Particle’s objective is to help our customers build connected solutions by alleviating the biggest pain points of deploying IoT products. Frequently, those pain points are technical challenges stemming from integrating and managing the very broad tech stack required to deploy IoT devices at scale. Sometimes, though, the biggest obstacles our customers face are business challenges, which can be just as difficult to understand and navigate. This is especially true in light of current challenges facing the global semiconductor industry.
Currently, there is a global chip supply shortage that is affecting multiple industries (including consumer electronics, phone production, and automakers) across the globe. This shortage is being caused by a perfect storm of market conditions, including COVID-19 impacts on production to increased demand of consumer electronics, multiple fires in Japan, drought in Taiwan, constraints in global transportation issues, and finally, frosty US-China trade relations.
This significant increase in demand in conjunction with the aforementioned supply-impacting events has resulted in the current shortage of silicon-based integrated circuits (ICs) in the global marketplace. Further, this situation has led to a virtual commodity free-for-all across multiple industries. Without enough key ICs, suppliers are being forced into making difficult decisions on what customer order they choose to serve. Due to these conditions, lead times for some key semiconductors have gone from a maximum of 12-16 weeks to a minimum of 28-32 weeks. In an extreme case, we have one IC that is now on a 52 week lead time from the manufacturer.
How Particle is supporting you through this shortage
At Particle, we understand the nature of this challenge and have been working diligently to keep the supply chain in motion for our customers. With over 75 years of combined experience in supply chain and manufacturing operations, our global, diverse, and highly skilled team is working tirelessly with our supply base to ensure we have access to the raw materials needed to meet our customers’ needs.
We have been working actively with our sourcing partners to identify alternate channels of components that will reduce lead times and help maintain our supply of products. Due to our experience building and helping customers build connected products, we have strong buying power for IoT components, so choosing Particle is the fastest way to project readiness.
We have sufficient inventory available now that we will allocate based on contractual commitments, so larger upfront orders now are the best way to ensure availability. There will still be uncertainty in the global supply chain throughout the second half of this year.
While we continue to work to reduce lead times and maintain our current supply of product, we wanted to provide some best practices to help guide you through this crisis and others that may be on the horizon. Transparency is key in partnering together through this current crisis. That said, we recommend that you consider the following steps to help navigate the global silicon shortage:
- Internalize the situation — Currently, most industry experts don’t foresee any meaningful change until 2022, which is why you should internalize the situation by reviewing your build plans and customer forecasts for the remainder of 2021 in conjunction with your material orders to identify potential risks to meeting customer demands.
- Get your orders in early — In a nod to fairness, a majority of vendors are utilizing FIFO method for order fulfillment. Usually, you don’t want to build up too much inventory, but we are not in normal times. By getting your orders in ASAP, you’re getting in the queue earlier, which will hopefully lead to getting the parts you need in time.
- Call your suppliers — Don’t slack, email, or text. Call them. If possible and safe, visit in person, and please keep in mind to follow all CDC guidelines and local health ordinances. With open and consistent dialogue with your suppliers, you can sometimes find opportunities to take advantage of a situation that is in constant flux. That said, with devices crammed full of notifications, a call can be the most effective form of outreach.
- Process can be a good thing — The “p-word” can elicit visions of bureaucracy and suppression of innovation. In this context, however, process can help enable your business to meet new challenges. For example, Particle has developed a robust weekly process to assess raw material status, build capacity, and our ability to meet current, as well as new demand.
- De-risk the supply chain — Review your bills of materials (BOMs) and identify the riskiest components; those with the longest lead times and single-sourced are the usual culprits. Review your forecasts and where possible buy ahead or secure necessary inventory at your earliest.
At Particle, we are working with our customers in every possible way to help best manage through this shortage. We aim to be your partner and will leverage our skills, experience and standing in the market to deliver our products to you as needed.
During this global chip shortage, our goal is to provide you with the certainty needed to grow your business. If you have any further questions or concerns, please reach out to your named Particle CSM or contact our support team here.