Renesas is rolling out several steps to increase redundancy in its supply chain and reduce the impact of any future natural disaster on its operations. The company is not alone, however. Other chip makers, component vendors and OEMs are engaged in similar actions in response to the Japan March earthquake.
The electronics industry has a notoriously myopic view of events—hence the disastrous inventory-driven boom-and-burst cycles that pockmark its history. But if you think the industry will soon forget the lessons learned from the March 11 Japan earthquake you might be completely mistaken—at least according to a major semiconductor vendor and its extended supply chain.
Behind the scenes, all of the major chip suppliers, other component vendors, OEMs and their extended support base are overhauling all parts of their manufacturing operation to increase the level of redundancies in the system and ensure any future natural disasters do not leave as big an imprint on the industry.
Perhaps it's right that Renesas should lead the charge. Five of the companies' fabs and three test and assembly sites in Japan were impacted by the earthquake and the resulting tsunami (all had to be temporarily shut down). And while the company has pulled through far ahead of schedule, it is moving far beyond recovery and rebuilding to implement a range of far-reaching actions that are meant to drastically reduce the impact of future calamities while sharply cutting down on recovery time.
"We will end up with more manufacturing capacity than before the earthquake because of the foundry capacity that we brought on and are continuing to use. We will also have a stronger, more flexible and more redundant supply chain," said Dan Mahoney, CEO of Renesas' U.S. subsidiary, Renesas Electronics America, in an interview. "This reflects a belief on our part that the earthquake is changing mentalities throughout the electronic industries, changing some of the philosophies that have governed the supply chain management throughout the electronics industry. "
Of course the entire electronics industry felt the heat from the Japan earthquake,e although the expected impact was lessened by the concerted efforts of companies working together—including rivals in some cases—to satisfy customer demand. But the greater fear of the entire market was the knowledge that the destruction and its impact could have been worse if a similar earthquake had hit Taiwan.
"People feel like they dodged a bullet," adds Mahoney. "It could have been a lot worse. So, we are seeing requests from customers to provide redundant manufacturing plans in new business proposals. I think this is going to spread and I think that greater redundancy and better risk management is going to be an expectation throughout the electronics industry."
It is understandable that Renesas chose to keep 90 nanometer, 40 nanometer and 0.15 micron fabs all in Japan. How ever, it makes sense to have a progressive strategy to locate some of the fabs in a relatively less siesmic zone outside of Japan, particularly those one generation behind. Diversifying within Japan itself may not address the risk mitigation satisfactorily.
It will be interesting to see what the added cost, if any, will be. Having several smaller more flexible manufacturing sites may end up being better overall than having a few mega-manufacturing locations. Time to market improvements from a more flexible manuafacturing environment will probably more than make up for any extra costs...
January 2016 Cartoon Caption ContestBob's punishment for missing his deadline was to be tied to his chair tantalizingly close to a disconnected cable, with one hand superglued to his desk and another to his chin, while the pages from his wall calendar were slowly torn away.122 comments