19 May 2020 -

Covid – a supply-chain ‘black swan’ for semiconductor industry

You may have missed the Deloitte report COVID-19: A Black Swan Event for the Semiconductor Industry? According to their predictions, there’s a 98% likelihood that a manufacturer will experience a disruption in the next 24 months, but only 53% of companies have strategic backup plans for factory or distribution center shutdown.

“Although the full impact of COVID-19 is still unknown, the impact across the electronics value chain, from materials to final products, will likely be far reaching—and hard hitting on those parties involved with semiconductor manufacturing, says Deloitte.

“COVID-19 is highlighting the potential risks and vulnerability of today’s electronics and semiconductor value chain model and challenging the semiconductor industry to consider transforming its global supply chain model. COVID-19 might become the black swan event that forces the semiconductor industry to transform its global supply chain model.”

In the long-term, says Deloitte, semiconductor companies should consider examining their supply chain strategy and operating model to address the risks of geographical concentration and lack of resiliency. Many companies have geographically concentrated manufacturing to realize the benefits of low-cost labor, favorable tax structures, and synergies with both suppliers and customers.

Rather than relying on the geographically concentrated model, we believe semiconductor companies should consider moving to an “agile supply node network” model—which is flexible and allows for multi-pathways that help eliminate single points of failure.

Astute Electronics – Bringing you Safe Supply with the latest insights from trusted sources.

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