Increased semiconductor M&A presents challenges for supply chain professionals

In a bid to drive digital innovation and cut costs, the semiconductor industry is experiencing widespread consolidation through mergers and acquisitions (M&A). As core manufacturers of essential components for electronic products, many global powerhouses, such as Intel and Qualcomm, have acquired semiconductor companies in recent years. M&A activity within the semiconductor industry shows no sign of slowing with 44 transactions recorded so far in 2024, according to recent analysis from KPMG.

About Tammy Max

Tammy Max is the director of technical content at Accuris,  which enables digital transformation in engineering organizations by connecting data with information.

While M&A activity positively impacts companies in various ways—cost reductions and efficiency gains topping the list—it can also create supply-chain complexity. Semiconductor manufacturers are no strangers to supply chain disruptions sparked by labor tensions, export restrictions and natural disasters. M&A further complicates such challenges and creates strain for supply-chain professionals working on the front lines.

As a result, semiconductor customers, specifically electronic products manufacturers, face downstream production delays and shortages.

Analyzing M&A supply-chain disruptions

A product’s bill of materials (BOM) does not change following a merger or an acquisition. However, part numbers and manufacturer names may be altered due to company consolidation efforts. This can result in semiconductor components having multiple different identifiers, often boasting their original identity and post-acquisition identities. This can lead to confusion amongst supply chain professionals and create significant disruption.

M&A can also impact the timely communication of product change notices (PCN), which are documents issued by manufacturers to inform customers of changes to products or manufacturing processes. In most instances, these are usually reported under a component’s current identifier, not the pre-M&A identifier. The internal dynamics of companies, including possible previous M&A identifiers and the use of distributor or legacy part numbers, complicate the matter of ensuring proper identification. These inconsistencies can cause a missed PCN, often resulting in production line-down situations or forcing a complete redesign in an electronic product manufacturing process.

To combat these issues, electronic product manufacturers should follow best practices to help capture and track manufacturers and part numbers as they evolve. This includes assigning internal part numbers to each component, specifically within internal systems such as product lifecycle management (PLM) platforms and product libraries. And adapting to dynamic part numbers.

As with many other industry challenges, artificial intelligence (AI) technology can help address these challenges and resolve part discrepancies for electronics manufacturers.

Software assistance—and assurance

For electronics manufacturers, data-driven software can offer valuable insights and help track potential issues after a merger or acquisition.

By looking at past data and patterns, analytical programs can help designers and procurement teams predict supply-chain issues before they happen. They can also simplify tasks like linking old and new product identifiers, reducing confusion and preventing duplication. For example, when customers add new product information, these platforms can match it with older records to stay aligned.

Analytical programs can also keep watch for product updates, discontinuations, and end-of-life notices from suppliers. It quickly alerts supply chain teams about changes and offers guidance on how to handle them. Using these programs, teams can keep operations running smoothly even during mergers and other major changes.

As mergers in the semiconductor industry continue, supply chain teams need to adapt to avoid disruptions. Cutting-edge software can help streamline operations after companies’ merge, manage product duplications, and provide a clear view of all operations. By using data-driven software, semiconductor companies can solve challenges more effectively while continuing to innovate in a fast-changing market.

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