Semiconductor industry has a resilient supply chain

By Beckett Tracy, Carlos D. Dones and Patricia Nhan May 3, 2021

The COVID-19 pandemic has taught us that diversity in the supply chain is more critical than ever. We need to be reliant on all resources available to us and seize opportunities where we can. With chip shortages across the world, there is a race to increase production yields despite traditional supply chains tapping out from a capacity standpoint. Solutions to these technology and supply chain problems require all hands-on deck including the smartest people in the world wherever, whoever, and however they are. Unfortunately, a quick look at the semiconductor supply chain reveals that for whatever reason, too many diverse owned suppliers are nowhere to be found. So, what does this mean for the semiconductor industry? It’s as if we’re working with one hand tied behind our back.

Supplier diversity

Supplier diversity is a strategy that drives the inclusion of diverse-owned businesses in the procurement of goods and services within an organization. Diverse groups vary globally in accordance with local laws but often include underrepresented groups such as women and local in-country minorities. Diverse companies are currently certified by being at least 51% owned, operated, and controlled by diverse individuals. Supplier diversity does not include lowering bidding standards or awarding business based on diversity status. Diversity done right increases ideas and competition.

By diversifying the supply chain, we can expect to see an influx of innovation to improve our processes through competition. Diverse companies entering new markets bring unique perspectives and can often focus on R&D problems large multinationals overlook. Engaging in the semiconductor industry allows local businesses to learn from what already exists in the market and offer new ideas that were not considered before. Furthermore, local businesses have more flexibility to create custom solutions for the process.

New diverse suppliers also mean additional capacity to supplement the already taxed supply base. If your current suppliers are telling you they’re full, it might be time to branch out. Don’t assume diverse suppliers are incapable of scale. There are many examples of multi-billion-dollar companies that are certified-diverse bringing world class scale, solutions, and capability to existing semiconductor supply chains. From one-off prototyping to large scale manufacturing, diverse suppliers bring multiple skill sets.

In addition to innovation and capacity building, expanding diverse suppliers has multiple other benefits to consider:

  • Government tax and contract incentives exist for supply chains with certified diverse content
  • 2020 increased public awareness of diversity and Corporate Social Responsibility (CSR) initiatives. Expanding these programs is in line with stakeholder expectations.
  • Flexibility of a privately held company with excellent customer service, often with less bureaucracy of a publicly traded company

Take action

If you’re seeing the gap between supply (chain) and demand, there’s plenty you can do about it. If you are a diverse owned company in an adjacent high precision manufacturing space, consider joining the semiconductor industry. You can reach out to your certifying NGO to find out more about our industry (SEMI is reaching out to them!).

If you’re a company looking to cast a wider and more inclusive global net in your bidding process, you’ve got options as well. Start by making an intentional effort to start your own supplier diversity program. Scrub your existing supply chain and you may be surprised to find you’re already working with some high performing diverse suppliers. Maintain high standards and fair bidding while proactively including diverse suppliers in your opportunities – they can compete and win the business.

– This article originally appeared on SEMI’s blog. SEMI is a CFE Media content partner. Edited by Chris Vavra, web content manager, Control Engineering, cvavra@cfemedia.com.

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