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The persistent global shortage of semiconductors has prompted governments and chip manufacturers around the world to take actions to expand production and prevent such shortages from occurring again. But in formulating their plans, they should include measures to ensure that future supply chains for computer chips are resilient. A study that we conducted with DENSO, a global automotive component manufacturer whose headquarters are in Japan, highlighted how vulnerable the semiconductor supply chain is to disruptions. We found that a short disruption of a semiconductor fabrication facility, or “fab,” in Taiwan for 10 days, could cause a flurry of additional disruptions across the entire supply chain that would last almost a year.
The aim of our study was to understand the resiliency of the semiconductor supply chain and to identify strategies that companies and the federal government could employ to improve it. To that end, we built a model, a mathematical description of the supply chain, which allowed us to simulate a supply chain disruption and its ripple effects throughout the value chain.
The vast majority of semiconductor fabs are located in Taiwan, mainland China, and South Korea. The production lead time for a batch of chips — the time between when the fab begins production and completion — varies from 20 to 60 days, depending on the plant and the complexity of the integrated circuit. These chips are subsequently shipped to assembly and testing facilities, almost all of which are in Asia, to produce various components; these processes can take 30 to 40 days. (…)
Read more @Harvard Business Review: https://hbr.org/2022/10/fixing-the-u-s-semiconductor-supply-chain