Page 58 - EE Times Europe September 2021

58 EE|Times EUROPE

OPINION | MARKET & TECHNOLOGY TRENDS
global supply chain. This has been driven by
Electronics in Europe: China’s continued growth, which has made
it an influential economic actor, and the
Chinese leadership’s increasingly assertive
Dead, Dying, or Reviving? foreign policy.
SUPPLY CHAIN COMPLEXITY
Finally, the sheer complexity and interdepen-
By Nick Wood, Insight SiP dency of electronics supply chains have been
harshly revealed, in some cases by random
events. In 2020, a factory owned by Asahi
2021 has seen a severe supply crunch in electronic components, Kasei Microsystem (AKM) in Japan caught fire
particularly silicon chips and crystals. The prolonged shortage has and was destroyed. This seemingly obscure
catapulted an industry story onto the front pages. It is one thing event — at a company unknown even to many
for electronics supply managers to be under increased stress. industry insiders — has led to mass product
It is quite another when a car factory shuts down because it can’t shortages. The factory was a critical supplier,
get components. with up to 90% market share for semiconduc-
The electronic component industry is notoriously cyclical, with tors in certain temperature-controlled crystal
regular periods of feast or famine. The current component short- oscillators (TCXOs). Because these small,
age can be traced to typical immediate causes: a miscalculation of cheap components are essential for many
demand with the corresponding lack of supply in development and a scramble to catch up. electronic devices and are not easily replaced,
However, the 2021 chip crisis has led to a more sustained period of soul searching in the West, the loss of the AKM factory had devastating
particularly in Europe. Recent events have led us to question whether we have collectively made ripple effects.
at best a wrong turn or at worst a strategic blunder of potentially catastrophic proportions.
SEMICONDUCTOR SITUATION
PANDEMIC’S IMPACT While AKM’s centrality to the TCXO market
First, the pandemic highlighted the fragility of our supply chains and our dependence on distant is an extreme example, semiconductor
factories. It was shocking to realize our “developed” economies were incapable of providing manufacturing is concentrated among
simple products like face masks. It showed how in times of crisis, normally commercial con- relatively few companies in a relatively small
siderations were trumped (and, indeed, Trumped) by nationalistic impulses. Globalization has geographic region. Taiwan Semiconductor
delivered economic benefits, but the crisis revealed that the associated limitations and risks are Manufacturing Co. (TSMC) has an estimated
poorly understood. 28% market share, followed by Taiwan’s
United Microelectronics Corp., at 13%, and
THE CHINA FACTOR then China’s Semiconductor Manufacturing
Second, perceptions of China have changed dramatically over the last decade from a convenient International Corp. (SMIC) and South Korea’s
place to reduce costs to a potentially hostile foreign power that controls critical parts of the Samsung, with roughly 10% apiece. If a
factory fire can cause disruption, what would
happen if a major natural disaster or political
upheaval hit Taiwan?

GLOBAL SUPPLY CHAIN: STILL VALID?
In contrast to Asia, Europe has largely left
the electronic components field, with the
exception of a few low-volume, specialized
niches, such as military and aerospace and
some limited in-house capabilities. The “fab-
less fashion” has taken root more firmly here
than anywhere. There are still big names in
electronic components: large companies with
a long history such as STMicroelectronics
and rising stars including Nordic Semicon-
ductor and Arm, which never intended to
make anything yet have their technology in
most mobile devices. The thinking is that
“high value” activity such as design is done
in Europe, with manufacturing conducted by
subsidiaries in Asia or outsourced to indepen-
dent companies typically in Asia.
The next stage in the supply chain is also
dominated by Asia: Asian factories make most
system-in-package (SiP) devices and assemble
most PCBs.
Historically, companies outsource to China
and other Asian countries to save money.

SEPTEMBER 2021 | www.eetimes.eu