When it comes to product design, changes in the semiconductor industry have a significant impact. And the current shortage of chips is also leading to some interesting changes.
For years, semiconductor companies have struggled to keep up with demand. The result has been a series of shortages affecting everything from PCs and laptops to cars and gaming consoles.
But the current shortage is different. It’s not just that there aren’t enough chips to go around. The available chips are in high demand, becoming increasingly more expensive. This article will discuss how the semiconductor shortage changes product design and how these changes ultimately lead to better products.
Pricing
Pricing is one of the most obvious ways the chip shortage affects product design. In the past, companies could source chips from multiple suppliers and then choose the cheapest option.
But now, with only a few companies able to meet the demand, prices have skyrocketed and will likely continue to do so. In addition, increased costs are forcing companies to re-evaluate their product designs and find ways to use less expensive chips.
This is already having an impact on the types of products that are being released. For example, many companies are now releasing lower-priced versions of their flagship products that use less expensive chips.
Others are releasing new products designed to be more efficient and use less power, which can help offset the cost of the chips. And still, others are finding ways to use alternative materials that can serve the same purpose as a chip but are not as expensive.
Availability
Another way that the chip shortage is affecting product design is in terms of availability. In the past, companies could typically order as many chips as needed and then have them delivered in a matter of weeks.
With chips in high demand, companies are lucky to get their hands on the chips they need when they need them. As a result, companies are being forced to rethink their product designs and find ways to use fewer chips. In addition, companies have had to manage their supply chains and product delivery timetables to consider the shortages.
Quality
Finally, the chip shortage also affects product design in terms of quality. Previously, companies could choose from various chips with features and performance levels. But now, with only a few companies able to meet the demand, companies are forced to make do with whatever chips are available.
Sometimes, the chips aren’t exactly what the company needs for its products, so the company needs to rethink product design while managing customer expectations regarding its products.
Improvements in the Semiconductor Industry
So, how is the semiconductor shortage changing product design? In short, it’s making products more expensive, less available, and lower in quality. But there is a silver lining. The current chip shortage is leading to some much-needed changes in the semiconductor industry, and these changes are ultimately leading to better products.
1. Investment
The first change is that the chip shortage is leading to increased investment in the semiconductor industry. In the past, companies were hesitant to invest in new chip manufacturing facilities because of the high cost and the risk of oversupply.
But now, with high demand for chips and high prices, companies are investing billions of dollars in new chip factories. This increased investment is already leading to improved chip manufacturing processes and higher quality chips. It will also lead to more capacity and lower prices in the future.
2. Consolidation
The second change that the semiconductor shortage leads to is the industry’s consolidation. In the past, there were dozens of small semiconductor companies, each with its manufacturing facilities and product lines. But now, with the cost of chip manufacturing rising, many of these companies are being bought out by larger companies.
The result is a smaller number of semiconductor companies that are each larger and more efficient. In the future, this consolidation is likely to lead to even better chips at better prices.
3. Improved Design
The semiconductor shortage is also leading to improved product design. In the past, companies could choose from various off-the-shelf chips and design their products around them. But now, with only a few companies able to meet the demand, companies are forced to work more closely with chip manufacturers to custom-design chips that meet their specific needs.
This closer relationship is leading to better communication and collaboration between chip manufacturers and product designers, and it’s resulting in products that are more tightly integrated and of higher quality.
4. Better Efficiency
Another way the semiconductor shortage is improving is through improved efficiency in the semiconductor industry. In the past, companies could afford to waste chips during manufacturing because there was always a plentiful supply.
However, with chips in short supply, companies are forced to find ways to use every chip they produce. This increased efficiency is leading to lower costs and higher quality chips.
5. Comprehensive Test Data Management
The semiconductor shortage is also changing product design through improved test data management. In the past, companies would typically send their chips to third-party test labs for testing.
Currently, however, companies are increasingly doing their testing. This change results in better and more comprehensive test data, leading to improved product design. This improvement in comprehensive test data management, in turn, is leading to better chips and products.
6. Rethinking Supply Chain Logistics
The semiconductor shortage is also changing product design through changes in the supply chain. In the past, companies typically sourced their chips from a small number of suppliers.
Companies are reconsidering their supply chains and sourcing chips from a more significant number of suppliers. This change leads to improved communication and collaboration between suppliers and companies, resulting in improved test data and product design.
7. Automation
The final way the semiconductor shortage changes product design is through increased automation. In the past, companies typically relied on manual assembly and testing of chips.
However, companies increasingly turn to automated assembly and testing with chips in short supply. This change results in faster and more consistent product design, leading to better chips and products.
When Will These Changes Happen?
While it might be challenging to predict the semiconductor industry’s future, the shortage leads to positive product design changes. Moreover, these changes will likely continue in the future as companies are forced to innovate to meet the ever-growing demand for chips.
Specifically, we can expect more industry consolidation, closer relationships between chip manufacturers and product designers, improved test data management, changes in the supply chain, and increased automation.
How Businesses Can Manage the Shortage
The semiconductor shortage is a challenge for businesses, but there are steps that companies can take to mitigate the impact.
a. Build Strong Relationships with Suppliers
First, companies should focus on building solid relationships with their suppliers. The best way to do this is to establish a long-term relationship with a supplier and develop a comprehensive understanding of their business. This will allow companies to anticipate better and manage the supplier’s response to the semiconductor shortage.
b. Consolidate Suppliers
Second, companies should consolidate their suppliers. This entails working with fewer suppliers and establishing closer relationships with those suppliers. This will allow companies to better manage the supplier’s response to the semiconductor shortage. In addition, it will enable companies to benefit from the economies of scale that come with working with fewer suppliers.
c. Improve Test Data Management
Third, companies should focus on improving test data management. The best way to do this is to do more in-house testing and better understand the testing process. This will allow companies to anticipate better and manage the supplier’s response to the semiconductor shortage.
d. Increase Automation
Fourth, companies should focus on increasing automation. The best way to do this is to automate the assembly and testing of chips. This will allow companies to better manage the supplier’s response to the semiconductor shortage. In addition, it will enable companies to benefit from the increased efficiency of automation.
What’s Next for the Semiconductor Industry
The semiconductor shortage is a challenge for businesses, but it’s also an opportunity for companies to innovate and improve their product design. These changes will lead to better chips and products and ultimately benefit the consumer. So, while the semiconductor shortage is a challenge, it’s also an opportunity for businesses to improve their product design.
Wrap Up
In conclusion, the semiconductor shortage has led to several positive changes in the semiconductor industry. These changes include increased investment, consolidation, improved design, efficiency, and more comprehensive test data management. These changes are all positive for the industry, and they’re likely to lead to better products in the future.
As the semiconductor shortage continues, businesses should focus on building solid relationships with their suppliers, consolidating their suppliers, improving test data management, and increasing automation. These steps will help companies mitigate the impact of the shortage. Ultimately, these steps will lead to better chips and better products.
About the author:
Daniel Jackson is a community manager for NI (formerly National Instruments), where they create the tools needed for companies to Engineer Ambitiously™. His current interests are at the intersection of software engineering and DevOps. Outside work, he is a marathon runner working on his first novel.
