chip shortage

Qualcomm’s Reply to the Chip Scarcity and Digital Transformation Technique

In Might, I attended the Kinaxis Kinexions occasion in San Diego, CA. On the convention, I used to be lucky to see a presentation from Brent Wilson, Senior Vice President of World Provide Chain at Qualcomm. I used to be additionally capable of interview Brent after his session to get just a little extra perception on how Qualcomm handled the Covid-19 pandemic, what it means for the semiconductor chip scarcity, and the place the corporate goes with its digital transformation technique.

As Brent talked about in his introduction, it has been a difficult few years for semiconductor producers. COVID-19 has essentially modified the best way the world connects, computes, and communicates. For corporations like Qualcomm, that’s fueled unprecedented demand for the semiconductor chips they supply to energy the expertise we’ve all come to depend on. Concurrent provide chain planning is required for the corporate to navigate uncertainty and broaden into new markets of automotive, computing, and connective clever edge.

Qualcomm’s background is rooted in sensible telephones and mobile phone communication. The corporate creates semiconductors, software program, and companies associated to wi-fi expertise. The corporate has been quickly increasing to new markets, comparable to IoT. The query Brent requested for the way forward for semiconductors is how do you join every part and provides every part the intelligence it must make native selections? That’s not precisely a simple query to reply. For Qualcomm, it’s all about innovation.

Qualcomm makes use of the Kinaxis Speedy Response answer for concurrent provide chain planning. The answer was applied in 2012 with a view to ship a complete gross sales and operations planning (S&OP) answer that was capable of transfer into execution with excessive integrity. Throughout the semiconductor business, particularly because the Covid-19 pandemic hit, execution is essential.

Brent identified that Covid created small interruptions for a lot of corporations when it comes to sourcing semiconductor chip supplies. There are totally different insurance policies in place at totally different corporations, which carries over into granting corporations licenses to have the ability to function. The bigger impacts have been extra round shifts in demand from Covid; demand unexpectedly shifted into a special route and consumed all assets above the forecast.

One of many largest points was the labor scarcity throughout Covid. As Covid unfold, so too did manufacturing unit closures. Qualcomm turned to extra automation in its semiconductor manufacturing. The ratio of labor to output is extra in the direction of output, so the corporate didn’t want as a lot labor. The important thing was to find out which product to give attention to. This ended up being excessive finish merchandise. Qualcomm needed to rethink its place within the mid and low house since they might not service all markets with a chip scarcity.

Qualcomm additionally confronted a uncooked materials scarcity. Some resins and epoxies weren’t out there, so the corporate had to take a look at different elements or totally different strategies of sourcing. By working what-if eventualities of their concurrent planning answer, Qualcomm was higher outfitted to deal with these disruptions.

One other disruption going through the corporate, and the business, was the face masks scarcity. Face masks and PPE have been already worn in semiconductor manufacturing crops to make sure a dust-free atmosphere. Instantly, face masks have been briefly provide as demand skyrocketed. Qualcomm had to take a look at alternate options to sourcing masks in addition to utilizing much less bodily labor to proceed with its output.

I requested Brent how lengthy he noticed the chip scarcity lasting. He instructed me that there’s typically 6 to 7 p.c progress in chip manufacturing year-over-year. The provision aspect is comparatively mounted, and there’s no large supply approaching board to flood the market with extra chips. On the demand aspect, there are some pockets which are displaying weaker indicators; some are primarily based on the correction of make money working from home, and demand is beginning to abate. The unwinding of tariff wars can be serving to. Since I interviewed Brent, semiconductor producers have seen a shift within the chip scarcity disaster, and are going through a glut of pc chips as smartphone and PC demand declines.

I requested Brent how Qualcomm prepares for the following large disruption. Before everything, he really helpful that corporations select their battles for the place they need flexibility. Corporations want to investigate complete provide and demand and have the self-discipline to comply with by, even when it takes cash and assets. In regular instances there isn’t any profit, however corporations want to remain the course even when demand and provide are equal. Coping with disruption additionally takes agreements from clients. Prospects want to know that distribution might change, relying on materials provides.

Brent mentioned that Qualcomm is correct in the course of its digital transformation journey. Qualcomm is taking a look at how synthetic intelligence can flip a bodily atmosphere and into 1s and 0s for higher efficiencies. Qualcomm understands it wants the {hardware} that helps AI, and it may well make the product AI prepared because of this. For now, Qualcomm is taking a look at the way it can proceed to make environment friendly selections on sourcing, in addition to the way it could make the quickest selections for its manufacturing wants. Because the pace of producing strikes ahead, so too does the pace of resolution making.

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