major buyers of semiconductors and semiconductor components to meet this growing need for technology in business and daily life, creating a significant supply vacuum for both semiconductors and semiconductor manufacturing components.
As a solution to increased global demand, Northern California semiconductor OEMs can partner with a local vendor to ensure the quick delivery of components needed to maintain production.
2. Decreased Manufacturing Capacity
There has also been a recent decrease in manufacturing capacity for semiconductors. Though factories in Taiwan have been overbooked for production needs, this alone has not accounted for the lack of production. The current geography of semiconductor fabrication plants (fabs) and OEMs are concentrated in just a few regions and these regions have experienced recent natural disasters that have halted production. A drought in Taiwan, a fire at a plant in Japan, and the power outage due to cold temperatures in Texas have all halted or shut down operations for extended periods of time. Future natural disasters in these areas with a significant number of semiconductor fabs and OEMs may also create a semiconductor shortfall that manufacturers should keep in mind.
Semiconductor manufacturers and governments have both realized the potential issues with having multiple OEMs in close proximity to one another. Manufacturers are looking to build out new fabrication spaces when it becomes less cost-prohibitive to do so. Government incentives are beginning to encourage the building of new facilities to meet production needs.
By having a local vendor for semiconductor manufacturing components, manufacturers can look to build new production facilities or expand existing ones without having to wait for components to be shipped from another part of the world. Further, a local vendor can provide consultation and guidance for the necessary upgrades to components as technology advances or if there is damage to a manufacturing site.
3. Increased Semiconductor Demand
Global semiconductor demand has also increased in recent years and this trend is expected to only continue. As countries advance economically, the need for advanced technology will become more intense. Rapidly developing countries such as China and India are now exponentially utilizing semiconductors more than they have in previous years. It’s clear that utilizing a local vendor will allow for components to arrive on time and for continued efficient semiconductor production.
For Northern California semiconductor OEMs, the lack of available parts and components due to increased demand has been felt. A partnership with a local vendor will help solve these issues when the global demand for components is high.
4. Increased Development of Products Utilizing Semiconductors
Semiconductors are ubiquitous and find their way into all aspects of daily life. Modern cars now utilize up to 3,000 semiconductors, or more, to provide computer-automated controls for aspects of driving, such as braking and temperature adjustments. The usage of semiconductors in cars is likely to continue to grow as the automation of safety and luxury features advances. Mobile smartphone devices are becoming a necessity for modern life. Smart technology has even been incorporated into thermostats, ovens, home security systems, and other home technology to allow for automated control that adjusts to changing conditions.
To meet this increased demand, semiconductor OEMS or fabricators will need the necessary parts and components for efficient semiconductor manufacturing. A local vendor—without the limitations and issues imposed by the global supply chain—can provide the necessary components to prepare manufacturers for increased demand.
5. How COVID-19 Has Impacted Semiconductor Manufacturing
The pandemic has slowed production for the parts needed for manufacturing and consequently the ability to produce critical parts for those up the supply chain. Facilities across Northern California had to suddenly decrease their on-site workforce and, unfortunately, a work-from-home solution does not function for sensitive manufacturing processes. Semiconductor manufacturers have faced significant delays of ordered components; particularly if those components are being sent via shipping containers (shipping containers have experienced delays moving into ports and getting through customs).
To some degree, these issues are beginning to be solved as semiconductor manufacturers navigate the pandemic; much of the workforce is back on-site with vaccination requirements. However, with an unknown timeline for the pandemic’s end, the uncertainty and damage to the upstream global supply chain are likely to continue. Further, how the pandemic will change—and how COVID-19 will affect the future—remains unclear.
By utilizing a local vendor in Northern California, semiconductor manufacturers and OEMs may be able to bypass issues related to travel and shipping restrictions while designing around availability.
6. Increased Federal Incentives for Semiconductor Production
The semiconductor industry plays an important role in the United States economy. It directly employs approximately 250,000 individuals with indirect estimates (individuals employed as a result of semiconductor industries) of over 1 million additional jobs. Further, semiconductors are America’s fourth-largest export.
Realizing the supply crisis of semiconductors and its negative effect across many American industries, the federal government has increased incentives for semiconductor production. The government has released several high-value contracts for the production of semiconductors with particular emphasis on production within the United States and for national defense.
Having a reliable local supplier of semiconductor manufacturing parts and components will help manufacturers in the US understand the process to gain these incentives. If further incentives are utilized to increase the national production of components, having a local vendor could be beneficial for gaining these incentives.
Swagelok Can Help You Keep Up With Semiconductor Manufacturing Trends
Semiconductors will likely continue to face shortages as demand increases and production interruptions occur. The increased need for semiconductors from developing countries will cause increased demand for semiconductor components. The use of semiconductors in every aspect of life will continue to drive significant demand for these products.
With the increased demand for semiconductors as well as the increased federal incentives for semiconductor production, now is the ideal time to have a reliable semiconductor equipment supplier for your Northern California operations. When components need to be replaced, you’ll likely be competing with other semiconductor manufacturers for components. As such, it is imperative to have a local vendor—such as Swagelok Northern California—to meet all your semiconductor manufacturing component needs. Utilizing a consultation with Swagelok’s Field Engineers will also allow you to establish future plans to mitigate issues with supply chains. Developing a solid future plan is one of the key cornerstones for successful semiconductor manufacturing operations.
About Morgan Zealear | Product Engineer, Assembly Services
Morgan holds a Bachelor of Science in Mechanical Engineering from the University of California at Santa Barbara. He is certified in Section IX, Grab Sample Panel Configuration, and Mechanical Efficiency Program Specification (API 682), and he is well versed in B31.3 Process Piping Code. Before joining Swagelok Northern, he was a manufacturing engineer at Sierra Instruments, primarily focused on capillary thermal meters for the semiconductor industry (ASML).