It's all over the news: Manufacturers looking to ramp up their microcontroller (MCU) purchasing are stymied by what the media has called a worldwide shortage of semiconductors.
But is that really the problem?
Not according to Tom Hackenberg, principal analyst at Yole Developpement, a technology analysis company. Hackenberg says the story behind the headlines is much more complex.
"The just-in-time supply chain is bent to the point of being broken," contends Hackenberg.
In his recent Live Market Briefing, Hackenberg reviews the timeline and various causes of how the microcontroller supply chain – typically 90% of all semiconductors shipped – arrived at its current state of imbalance. Among the reasons he cites are:
- Pre-pandemic geopolitical conflicts, mostly over tariffs and stockpiling
- Catastrophic weather events and accidents
- Workforce shutdowns due to COVID
- Pandemic-induced reductions – then unexpected increases in demand for components
- Retooling of foundries to accommodate demand for specialized MCUs
- Unpredictability of delivery due to COVID-related shipping congestion
- Uncharacteristic MCU price uptick of more than 10-15% to accommodate premium foundry services
Only five semiconductor companies produce 80% of the world's MCUs, says Hackenberg, and Renesas, we’re proud to report, is at the top of the supplier list with 19% of the market.
Right about now you might be wondering, “Wait. Wasn’t there a fire in Renesas’ Naka, Japan, fab this past summer? How is it even possible that Renesas is the top supplier of MCUs?”
In a word: Redundancy.
Yes, the foundry fire was unfortunate and especially untimely, given the ongoing effects of COVID on the microcontroller supply chain. But disruptions can – and do – happen. Ten years ago, it was an earthquake that unleashed a tsunami and a resulting nuclear accident. Today, it’s the pandemic. Tomorrow, it may be something else.
Building Business Continuity
At Renesas, we have learned from these past experiences to navigate disruption. We use business continuity management best practices to prepare for disasters and manage risks. Our goals are to protect the safety of employees, and, of course, to fulfill our responsibility to supply you with products and services. Part of that effort is building redundancy into our production lines, and innovation into our product families.
Many Sources Eliminate Supply Failures
Unlike some of our competitors, Renesas has a dual-source manufacturing strategy for both back-end and front-end manufacturing. Simply put, we use our own fabs as well as third-party fabs. So if there’s an interruption on one line, we boost production on another.
For example, we fabricate our secure RA microcontrollers, our high-performance RX microcontrollers and our low-power RL78 microcontrollers among a network of three Renesas-owned foundries and three additional outsourced foundries. There’s simply no chance of a single point of failure.
And we coordinate with semiconductor distributors who know first-hand your supply chain concerns. Their on-the-ground customer intelligence guides the short- and long-term product planning for our five microcontroller families (Figure 1). So as your products become more sophisticated, you can be sure we’ll have MCUs that support your future designs.
No Need to Wait
For his part, analyst Hackenberg predicts that the current global supply chain problems will eventually resolve, but not for about two more years.
“By 2023 the MCU market will have more successfully balanced a new just-in-time model with more hybrid models stocking critical components and second sourcing,” he says. “Current fab investments are expected to bring a large amount of capacity online by the end of [2023].”
Encouraging news? Sure. But not if you want a reliable source of MCUs right now.
Rather than wait for a supply chain reboot in 24 months, why not choose a safe bet now? Find the right MCU for your design with the easy-to-use MCU selection tool or download the Renesas MCU guide app and move your manufacturing forward today!