With Olympics Over Focus Now on South Korea’s Supply Chain
All products that have semiconductor devices or integrated circuit (IC) chips are vulnerable to Moore’s Law, industry analysts maintain.
Latest NewsU.S. Port Update Part 1: Infrastructure Shortfalls Driving Innovation Procurement is getting its digitized act together BREXIT Finale Creates Another Challenge for Global Supply Chain Managers Oregon Rep. Blumenauer makes move for permanent short-line railroad tax credit UPS is in line to sue EU over failed attempt to acquire TNT Express following court ruling More News
Latest Resource2019 Top 5 Trends of Enterprise Labeling This year’s sixth annual Top 5 Trends in Enterprise Labeling report outlines significant shifts in labeling that are impacting businesses and global supply chains at an unprecedented level.
Based on data collected over 7 years from over 5000 companies in the high tech industry supply chain, analysts warn that electronics manufacturing globally could take several years to return to normal…and have an impact on many other industries
As the 2018 Olympics wrapped up last month, millions of viewers had a fresh look at South Korea and came to understand its vital status in the Pacific Rim. This is hardly any news for global supply chain managers, however, particularly those working in the high-tech electronics industry.
According to Resilinc – a global supply chain mapping intelligence organization with a key focus on the high tech – a military conflict of any magnitude could have catastrophic consequences for this sector. Indeed, even using traditional weaponry would not only bring global supply chains to a grinding halt, but the time to recover back to current levels could take several years. This prediction is based on an analysis of several tiers of the global high-tech electronics industry supply chain.
The company has amassed vast amounts of supply chain mapping intelligence over the past eight years, having mapped global supplier locations for over 40,000 suppliers and tracked over 2,000,000 parts across 90,000 factories in more than 130 countries.
Most importantly, the data is collected from the companies in the supply chain directly, as they report the sites they use to manufacture, store or distribute their raw materials and parts.
Resilinc analysts say over 200 suppliers have reported sites they are dependent on within range of artillery in the area of Kaesong base, and over 1300 suppliers have reported dependence on sites within the high-risk zone of a coordinated attack.
Furthermore, an analysis of over 1500 high tech electronics products, their bills of material and parts mapping data shows that almost every product depends on at least one South Korean site, in the direct tier 1 supplier base or indirect tier 2 supplier base. Resilinc highlights multiple failure points in the Seoul and Incheon areas that are vital to the electronics manufacturing.
All products that have semiconductor devices or integrated circuit (IC) chips are vulnerable to Moore’s Law, industry analysts maintain. Intel’s Gordon Moore predicted in 1965 that the number of transistors per square inch on integrated circuits would double approximately every 18 months.
This law has held true until about the last 5 years, but continues to have tremendous implications for supply chains, and is one reason for the massive capacity constraints Resilinc predicts will be experienced in even a small incident in this area of the world.
Because of Moore’s Law, about every two years, new lines with smaller manufacturing footprints are brought online, and made to scale to produce tens of millions of ICs. Given the complexity of the process, bringing a fab online is billions of dollars in investment and can take several years. And, because of this ubiquitous consumption of electronics components in our products today, each fab today runs at 95% plus capacity.
Therefore, one fabrication facility’s capacity being taken off of the market could result in massive impacts on capacity, supply and pricing. This is particularly so given that almost 40% of worldwide wafer capacity is located in South Korea and Japan, the countries most threatened by North Korea.
“For risk management professionals like us who look at supply chain mapping data for a living, the chart presents a very scary picture. And even then, it shows only a partial picture of the supply chain. Because by looking at it, we may think that in a Japan and/or South Korea conflict scenario, 37% of the wafer fab capacity could be impacted,” said Bindiya Vakil, CEO.
“What people don’t always realize is that the Taiwan wafer capacity could effectively go down,” Vakil concludes. “This is because Resilinc’s part site mapping data shows that almost 75% of parts that are wafer fabricated in Taiwan, are shipped to South Korea’s assembly test sites for packaging.”
Bottom Line: This means that almost 50% of IC capacity could be at risk if wafers produced in Taiwan could not be processed.
About the AuthorPatrick Burnson, Executive Editor Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]
Subscribe to Supply Chain Management Review Magazine!Subscribe today. Don't Miss Out!
Get in-depth coverage from industry experts with proven techniques for cutting supply chain costs and case studies in supply chain best practices.
Start Your Subscription Today!
Truck Driver Shortage: No one behind the wheel Intermodal to the rescue View More From this Issue