Monday, April 4, 2011

Raw Die Disruption in Japan Represents 25% of World Supply

Supply Chain Executives are set to see some significant challenges around Raw Die deliveries.  The brands most like to be impacted significantly are the fabless chip houses such as Xilinx, IDT, PMC Sierra, to name a few.  See here:
There also appears to be a looming potential crisis in the supply of copper-clad laminate.  Japan produces 70% of the world's supply of this material which is used in the production of almost all PCB boards.

Many of the larger chip houses including ON Semi, TI, IBM, Renesas and others also procure a certain percentage of their die from Japanese sources outside of their own internal supply to supplement bumps in demand on certain product lines. 

Combine this crimp/shortage with robust demand across the board as the world emerges from the recession and you have a formula for price inflation as well as extended delivery times.  Critical processes to procurement planning in this environment clearly is a commitment of resources to crossing to secondary brands to supplement existing challenged primary component sources/brands.

We recommend every requirement for items affected, where possible, leave open the possibility for accepting crosses and replacement from secondary and tertiary brands.  Reviewing and shortening approvals for crosses is going to gain critical importance in the comind days, weeks, months, and maybe even quarters...

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