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Is this the new normal for embedded electronic design and component selection?

Updated: Aug 25, 2022


If there’s a couple of phrases which have permeated public consciousness as much as any in the last two seismic years, it’s “unprecedented times” and “the new normal”. Whether used to explain or excuse performance on governmental, corporate or societal level, one thing is for sure: change has been rapid and dramatic. What remains to be seen is how permanent those changes are.


Partly driven by a gross misjudgment of the effect the pandemic would have on demand and, partly, a longer term change in the pattern of investment in capacity, we now find ourselves deeply entrenched in the longest, broadest supply shortage in the history of electronics. “Industry veterans” who have witnessed a rollercoaster of availability of various DRAMs over the decades will testify that this time it's very different.

Most significantly the biggest differentiator, and potentially for the long term, is the reaction of our customer base.


The first reaction of many to warnings of supply chain shortages was denial. While some companies heeded the guidance to book ahead, many did not; confident that what had gone before would happen again. The second reaction was probably the most difficult commercially.


Accepting the inevitable

The ultimate acceptance of stopped production lines, damaged revenue and profits and the need to redesign was a huge shock to the system. Aside from the very highest level of manufacturing, such as automotive where governmental pressures were brought to bear, no amount of managerial escalation was enough to secure sufficient product required to get production lines rolling again. No amount of scratching around in the grey market was able to bring together a complete kit of parts without paying a king’s ransom of 20x to 100x the normal market rate for everything from passives to CPUs. One customer told us they'd made considerably more money selling the components they currently hold in stock than the product they're striving to manufacture! Crazy times.


The net result? Every CEO and MD at every company that builds or embeds electronics in their product is questioning how they got so exposed and what they need to do to avoid it ever happening again.


No Longer a Buyers Market

A generation of designers and purchasers have been born and raised on readily available product and competing component manufacturers have historically driven down costs at a staggering rate. Super-efficient online supply channels have been able to provide engineers with sample quantities of every possible size, shape and flavour of component from stock within hours or days. With few exceptions, the semiconductor industry has fundamentally always been a buyer’s market. Even when market forces have swung in favour of the supply chain, businesses have been able to tolerate higher prices and longer lead-times safe in the knowledge that the pain won't last long.


This time however, there is no obvious end in sight resulting in a potential Paradigm Shift for future design and purchasing strategy.


AVLs are being torn up as quickly as barriers to entry are being torn down. Scars are being inflicted on the reputations of some of the industry’s household names that won’t heal any time soon. Traditional attitudes to unfamiliar Chinese and Taiwanese IC vendors have changed. It turns out that worries about technical support from the other side of the world are no longer as worrying as the constant stream of bad news from the familiar folks around the corner.


So, how does a company today strategise designing in and procuring components which will mitigate the effects of this first long supply shock and any subsequent recurrences?


Ineltek is witnessing a number of tactics including:

Multi-sourcing

Nothing new here, but season 2021/2 has taught designers that the strategy has never been more important.


Multiple Designs

Multi-sourcing doesn’t work for bespoke components: critically MCUs (with a couple of notable examples) and MPUs. This leaves the only viable option to develop multiple PCBA versions to support each product SKU, allowing rapid switching of production lines to build whichever version is most manufacturable at a given point in time.


Geo-political Considerations

Often in the past, components have been selected based on familiarity of design tools, support from a particular distributor or (whisper it quietly) personal relationships. Now we’re increasingly seeing decisions based on geo-political and logistical factors: will the US and China have a trade war? What if China decides to invade Taiwan? Which factory can cope best with another wave of COVID / [other unknown pandemic] lockdowns?


Strategic Partnerships

At the highest level, big consumer and automotive companies are investing directly in IC builders to ensure preferential allocation of product in the event of shortages. Great for them, but where does that leave you?


Where Ineltek can help

As a specialist distributor, Ineltek’s linecard has been built to provide the best technical and commercial offering for our customers and, by happy chance, includes a number of suppliers that can provide great solutions to supply challenges in the short term and for the long haul.


A few highlights include:

Nuvoton

New entrant to the top tier of the world’s leading semiconductors WLTM global brand leaders. Not content with acquiring the semiconductor design and manufacturing capability of Panasonic, former Winbond spin-out Nuvoton have made it their business over the last 18 months to provide large quantities of MCUs where others couldn’t. Ineltek has grown its Nuvoton business 700% during this market crisis and you can’t do that without enormous supply and terrific support from HQ.

Raspberry Pi

The newest addition to our roster, Raspberry Pi are launching into the MCU space with a unique offering: a single flashless, powerful, low-cost MCU and you choose the commodity Flash to suit. RP2040 is available from stock in huge quantities. Dual core processor under a dollar? No problem.


Geehy

Struggling with manufacturing? Staggering leadtimes crippling your business? Staring at extortionate broker quotations? Geehy’s line-up of M0+, M3 and M4 pin-for-pin MCUs will replace your standard European MCU faster than you can say alliteration.


Premo

Electromagnetic components for automotive and industrial applications. With manufacturing spread across China, Vietnam and Morocco, there’s no risk of one region trapping you in a supply hole.


3Peak, Bruckewell, DAPU Telecom: Linear, Converters, Interface, Power Management, PHYs, Timing ICs and Power Discretes for an enormous range of applications, many of which are available on short lead-times in industry-standard footprints for fast second-source approvals.


SIMCom

2G, 5G and everything in between. With the sun setting on 2G and 3G networks globally, there’s never been a better time to transition to 4G. SIMCom’s strategy is to provide footprint compatible solutions based on silicon from US and Chinese comms chip vendors, providing supply chain risk mitigation in parallel with huge cost benefits.


Summary

Whatever design / sourcing strategy you're considering, Ineltek goes above and beyond to work out a solution to keep your production on track. With in-house design-in expertise and close, long-term working relationships with the decision makers at our franchised suppliers, why entrust your critical components to anyone else? (Check out our components with reasonable lead times here)


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